WHY PUT TOGETHER A TRUST RATHER THAN A WILL?
MISCONCEPTION: A WILL IS CHEAPER, EASIER AND GETS ASSETS TO MY BENEFICIARIES IN THE SAME TIME PERIOD AS A TRUST.
TRUTH: A WILL COSTS SUBSTANTIALLY MORE IN THE LONG RUN AND CAUSES SUBSTANTIAL DELAY IN YOUR BENEFICIARIES RECEIVING ASSETS.
Many people do not know that passing assets to loved ones by relying on a Will is not an efficient or a fast way to handle your affairs. A Will has to be Probated, which means it has to go through a mandatory court process which is costly and slow. Furthermore, all information pertaining to the decedent’s assets and the beneficiaries receiving assets can be accessed by anyone as it is a matter of public record. By comparison, a Trust Administration is a private process which provides the trustee immediate access to the trust assets and trust management.
Just the filing fee in Orange County for a probate is $435 and continuing to rise. However, the real cost associated with probating a Will or an Intestate Estate are the Administrator’s Fees and Lawyers Fees. A small estate of about $800,000 would cost approximately $19,000 in “ordinary” attorneys fees, in addition to costs and the fees of the administrator. Courts may also allow “extraordinary fees” in addition to an attorney’s ordinary fees, depending on the complexity of the case. When looking at the total cost of a Will versus a trust, establishing a trust and administering a trust, on average is about one-tenth of the cost, if not less.
CALIFORNIA PROBATE CODE RE PROBATE ATTORNEYS FEES:
- 10810(a) Subject to the provisions of this part, for ordinary services the attorney for the personal representative shall receive compensation based on the value of the estate accounted for by the personal representative, as follows: (1) Four percent on the first one hundred thousand dollars ($100,000). (2) Three percent on the next one hundred thousand dollars ($100,000). (3) Two percent on the next eight hundred thousand dollars ($800,000). (4) One percent on the next nine million dollars ($9,000,000). (5) One-half of 1 percent on the next fifteen million dollars ($15,000,000). (6) For all amounts above twenty-five million dollars ($25,000,000), a reasonable amount to be determined by the court. (b) For the purposes of this section, the value of the estateaccounted for by the personal representative is the total amount of the appraisal of property in the inventory, plus gains over the appraisal value on sales, plus receipts, less losses from the appraisal value on sales, without reference to encumbrances or other obligations on estate property.
TIME CONSIDERATIONS – DON’T PUT THE TIMELINE IN THE COURT’S HANDS
Like all court involved actions, Probate is extremely slow and getting slower every year as budget cuts in the courts become a reality, particularly in Southern California Courts. Without a Trust, a family member will not have access to the decedent’s assets for things like taxes, funeral expenses, mortgage payments and the like. Furthermore, beneficiaries will not receive a decedent’s assets until a probate closes. Trustees may, either in their discretion or pursuant to your specific trust instructions, make distributions to dependents along the way before final distributions from the trust. These provisions are carefully hand-crafted according to the needs of your beneficiaries when you draft a trust.
Our lawyers are dedicated to providing estate planning services to all walks of life. We proudly represent the entire spectrum of clients from wealthy families analyzing the estate tax planning options that best suit their family and asset structure, to a new family purchasing a first home. In many family cases, estate planning can be done in a simple and straightforward fashion to bring a sense of relief to our clients.
ESTATE PLANNING FOR BUSINESS OWNERS
Minto has over a decade of experience in estate planning specifically dedicated to business owners. We do not establish an estate plan in a vacuum, but rather in tandem with analyzing the business succession plan and business management documents. We typically amend Operating Agreements or Bylaws and draft buy-sell agreements and/or shareholder agreements as a part of a comprehensive succession plan for business owners who do not opt to liquidate but opt to pass their business onto the next generation.
SPECIAL NEEDS TRUSTS
Our attorneys have drafted dozens of third-party special needs trusts to put to rest the worry that parents and grandparents carry when knowing they are leaving behind a loved one with special needs for care and support. We are also able to establish and seek court approval for special needs trusts for those individuals who have been injured and seek protection of those funds which have been earmarked for their care.