Revocable Living Trust
If you own a home, then chances are a Trust is right for you. One of the main objectives in any estate plan is to avoid probate. A properly prepared Trust will avoid Probate.
Probate can be much costlier than preparing an estate plan which includes a Trust. The goal is to have your assets held “outside” of probate and its reaches.
If you have more than $150,000.00 in assets that are not held outside probate, than probate will be necessary. The value of the home is based on what it’s worth, not how much equity is in the home. So if your home is worth more than $150,000.00 and is not held outside probate, your estate will need to be probated.
CALL: (951) 229-0757
How Much Does It Cost to Go Through Probate?
Most houses in and around the Menifee area are worth more than $250,000.00 and the fees associated with probate are related to the value of the estate. The fee for an attorney and executor to probate a home that is worth $250,000 can be as much as $8,000 each, for a total of $16,000.
$250,000 is calculated as follows:
the fee for the first $100,000.00 is $4,000.00 (4% of $100,000.00);
the fee for the second $100,000.00 is $3,000.00 (3% of $100,000.00);
the fee for the next $50,000.00 is $1,000.00 (2% of $50,000.00)
* This is only an estimate, actual fees may vary
That's $8,000.00 for the attorney and an additional $8,000.00 for the executor!
Do You Want Things to Go Fairly Quickly or Long and Drawn Out?
Probate can take as little as nine months if everything goes like clockwork and there are no complications. However, for the average probate it's not unusual for it to take at least a year to get through the entire process.
A Trust can be easier to administer since court is avoided
LAW OFFICES OF KRIS CRAWFORD ESTATE PLANNING ATTORNEY
Aren’t There Other Ways if You Own a Home to Avoid Probate?
Yes, there are other ways besides a Trust to have your home avoid probate.
Title to Your Home Can Be Held In Joint Tenancy.
If you hold title to real property in joint tenancy, it will avoid probate. However, this is only true when there are two or more living people, on title.
An example of how it works is like this: John Smith and Jane Smith are Husband and Wife and hold property as “John Smith and Jane Smith as Joint Tenants”.
If John dies then his 50% share automatically goes to Jane, who would now have 100% ownership. But, after Jane Smith has 100% ownership, she does not have another person holding title with her. When she dies, it will go through probate unless she takes action.
She could add her children to the deed as joint tenants, however that takes effect immediately. Her “heirs” now legally own part of the home, so their creditors can lien the house, you need their permission to sell or refinance, and it ultimately can lead to higher taxes. You will probably need to file a gift tax return this year. And you can’t change your mind.
Using the New Revocable Transfer on Death (TOD) Deed, Also Called a Beneficiary Deed.
You can use it to name beneficiaries who will receive the property when you die, without the need for probate. This is meant to replace the common practice of adding your heirs to your home as joint tenants.
With the TOD deed, you can revoke it at any time. Your heirs do not own any of the property during your life, avoiding the above problems. And when you pass away, the transfer is treated as an inheritance, not a gift, so it gets more favorable tax treatment.
There are drawbacks to a Transfer on Death deed:
Cannot choose contingent beneficiaries i.e. if the beneficiary dies before the current owner, the owner cannot designate another person to take their share.
If there is no living beneficiary listed on the TOD deed, then it’ll pass through probate.
It is public record, therefore your friends, family and whomever else can see who you wish to give your property to.
You cannot choose different percentages of ownership for your beneficiaries, if you name more than one, then they will all be co-owners in equal shares as tenants-in-common. Therefore, if you wanted to give 75% ownership to Bob and 25% to Sally, it cannot be accomplished with this sort of deed.
You cannot designate a class of people like “my children”, so if you may still have more children, then you would need to keep updating your beneficiary designation to include the after born children.
LAW OFFICES OF
KRIS CRAWFORD ESTATE PLANNING ATTORNEY