If you own real estate, will your living trust actually keep your estate out of probate?

If you are relying on a trust to keep your family from having to use the probate court process to administer your estate after your death, you need to be vigilant about a few things to ensure your goal is achieved. Every year I am hired by too many families of deceased loved ones in situations where the deceased person or deceased married couple did have a living trust, but probate has still become required for one reason or another. Let’s review one of the most common scenarios where this happens, so that you can be sure it doesn’t happen to your family. 

Idaho law requires that when a real property owner dies, his or her estate goes through the probate court process (commonly just called “probate”) unless the deceased property owner held title to that real property through a trust. I meet many people who mistakenly believe that if they have a last will and testament document in place at death, their estate will not go through probate. This is not true for any person (or married couple) who owns a personal residence — or any other real estate. Note that the value of the real estate does not matter. I’ve seen probates caused by odd little pieces of land that essentially have no value because of their size, location, or both. 

The solution for any Idahoan who owns real estate and wants to avoid probate, is establishing a living trust. However, the living trust will only avoid probate if all the real estate owned by that person is titled to the living trust at the time of their death. This is the first way in which I see too many estates go through probate that should not have — one or more pieces of real estate are not titled to the trust at the time of the property owner’s death. This happens for various reasons. When Kootenai Law creates a living trust for a client, we also take the steps necessary to change title to the client’s real estate to name their trust as the titled owner. If someone established a trust but did not retitle their real estate to their trust, probate will still be required. 

Another way we see this happen occurs when a person or couple who has a trust and has their home titled to that trust, sells that home and purchases a new one — but forgets to title the new home in the name of the trust (or perhaps told their title company that they wanted it titled to the trust, but the title company did not do so, and the property owner did not catch the mistake). A similar issue arises when someone who has their home titled in their trust name makes a purchase of additional real estate (a family cabin, or a rental property, for example) and does not get the additional property titled to their trust. 

Finally, I have also seen instances of this problem when a property owner who has their home titled to their trust but is instructed by a lender to change that title back into the owner’s personal name as part of a refinancing or home equity line of credit loan process. Again, if that property is still titled to that owner’s personal name instead of their trust at the time of death — you guessed it — probate is required. If you or a loved one prefers that their estate stay out of probate court, and there is any real property involved, it is well worth the time and effort to work with an experienced estate planning attorney to be sure that a trust is not only established, but that all assets required to be titled in the name of that trust are correctly handled. 

If you have questions, my law firm is currently offering free in-person, telephonic, or electronic consultations concerning creating or reviewing estate planning documents.

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Robert J. Green is an Elder Law, Trust, Estate, Probate, & Guardianship Attorney and the owner of Kootenai Law Group, PLLC in Coeur d’Alene. If you have questions about estate planning, probates, wills, trusts, powers of attorney, guardianships, Medicaid planning, or VA Benefit planning, contact Robert at 208-765-6555, Robert@KootenaiLaw.com, or visit www.KootenaiLaw.com. 

This has been presented as general information and not as legal advice. Do not engage in legal decision-making without the advice of a competent attorney after discussion of your specific circumstances.