The most important question:   If I already have a will, do I need a trust?

Without a doubt! Even with a will, the state of California will still charge a probate fee to your estate. So, if you own a $300,000 house, your probate fees would be $18,000. A living trust could save about 90% of those fees or approximately $16,000!

What is a Trust?

A living trust is a legal document which allows you to avoid paying probate fees. It also determines who gets your property if something happens to you.

What is Probate?

Probate is the court-supervised process of transferring ownership of property upon your death.  

What is Wrong with Probate?

Probate is a very expensive, time-consuming — and completely avoidable — legal process. This table should give you an idea of how expensive probate can be:

Calculated using California's current probate fee schedule.   

How Time Consuming is Probate?

Generally, probate takes anywhere from nine months to two years. But it's not unheard of for probate to stretch on for years. The longest probate I know of started in the 1920's and was still going strong in 1979. Who knows, maybe it's still working its way through the courts.

Which Assets are Affected By Probate?

Not all assets are affected by probate. Insurance proceeds generally   bypass probate and go directly to the beneficiary. Your home and other real estate--typically your most valuable assets--need to be put into a trust to avoid probate.

How Do I Avoid Probate?

The best way to avoid probate is to set up a living trust.

What Does It Cost for a Living Trust?

The cost of a living trust depends on your individual situation. Generally, the cost ranges from $1,500 to $2,500.

How Much Can I Save with a Living Trust?

Generally, you save $10.00 for every $1.00 invested in setting up a living trust. Based on the normal legal fee for a trust, the savings start at a minimum of $12,000 and go well beyond $25,000!   

What is the Right Trust For Me?

Single

Generally a single person needs a simple trust. In rare instances, a single person has assets over $2,000,000 and a second, more advanced trust may be necessary.

Married

Simple Trust - A married couple with a taxable estate worth less than $2,000,000 needs only a simple trust. Younger couples (under age 55) who are close to $2 million should consider that, down the road, they may exceed this important threshold. A simple trust contains only one trust and can only safeguard one of the available $2.0 million tax shelters.

Complex Trust - A married couple with a taxable estate worth more than $2,000,000 needs a complex trust. A complex trust contains two trusts--one for each of the $2.0 million tax shelters--and safeguards both valuable tax shelters. This gives you a potential of $4,000,000 in protection. With a simple trust, a married couple loses one of their tax shelters. For couples whose assets are under $2,000,000 this is not a problem.

Why is the $2,000,000 Threshold So Important?

Each person, whether married or single, has a $2,000,000 tax shelter to protect their assets from federal estate tax. If married, it is important to take advantage of both $1,500,000 tax shelters. The first $2,000.000 worth of assets given to children or other beneficiaries can always be completely exempt from taxes.   However, if you are over the threshold, there is a potential, but avoidable tax.

Can You Lose Your $2,000,000 Tax Shelter?

Yes, a married couple can lose one of their tax shelters. The first spouse to die must have already set up a special complex trust in order to take advantage of the $1,500,000 tax shelter. If the first spouse dies without using the tax shelter, the first spouse "loses" it. Without a complex trust, the married couple can lose one of their $2.0 million tax shelters.

Why Does A Married Couple Lose A $2,000,000 Tax Shelter With A Simple Trust?

A simple trust contains just a single trust, allowing only one $2.0 million tax shelter to be used. A complex trust, containing two trusts, allows both tax shelters to be used.   Unless a married couple sets up a complex trust before the death of the first spouse, they cannot claim both tax shelters.