For most people living in Southern California, the most valuable thing they own is Real Estate. Transferring your real estate into a Living Trust can save your loved ones substantial time and money after you pass away, by avoiding the Probate Process. My trusted Estate Planning Attorney Matthew Odgers with The Law Offices of Matthew Odgers can set you up with a trust. It is a very inexpensive and easy process worth it for anyone who owns real estate in San Diego.
What is a Living Trust?
A Living Trust is a legal document that creates a relationship in which one party, known as a Trustor, gives another party, the Trustee, the right to hold title to property or assets for the benefit of a third party, the Beneficiary.
In relation to Real Estate, the owner of the property will create a Living Trust and transfer the title of their property into the name of their living trust. While the owner is alive and well, they can manage or sell the property as they see fit. If they become incapacitated, or die, the living trust dictates who makes decisions regarding the property, and who will inherit the property, with little court-supervision.
Why Have a Revocable Trust?
One of the primary objectives of a Living Trust is to avoid probate. Probate refers to the entire court process of the distribution of a person's property after they die, according to the persons will. When a person dies, a Living Trust functions like a will, disposing of the decedents property based on the decedents wishes, however, there is no Probate proceedings and there is far less court supervision. The Trust assets are administered and distributed by the trustee under the terms of the trust.
Why Avoid Probate?
TIME: The minimum period for a probate proceeding is 6 months and they can last over two years. During that time, the property is held in limbo and may depreciate in value and possibly leave your loved ones in a tough financial position.
COST: Costs in Probate include court filing fees, probate referee appraiser fees, personal representative's commission, and attorney's fees which are statutorily set as high as 4% of your total estate.
PRIVACY: During the Probate process your will is made public which takes away all privacy and opens to door for debt collectors and potential litigation.
In contrast, a trust can usually be administered fairly quickly at a nominal cost, and the administration of a trust is private.
Assets you want protected by the trust must be retitled in the name of the trust. Anything that is not titled in the name of your Trust when you die will have to go through the Probate process and may not go to the beneficiaries that you intended, but the beneficiary the probate court decides. Titling your home in the name of the trust is not difficult, and can be done when initially purchasing a house or after you have purchased a house through a transfer deed. When you create a estate plan through an attorney, the attorney will generally assist you in transferring the title of your property into the name of the trust.
Cost and Time
When it comes to cost, a basic trust plan may run anywhere from $1,600 to $3,000, or possibly more depending on the complexity of the trust. A basic estate plan should include the trust setup, a will, a living will and HIPPA authorizations, along with Health care and financial power of attorneys. You will also pay fees to amend the trust (if it's revocable) and to administer the trust after you die.
The time to set up a trust usually takes a few hour-long meetings with an attorney, depending on the complexity of the trust. The attorney you choose should do a comparative analysis of the probable costs of administration of a revocable trust and a will, coupled with the cost of creation of each instrument, to ascertain which type of estate plan is in your best interest.