Kastrick Law

A Living Trust is a legal contract between the creator (“Grantor”) and the manager (“Trustee”). There are many types of Trusts, but they fall mainly into two categories:

• Revocable Living Trusts.  Revocable Living Trusts are Created by a Grantor who can revoke or make changes to the Trust at any time so long as they have the mental capacity to do so. During the Grantor’s life, the Grantor maintains full control of placing or removing assets from his or her Trust. 
• Irrevocable Living Trusts.  Irrevocable Living Trusts are created by a Grantor, but may not be altered, amended, or revoked by said Grantor.  These types of Trusts are created for a specific purpose, usually revolving around asset protection, estate tax planning, long term care planning, family legacy planning, or disability planning.

Most people who have an Irrevocable Living Trust also have a Revocable Living Trust, as the two Trusts work together.  In general, the only way to obtain tax advantages using a Trust is to give up ownership.  Irrevocable Living Trusts require you to give up ownership and control of the property the Trust owns, and said Trust cannot normally be changed.  Revocable Living Trusts, on the other hand, require you to give up ownership, but not control, of the property the Trust owns, but said Trust can be changed.  Generally speaking, there are no tax advantages to Revocable Living Trusts.  Revocable Living Trusts are primarily used for control and management of assets.  The Revocable Living Trust usually becomes irrevocable upon your death.

Wills and Trusts are completely different estate planning tools.  Both a Trust and a Will provide instruction for where your assets go upon your death.  A Trust can additionally provide instruction on how your assets are to be managed during your life and upon your disability.  A Trust has the added benefit of avoiding probate, therefore keeping your assets and planning private.  A Will is a death instrument (i.e., a document that is only used when someone dies).  It is merely an instruction booklet that tells a judge who is in control and how that person must distribute assets that must go through the Probate process.  A lot of people assume that if they have a Will they will avoid Probate.  Generally, the opposite is true.  Unless your estate meets your State’s guidelines for a “Small Estate”, a Will guarantees Probate.  Most people that have had to go through this process would prefer to avoid it if possible.

Probate is the process an estate goes through when there is property that passes without any estate plan established, or when property passes by a Will.  Whether an estate goes through Probate depends on how a decedent’s assets are titled at death.  For example, if husband and wife own real property together as Joint Tenants with Rights of Survivorship, when husband dies, husband’s interest in that real property passes directly to wife because of how the property is owned.  However, if wife then dies with the property still in her name and without there being a joint owner and without a beneficiary listed on the property (only allowed in certain states), then that property must pass by the terms of the Will and therefore must go through the Probate process.

Each State has a Probate exemption (called a “Small Estate”).  This is a threshold so that if the amount of assets subject to Probate is below that State’s Small Estate it would not trigger a full Probate and can typically be handled in a much simpler way.  The following are the “Small Estate Limits” for each State in which our firm works as of 2025:

            -Nebraska: $100,000.00

            -Iowa: $50,000.00 (or $200,000.00 “Simplified Probate”)

            -Kansas: $75,000.00

            -North Dakota: $50,000.00

            -South Dakota: $100,000.00

            -Illinois: $100,000.00

Since Probate is a State process, there could be a Probate in every State in which someone owns an asset.  For example, if a person was a resident of Nebraska and had a vacation home in Arizona, at death, the estate would need to be probated in Nebraska (because of the decedent’s residency there), and the estate would also need to have an “Ancillary Probate” in Arizona, making the after-death process much more cumbersome and expensive.

Probate can be avoided by the estate of a decedent three different way. 

• Title.  Assets that have more than one owner, and those owners have rights of survivorship, will avoid Probate.  The most common example of this is a house that is owned by a married couple as joint tenants with rights of survivorship (“JTWROS”).
• Beneficiary Designations.  Some assets cannot be owned by more than one person (i.e., retirement accounts).  Since there is no way to have joint ownership on these assets, they must have a properly listed Beneficiary Designation to avoid Probate.  These are sometimes called “Transfer On Death” or “Payable On Death”.  An asset with a Beneficiary Designation will avoid Probate.
• Living Trusts.  Trusts do not automatically avoid Probate; this is a common misconception.  Two things must be true for a Trust to avoid Probate:  the first is that the Trust must be a “Living Trust”; the second is that the Trust must own the asset (i.e., the asset must be titled in the name of the Trust).  If a Living Trust owns an asset that asset will avoid Probate.

*Please note that completely avoiding Probate may not be possible depending on the State in which you reside.  

Yes, this is called a “Testamentary Trust”.  These are used when you have a Will that instructs the Personal Representative to create a Trust upon your death.  This is not the same as a Living Trust.  Testamentary Trusts do not avoid Probate.