What is Probate?
Probate is when the court supervises the processes that transfer legal title of property from the estate of the person who has died (the "decedent") to his or her beneficiaries.
If the person who died did not have any property to transfer or property valued at over $150,000, probate is usually not necessary. The deceased person’s survivors may decide to open a probate if there are debts owed or if there is a need to set a deadline for creditors to file claims. When there is property to transfer, the probate process also provides for the distribution of the estate's property to the decedent's heirs.
Usually, you must fill out court forms and appear in court to:
Prove to the Court that the Will is valid (this is usually routine),
Appoint a legal representative with authority to act on behalf of the decedent,
Identify and inventory the decedent's property, and have that property appraised,
Pay debts and taxes, and
Distribute the remaining property according to the terms of the Will or to the decedent's heirs.
What is a Trust?
A trust is a fiduciary arrangement that allows a third party, or trustee, to hold assets on behalf of a beneficiary or beneficiaries. Trusts can be arranged in many ways and can specify exactly how and when the assets pass to the beneficiaries.
Since trusts usually avoid probate, your beneficiaries may gain access to these assets more quickly than they might to assets that are transferred using a will. Additionally, if it is an irrevocable trust, it may not be considered part of the taxable estate, so fewer taxes may be due upon your death.
Assets in a trust may also be able to pass outside of probate, saving time, court fees, and potentially reducing estate taxes as well.