Do I Need A Living Trust?

It is a common misconception that creating a living trust is something that wealthy people do.  Often, people focus on the need to “create a will” and may assume that their family and belongings will be taken care of through the creation of that single document.

Often, however, a will simply provides instructions such as: who you would like to manage your estate, who you would like to receive your belongings, and who you would like to care for your minor children.  The estate of a person who dies with a will still requires a probate to carry out these instructions upon death.

Probate is the court monitored process of managing and distributing a person’s estate upon their death.  In California, any estate with a gross value of $150k or more, or which contains real property worth more than $50k, will likely need to be probated.  This is true whether the person died with or without creating a will.  That is, if they have not created a living trust (also known as a revocable trust).

Probate avoidance may be the most common reason that people create a living trust.  Probate is costly and time-consuming.  As of 2015, the average home price in California was $440k[1].  California law provides the administrator and the probate attorney for an estate worth $440k would be entitled to fees of $11,800 each[2].   As a percentage of the estate, these fees go up as the value of the probate estate rises.  Generally, the probate process is going to take a minimum of nine months to a year to complete, and in many cases, between twelve and eighteen months.  Your heirs will wait nearly a year to receive their distributions and receive tens of thousands of dollars less when your estate goes through probate.

Assets in a revocable living trust are exempt from probate.  You can save your estate tens of thousands of dollars in the future with a small investment in your estate plan now.  At Borjas Law, we include the transfer of a single home into your revocable living trust with each of our packages.  We are happy to assist with the transfer of multiple properties or other assets as well.

Any person or family who owns real estate, or has certain assets valued at over $150k, can benefit from creating a revocable living trust.  Creating and funding a living trust is easier than many would think, with the help of an attorney.  Generally, the process consists of completing a simple questionnaire regarding your family, assets, and desires for distributing your estate.  The process can be completed with two meetings or less.  Contact Borjas Law for a free consultation.

[1] http://www.lao.ca.gov/reports/2015/finance/housing-costs/housing-costs.aspx

[2] CA Probate Code § 10810

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