Probate is a long and costly process, but one way to avoid it, at least for some of your assets, is with a living trust. A probate lawyer in San Diego, CA can give you more specifics for your unique situation.
Probate in California
Probate is a court process that distributes a person’s assets after they pass away. If someone dies without a will or trust, or with assets not covered by a trust, the court oversees who gets what. Probate can take months or even years, and it involves a lot of complications and fees that can reduce the estate’s value. Having your estate go through probate also means that all the details about your assets become public.
A living trust is a kind of legal document that you create during your lifetime. It holds your assets, whether that’s real estate or bank accounts, and you name yourself as the trustee so that you manage these assets while you’re still alive. However, you also choose a successor trustee who will take over after you die. This transfer goes smoothly and quickly and allows the assets in the trust to pass directly to your beneficiaries without the involvement of the court. That’s because the assets in that trust are not considered part of your estate once they are placed in the trust.
Your successor trustee will transfer the assets directly to your chosen beneficiaries, following the instructions that you leave. For example, if your house were to be in the trust, it could then go to your heirs without needing either court approval. This saves time, keeps the process private, and can also lower the tax burden for your loved ones.
Funding the Trust Properly
Transferring assets into the trust’s name is a process known as “funding the trust.” If you’re talking about real estate, for example, you would be changing the title on the home or property to the trust itself rather than you personally. If it’s a bank account, you update the bank account so the trust becomes the owner. Any assets that remain in your name alone will likely still go through probate. An experienced probate lawyer can help you make sure that all your major assets are correctly placed into the trust.
Benefits of Using a Trust
Fewer Costs and Delays
As mentioned above, probate in California is expensive. It can cost many thousands of dollars and as much as 7% of the value of an estate. The probate process also takes anywhere from 9 to 18 months, during which time your beneficiaries cannot use the things that you want to leave to them. A trust, in contrast, cuts out a lot of these expenses because no court process is needed after your death. It’s also faster, as the successor trustee can usually handle the distributions in just a few weeks.
Maintaining Privacy
In probate, the details of your assets are public in court records, but a trust allows you to keep things private. In the state of California, when assets go through a trust, there is no requirement to make a public filing. Thus your family’s financial matters stay confidential.
That will not only protect your family generally from unwanted attention but can also help prevent disputes among family members. When assets go through probate, every member of the family is aware of what every other member has received. With a trust, everyone is only aware of what they receive personally unless they choose to discuss it among themselves.
Flexibility
There are several types of trusts, two of the most popular being revocable and irrevocable. With an irrevocable trust, you cannot make any changes once you establish the trust. But a living trust is revocable, meaning if you want to add new assets, such as property you’ve just bought, or you wish to switch beneficiaries, you can do this without having to get any approval from the court. This makes it simple to keep your estate plan current. It also means a smaller risk of any assets accidentally going to probate because the documents related to it are outdated.
Handling Incapacity Without Court Involvement
Another benefit to a trust is that it gives you peace of mind if you should ever be incapacitated. If you become unable to manage your affairs due to illness or accident, your successor trustee can simply step in, with no court process, and manage the assets for you. Without such an arrangement, in the event of your incapacitation, the court would have to appoint a conservator for your estate unless you have separate powers of attorney documents in place: and these can be more limiting in some ways. Conservatorship, again, is both costly and public. With a trust, your trustee manages assets like paying bills or selling property while you are incapacitated. If and when you pass away, there’s a smooth transition to your heirs.
Simplifying Distribution
If you have a complex estate with multiple assets, such as investments, and particularly businesses, you’ll find that a trust is a great way to simplify distribution. You can make the rules in the trust for distribution as specific or general as you like, and your trust will be followed without court intervention.
Tips for the Best Outcome
Hire a Probate Lawyer in San Diego, CA
It’s always wise to hire a probate lawyer to help you set up a living trust. There are many kinds of trusts, and there may be some assets that are perfect for a living trust and other assets that may do better in an irrevocable trust. Though an irrevocable trust cannot be changed, it does come with more protections in some ways from taxes and creditors. Your lawyer can help you work through all of this and make sure that all documents are ironclad, legal, and unlikely to be challenged in court.
Ask Your Lawyer About Out-of-State Property
If you own property in another state, California probate courts won’t be able to process it, and this means “ancillary probate” in the other state. Boiled down, this means you’re talking about double the time and costs. If you put your out-of-state property into a living trust, though, you don’t have to worry about this extra probate. Your successor trustee has access to and control of everything in the trust, no matter where it is.
Think About Minimizing Family Disputes
A trust can do a lot to minimize arguments among family members after your death, but only if it is done well and planned out carefully. Talk with your lawyer about how to clearly outline who gets what to prevent any misunderstandings. And since the trust bypasses probate, you don’t have to worry about going through a court process that allows relatives to challenge your decisions.
That said, you may still wish to explain some of your decisions to your relatives in advance of your death, and a lawyer can help you here. Since a lawyer has gone through this process many times, they know what kinds of questions to ask and what advice to give to make sure that you and your family are all on the same page.
For help with your estate planning, contact Frisella Neilson, APC in San Diego today to schedule a consultation with us.
