Do I Need A Trust?
Many people know they need a will, but very few people know what a trust is and whether or not they need one. A trust is a contract that allows you to state who will get your property when you pass and also creates provisions for your care in case you become incapacitated. Most people will create a revocable trust that can be amended or changed at any time.
In California, estates that are valued at more than $150,000 will go through probate. The one and only way to avoid probate is to have a trust. To determine the value of your estate you can add up the value of all your assets that do not have a beneficiary designation.
For example, if your assets include a house worth $500,000, a retirement account valued at $50,000 and a savings account with $25,000, your estate has a value of $525,000. Your retirement account has a beneficiary designation and therefore is exempt from probate.
Now, you may be thinking that the math is wrong because while your home is worth $500,000 you still owe $400,000 to the bank. However, for the purposes of probate court, your liabilities (or debt) are not taken into account and therefore your estate's value is $525,000. Since this is well above $150,000 and includes real property, without a trust, your assets will have to pass through probate before reaching your beneficiaries. Today, probate fees on a $525,000 estate would be at least $27,000.
All this math is important because if you don't create a trust, your estate will pass through probate. Probate is a very long and costly process. Probate court, like most court systems, is slow and overworked. It may take years before your family has access to any funds. If you have minor children, you will want your children and their guardian to have access to your assets as quickly as possible and with as much ease as possible. So, do you need a trust? If you have more than $150,000 in assets or have minor children you should create a trust. Meeting with an estate planning attorney will help you determine the right planning for you and your family. Contact Bahar Geslin at firstname.lastname@example.org or visit www.geslinlaw.com