Have you wondered “should we get a living trust for our estate” rather than a Will. Living Trusts have become the “go to” estate planning device.
A Trust is a legal relationship that involves three parties: the trustor, the trustee, and the beneficiary. The trustor transfers his or her assets to the trustee, who holds, manages, and distributes those assets for the benefit of the beneficiary.
A Living Trust is a trust you create to hold your assets for your own lifetime. In a typical Living Trust, you are the trustor and the trustee and your children are the beneficiaries. If you become incapacitated, the trust names a successor trustee to manage things for you. Upon your death, the trust directs how the trust assets are to be distributed. A Living Trust is revocable, meaning you can terminate the trust or amend it at any time. Thus the term sometimes used for these trusts is “Revocable Living Trusts.”
The primary advantage of a Living Trust is that it avoids probate. Probate is the process of administering and distributing your estate under the local court’s supervision following your death. Probate can be lengthy and expensive.
Unlike assets in a Living Trust, assets passing under a Will generally must go through probate.
Under California Probate Code, the executor and the trustee both receive 4% on the first $100,000, 3% on the next $100,000 and 2% on the next $800,000. So for an estate worth $600,000 the fees work out at approximately $15,000. So if you own a home in Sonoma County your executor plus Trustee fees are about $30,000.00 plus, while administration of a Trust can be as little as $1500. Costs of drafting a trust vary with the number of children, the number of properties and the
complexity of your distribution. Legal costs run from $1500.00 up to $5000.00.
Living Trusts also offer more privacy than Wills do. As part of probate, a Will must be filed with the court and becomes a document of public record. A Living Trust, however, does not need to be filed with the court.
A Living Trust is more expensive to set up than a Will, because it requires the additional step of transferring assets into it after it is written. This includes significant bank accounts and real property. If your assets you wish to pass on are not held by the Living Trust when you pass they will have to be probated which was to be avoided.