LIVING TRUSTS

Do you need a Living Trust?

Clients frequently tell me that they were told by their legal or financial advisor that they don't need to have a trust or do any estate planning unless their estate is valued at more than the estate tax exclusion amount. Many of these clients are shocked when I point out to them the cost to their children of failing to arrange their estate to avoid Probate.

Probate administration is the court administered transfer of assets from your name to your heirs, such as your children.

The problems with Probate are several.   See PROBATE

First, it takes time. Probates take from 9 months to many years to complete. In California, the average time is 2 years.

Second, the Will and all of the assets owned by the deceased person become part of a public record, accessible by anyone.

Third, due to the complexity of dealing with the court processes and procedures, attorneys are usually necessary hired to represent the executor in probating the estate. By law, these attorneys are entitled to receive as their fee, a percentage of the gross value of the estate. This means if the entire estate is valued at $500,000, with debts of $250,000, the attorney fee will be based on the $500,000 value. For an estate valued at $500,000, the attorney's fees allowed by law are $13,000.   See schedule of fees under the PROBATE link.

The executor of the estate is allowed the same percentage as the attorney. This means that the total fees on the $500,000 estate could be a minimum of $26,000. I say minimum, because many attorney's who practice in the probate area charge "extra-ordinary" fees for numerous tasks, such as assisting to sell real property, preparing or assisting in the preparation of tax returns, and many other matters.

Fourth, unless your children or executor have lots of experience in dealing with the court system, it can be an exasperating and upsetting experience. The court's rules and procedures for probate administration are complex and non-user friendly. Even attorneys frequently run afoul of them. Many executors feel like they have been thrown into the middle of a lawsuit, even when there are no disputes between the heirs and executor. The heirs, on the other hand, feel dispossessed and alienated.

How can you avoid probate? First, you can leave everything to your spouse. Generally, a probate is not required if you leave everything you own to your spouse. There are some instances where this may not be true, however.

Second, you can put assets into joint tenancy. The joint tenancy form of ownership means that you give a current interest in the property you put in joint tenancy to the persons you list as joint tenants.  This means that the other joint owner is a co-owner of the asset and has all of the rights given to co-owners. In fact, with regards to bank accounts, one joint tenant can take all of the money on their signature alone. If the joint tenancy is in real estate, a joint tenant may sell or transfer their interest in the property without the consent of the other joint tenant. If a joint tenant becomes incapacitated, the other party is unable to refinance, sell, rent, or manage the real property. If a joint tenant dies while property is held in joint tenancy, the surviving joint tenant(s) owns the property and no probate is required. However, using joint tenancy to transfer property at death may cause the loss of beneficial income tax benefits obtained if the asset is not co-owned before death.

Third, probate is avoided if at your death, all of your assets are held in a living trust. Further, a living trust can help avoid conservatorships or needing court orders to manage assets of incapacitated owners and co-owners. This is a very important characteristic of a living trust that often becomes even more important than probate avoidance.

The living trust is set up while you are living and assets are put into it while you are living. Putting assets into the trust is done by transferring the asset from your name to that of the trustee(s) of your trust.

The trustee of the trust manages and controls the assets in the trust. The beneficiary obtains the benefits, the use and enjoyment, of the money and assets in the trust. Generally, most people setting up living trusts (called the Trustor or Settlor) name themselves the trustees and beneficiaries.

So long as the Trustor is also the Trustee and beneficiary, the trust form is ignored for property tax, income tax, and most other purposes. It does not protect your assets from creditors either. However, if one Trustee becomes incapacitated, the other, or successor Trustee, can manage the assets without having to get a court order. Further, at the death of the Transferor, all property held in the trust at the date of death of the Trustor can be sold, used to pay creditors, and distributed without probate administration or any other court proceeding.

I have had many cases where the entire administration of the trust estate took no more than 9 months with significant savings in time and money.

Trusts also can take the place of a formal court ordered conservatorship if you become unable to handle your own assets, either due to physical or mental incapacity.

