Do I really need a Trust?
People often ask why they need a Trust and furthermore why a Will isn’t enough. Pursuant to California law, even if an individual has a Will, an estate which exceeds $100,000 in assets will need to go through Probate Court, a lengthy process in which your assets are inaccessible for a period of time. The Executor of your Will has to petition the court for authorization to access and administer your estate. Before the court gives authorization, the executor must prepare and file a petition, must publish a notice to creditors in a local newspaper and must provide notice to all legal heirs. A hearing date is set at which a Judge will review the petition and approve the appointment of Executor, issuing Letters of Administration.
The process doesn’t stop at appointment. Your Executor must complete an Inventory and Appraisal which has to be evaluated by a Probate Referee. Any creditor’s claims must be paid after the statutory four months have passed. The Executor must also file a petition with the court to conclude the probate by filing a final distribution of the estate, which often includes a full accounting from date of death to date of distribution. Once granted, your Executor can distribute your assets after all expenses are paid.
Just how much does probate cost? Currently, it costs $395 for each petition filed in California in addition to other costs such as publication and additional court fees. In addition, your Executor and his/her attorney receive identical statutory fees for their services. This means that your attorney is not paid hourly but receives compensation based on the date of death estate value. An example using an estate of $3,000,000 is illustrated below:
4% of first $100,000: $ 4,000.00
3% of next $100,000: $ 3,000.00
2% of next $800,000: $ 16,000.00
1% of next $9,000,000.00: $ 20,000.00
TOTAL FEE $ 43,000.00
*To each the attorney and executor. This means the total cost is $86,000.00*
With or without a will, with an estate value in excess of $100,000, your estate will be publicly administered, your assets will be inaccessible for a period of time and the fees for services far surpass the costs of establishing a living trust. Today, in the bay area, an estate of $100,000 in assets is common. To protect your assets and your legacy for your family, call us to discuss the benefits of establishing your estate plan.