NFPA Paralegal Core Competency Exam (PCCE)Substantive LawMedium
A paralegal is assisting in the estate planning for a client who wishes to leave specific assets to certain beneficiaries upon their death, but also wants to avoid the public and often lengthy probate process for those assets. Which of the following legal instruments would BEST achieve this goal for those specific assets?
- AA living trust
- BA testamentary trust
- CA power of attorney
- DA simple will
Show answer & explanationAnswer & explanation
Correct answer: A. A living trust
A living trust (inter vivos trust) allows assets to be transferred to the trust during the grantor's lifetime. Upon the grantor's death, these assets can be distributed to beneficiaries according to the trust's terms without going through probate.
Why the other options are wrong
- B. A testamentary trust is created by a will and only takes effect after the will goes through probate, thus not avoiding it.
- C. A power of attorney grants authority to act on behalf of another but ceases upon the principal's death and doesn't distribute assets.
- D. A simple will directs the distribution of assets, but typically requires probate to be legally effective.
Living Trust (Inter Vivos Trust)
A legal arrangement established during an individual's lifetime for the purpose of managing assets and distributing them upon death, typically avoiding probate.
- Assets are transferred into the trust during the grantor's lifetime.
- Grantor can serve as trustee and beneficiary during their life.
- Provides privacy and can be more efficient than probate.
Memory trick: Wills and Trusts are the main ways to control your wealth after you're Gone.