Do I Need a Trust?
If you own real property in California, part of your estate planning should include a Trust. You’ve worked hard for your success, and the benefit of the things you acquire should go directly to the beneficiaries you designate. Without having your property in trust, if your estate (all of your property together) is valued at more than $166,250, or if you have more than $55,425 in real property (the threshold increased on January 1, 2020), the estate will be probated.
What is Probate?
Probate is a process by which the court determine your rightful heirs at law to transfer your property. The cost is codified at California Probate Code Section 10810 for attorney fees and the executor—or personal representative—fees are found at California Probate Code Section 10800. There is a sliding scale which costs roughly around 5% of your gross estate. For example, if everything you own when you die (which is not in trust or designated with a POD beneficiary) is appraised at a value of $600,000, the attorney would get $15,000 and the executor would get $15,000. $30,000 less for your Beneficiaries because you didn’t plan ahead! Probate can be a complicated and paperwork-intensive process which takes up to six months to transfer property.
What is a Trust?
A trust is written legal testamentary* document. The Settlor (also called “trustor”) executes the trust which is then managed by one or more trustees. The Trustee holds the property for the benefit of the Beneficiaries (people you have decided will eventually receive your property). Most living trusts are revocable (can be terminated) and amendable (can be changed) until the settlor(s) die. Most people name themselves as Trustee(s) of the trust during their lifetime, and someone else (a Successor Trustee) to manage the trust in the event the original Settlors are no longer able to manage it, and make distributions according to their wishes after their death.
*Testamentary means “an act by which a person determines the disposition of his or her property after death.”
Who Pays Estate Taxes?
As of January 1, 2020, the federal estate tax exemption is $11.58 million per individual. There are many types of trusts, and different planning tools for larger estates.
What Does the Package Include?
My law office’s typical trust package includes a Living (Inter Vivos) Trust, a Pourover Will (two for married couples), a Durable Power-of-Attorney (two for married couples), an Advanced Health Care Directive (two for married couples), and the cost of preparing, notarizing, and filing the deeds for your real property will be included in the quote.
What Information Do You Need From Me to Prepare The Trust?
To prepare the trust, I will need the addresses of all California real property you own, as well as copies of any Grant Deeds to out-of-state real property you own. I will need to know who you want to name as your Successor Trustee (i.e., the person who will manage your property if the initial Trustee cannot, and/or take over to distribute your assets after you die), your Executor (same role as Successor Trustee, but for the Will—most people choose the same person for both jobs), your agent for a Durable Power-of-Attorney and Advance Health Care Directive (i.e., person who will act on your behalf for financial matters and medical decisions, if you are unable to do so while you are living), the Guardian for your minority-age children, if any, and your Beneficiaries (the people to whom you want to leave your assets after you die).
I am happy to explain the further explain significance of any of these roles.
Who Should Prepare My Trust?
Preparing trusts and wills constitutes the practice of law, and only an attorney (or a paralegal under the direct supervision of an attorney) should prepare these documents for you. You can, of course, legally represent yourself in any matter, but if another person prepares your testamentary documents, please be sure that he or she is an attorney licensed by the State Bar of California.
There is a California State Bar Ethics Alert Advisory out on Trust Mills—organizations where attorneys do not prepare your documents. (Even attorney review after the fact does not cure Unauthorized Practice of Law! Cleveland Bar Assn. v. Sharp Estate Serv., Inc., 107 Ohio St.3d 219, 2005-Ohio-6267)
Some of these organizations are selling your personal information, and some of them are sending back notaries to notarize the trust who are licensed insurance people—they already know what you own, because you disclosed everything for the trust preparation—and they are ready for the hard sell! They are selling senior citizens annuities with large surrender values if the senior dies within e.g., ten years!
What If I Don’t Own Property?
If you don’t own real property and don’t have titled assets worth over $166,250, there is not likely a need for you to have a trust. However, you should still have a Will to designate your Beneficiaries and a Guardian for your minority-age children. All adults over 18 years of age should have a Durable Power-of-Attorney which allows a designated person to make medical and financial decisions in accordance with your wishes should you become unable to make these decisions.
How Much Does It Cost?
It depends on your individual situation: whether you are single or married, how many properties or other interests you own (e.g., corporate shares or other business interest, intellectual property rights), and how you are holding title to real property. Other important factors to consider are children with special needs, and marriage to a non-citizen spouse, each of which situations require a specific type of trust.
I am happy to provide you with a free, no-obligation consultation and give you a quote customized to your situation. Any information you give me will be subject to the Attorney-Client Privilege. None of your personal information will be used for any reason other than requested legal advice and/or preparation of your legal documents at your request.
Other Legal Services Available
- I prepare premartial (prenuptial) and post-marital agreements.
- I prepare transmutation agreements to and from community property to separate property, and vice versa.
- I handle plantiff’s personal injury cases on a case-by-case basis.
Disclaimer Notice: This is general information only, and is not legal advice. Though any consultation will be confidential regardless of whether you retain my services, no attorney-client relationship exists until a fee agreement with me is signed and a retainer is paid.