Complete Trust Packages include: Trust drafted drafted to fit your wishes, Pourover Will(s), Durable Powers of Attorney, Advance Health Care Directive (Also referred to as Medical Power of Attorney or Living Will), and documents to transfer property into the Trust (up to 2 included in flat fee). Call for current fees. No Hidden fees. Call 831-772-8300 for your free Estate Planning consultation from a Salinas and Monterey County Trust Attorney, Probate Attorney, Estate Planning Attorney, and Elder Law Attorney


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	LIVING TRUSTS INFORMATION AND PRICES Do you need a Living Trust? Clients frequently tell me that they were told by their legal or financial advisor that they don't need to have a trust or do any estate planning unless their estate is valued at more than the estate tax exclusion amount. Many of these clients are shocked when I point out to them the cost to their children of failing to arrange their estate to avoid Probate. Probate administration is the court administered transfer of assets from your name to your heirs, such as your children. The problems with Probate are several. See PROBATE First, it takes time. Probates take from 9 months to many years to complete. In California, the average time is 2 years. Second, the Will and all of the assets owned by the deceased person become part of a public record, accessible by anyone. Third, due to the complexity of dealing with the court processes and procedures, attorneys are usually necessary hired to represent the executor in probating the estate. By law, these attorneys are entitled to receive as their fee, a percentage of the gross value of the estate. This means if the entire estate is valued at $500,000, with debts of $250,000, the attorney fee will be based on the $500,000 value. For an estate valued at $500,000, the attorney's fees allowed by law are $13,000. See schedule of fees under the PROBATE link. The executor of the estate is allowed the same percentage as the attorney. This means that the total fees on the $500,000 estate could be a minimum of $26,000. I say minimum, because many attorney's who practice in the probate area charge "extra-ordinary" fees for numerous tasks, such as assisting to sell real property, preparing or assisting in the preparation of tax returns, and many other matters. Fourth, unless your children or executor have lots of experience in dealing with the court system, it can be an exasperating and upsetting experience. The court's rules and procedures for probate administration are complex and non-user friendly. Even attorneys frequently run afoul of them. Many executors feel like they have been thrown into the middle of a lawsuit, even when there are no disputes between the heirs and executor. The heirs, on the other hand, feel dispossessed and alienated. How can you avoid probate? First, you can leave everything to your spouse. Generally, a probate is not required if you leave everything you own to your spouse. There are some instances where this may not be true, however. Second, you can put assets into joint tenancy. The joint tenancy form of ownership means that you give a current interest in the property you put in joint tenancy to the persons you list as joint tenants. This means that the other joint owner is a co-owner of the asset and has all of the rights given to co-owners. In fact, with regards to bank accounts, one joint tenant can take all of the money on their signature alone. If the joint tenancy is in real estate, a joint tenant may sell or transfer their interest in the property without the consent of the other joint tenant. If a joint tenant becomes incapacitated, the other party is unable to refinance, sell, rent, or manage the real property. If a joint tenant dies while property is held in joint tenancy, the surviving joint tenant(s) owns the property and no probate is required. However, using joint tenancy to transfer property at death may cause the loss of beneficial income tax benefits obtained if the asset is not co-owned before death. Third, probate is avoided if at your death, all of your assets are held in a living trust. Further, a living trust can help avoid conservatorships or needing court orders to manage assets of incapacitated owners and co-owners. This is a very important characteristic of a living trust that often becomes even more important than probate avoidance. The living trust is set up while you are living and assets are put into it while you are living. Putting assets into the trust is done by transferring the asset from your name to that of the trustee(s) of your trust. The trustee of the trust manages and controls the assets in the trust. The beneficiary obtains the benefits, the use and enjoyment, of the money and assets in the trust. Generally, most people setting up living trusts (called the Trustor or Settlor) name themselves the trustees and beneficiaries. So long as the Trustor is also the Trustee and beneficiary, the trust form is ignored for property tax, income tax, and most other purposes. It does not protect your assets from creditors either. However, if one Trustee becomes incapacitated, the other, or successor Trustee, can manage the assets without having to get a court order. Further, at the death of the Transferor, all property held in the trust at the date of death of the Trustor can be sold, used to pay creditors, and distributed without probate administration or any other court proceeding. I have had many cases where the entire administration of the trust estate took no more than 9 months with significant savings in time and money. Trusts also can take the place of a formal court ordered conservatorship if you become unable to handle your own assets, either due to physical or mental incapacity. Complete Trust Packages include: Trust drafted drafted to fit your wishes, Pourover Will(s), Durable Powers of Attorney, Advance Health Care Directive (Also referred to as Medical Power of Attorney or Living Will), and documents to transfer property into the Trust (up to 2 included in flat fee). Call for current fees. No Hidden fees. Call 831-772-8300 for your free Estate Planning consultation from a Salinas and Monterey County Trust Attorney, Probate Attorney, Estate Planning Attorney, and Elder Law Attorney \| LIVING TRUSTS \| PROBATE \| \| Return Home \| About the Firm \| Attorney Information \| Practice Areas \| FAQ Page \| Articles & Publications \| Contact Us \| Great Links \|