When revocable living trusts don't prevent probate: Common scenarios to watch for

Many of our clients choose to set up revocable living trusts as part of their estate plan, often with the primary goal of helping their loved ones avoid probate after their passing. While living trusts are excellent estate planning tools that can indeed help bypass probate in many cases, there are several situations where probate might still be necessary — even with a properly established trust in place. Let’s consider the following: 

Unfunded or Partially Funded Trusts 

The most common reason for needing probate despite having a living trust is failing to fully fund the trust. Simply creating a trust document isn't enough — you need to actually transfer your assets into the trust's ownership. We often see clients who have diligently created their trust but haven't completed the crucial next step of: 

• Retitling real estate into the trust's name 

• Transferring bank and investment accounts to the trust (or using POD/TOD arrangements to be sure these accounts bypass probate) 

• Updating beneficiary designations on retirement accounts and life insurance policies 

• Moving business interests under trust ownership 

Assets left outside the trust at the time of death may need to go through probate, even if you intended them to be trust property. 

Discovery of Additional Assets 

Sometimes, assets are discovered after death that weren't included in the trust. This might include: 

• Recently inherited property 

• Forgotten bank accounts 

• Unclaimed insurance benefits 

• Stock certificates found in old files 

• Timeshare properties 

• Oil, gas, and mineral interests passed down in the family 

When these assets are discovered, probate may be necessary to properly transfer them to the intended beneficiaries. 

Claims Against the Estate 

Even with a fully funded trust, probate might be required if there are claims against the estate that need to be resolved. This could include: 

• Outstanding debts and creditor claims that can’t be resolved out of court 

• Tax obligations 

• Disputes over asset ownership 

• Challenges to the trust's validity 

• Personal injury claims against the deceased 

The probate process provides a structured framework for resolving these claims and protecting the rights of both creditors and beneficiaries. 

Small Estate Administration 

In Idaho, even if some assets need to go through probate, you might be able to use the simplified small estate procedure if the total value of probate assets is under the statutory threshold (typically $100,000.00). This process is much simpler than full probate but still requires some court involvement, and an attorney should be involved. 

Protecting Your Estate Plan 

To minimize the chance of probate being necessary, we recommend: 

1. Talk to your estate planning attorney when you acquire new assets 

2. Maintaining an updated asset inventory to keep you and your successors organized 

3. Be sure all real estate you own is titled in the name of your trust (possible exceptions would be real estate held in an LLC, which you should discuss with your estate planning attorney) 

5. Review your own estate planning documents every year or two, and meet with your attorney if you have questions or need updates 

The Bottom Line 

While a revocable living trust is an excellent estate planning tool, it's important to understand that it's not a guarantee against probate in all situations. Working with an experienced Idaho estate planning attorney who can help you maintain your trust and identify potential probate triggers is crucial for ensuring your estate plan works as intended. 

Remember, the goal isn't necessarily to avoid probate at all costs — sometimes probate might be the best way to handle certain situations. The key is to be prepared and understand when probate might be necessary, so you can plan accordingly and ensure your loved ones are protected.  

My law firm is currently offering free telephonic, electronic, or in-person consultations concerning creating or reviewing estate planning documents.   

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Robert J. Green is an Elder Law, Trust, Estate, & 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 Kootenai Law at 208-765-6555, Info@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.