How a Trust Can Help You
If you have an estate valued at more than $150,000.00 then if you die your estate could be subject to the probate process. The attorney's fees and administrator's fees in a probate are based on the gross value of the estate based on a fixed fee scale. The fees are presently 4% on the first $100,000.00, 3% on the next $100,000.00, 2% up to the next $800,000.00 and 1% on any amounts over a million. An example will help demonstrate how expensive the probate process is relative to having a simple trust done.
Joe dies intestate (without a will) with a house in Mission Viejo, California worth $600,000.00. He has a $300,000.00 mortgage on the property. Assuming this is the only asset, his estate has a net value of $300,000.00. However, the probate fees are going to be based on the GROSS value of the estate, i.e. $600,000.00 Using the table set forth above, you would pay 4% on the first $100,000.00 ($4,000.00) 3% on the next $100,000.00 ($3,000.00) and 2% on the final $400,000.00 ($8,000.00) for a total of $15,000.00. The attorney for the estate AND the administrator would be entitled to $15,000.00 making the total due in attorney's fees and administrator's fees of $30,000.00! This does not even take into account other filing fees. In this example, 10% of the net value of the estate is going to the attorney and the administrator! In contrast, had Joe gotten an estate plan drafted which included a trust, will, power of attorney for asset management and health care directives, he would have spent a couple thousand dollars at most!
In addition to the financial burden, the probate process is long and your life (and squabbling heirs potentially) is open to public scrutiny.
A trust is a cost efficient way to avoid the probate process. Basically, you transfer all of your assets to an entity (the trust) so that when you die there are no assets in your name for the state of California to probate. Then, your successor trustee gathers up the assets of the trust, pays your creditors and ultimately distributes your assets to your heirs pursuant to the terms of the trust. While you are alive, you can amend your trust and change beneficiaries or trustees as you see fit. You also have total control over the assets put in the trust. Because you still control the assets, the IRS does not require you to file a separate tax return but instead treats the trust assets as they would your personal assets. In addition there is a special exemption from reassessment so that your home is not re-assessed for property tax purposes when you transfer your home to a trust.
Simply put, there are no good reasons NOT to have a trust in California. I can help you draft a trust that can ensure that your assets pass smoothly according to your wishes with minimal expense.
Legal Assistance in Preparing a Trust
At Finlay Law Group, APC, I offer skilled legal assistance in preparing trusts, living trusts, wills and other estate planning documents. It is important that you keep your family's and beneficiaries' best interests in mind when planning your estate. Preparing your assets in order to benefit them is a very caring gesture on your part. I can help prepare a trust, or other legal document in such a way as to ensure that your wishes are carried out after you pass, and that your estate is distributed according to your wishes.