Posted in: Blog, Posted On: 14-05-2014, Posted By: Steven Schroeder

Top Three Reasons for Setting up a Revocable Trust & Avoiding Probate

 

1. Probate Avoidance

Probate is a court process which involves collecting a decedent's assets, notifying creditors, paying liabilities, and distributing the remaining assets to heirs.  In California the time needed to probate a decedents estate can be anywhere between 1 to 2 years.  This is time that the beneficiaries have limited or no access to the property in the estate. 

Moreover, probate can be quite expenses.  California Probate Code §10810 deals with compensation for conducting ordinary proceedings and states:  Subject to the provisions of this part, for ordinary services the attorney for the personal representative shall receive compensation based upon the value of the estate accounted for by the personal representative, as follows:  (1) 4% of the first $100,000; (2) 3% of the next $100,000; (3) 2% of the next $800,000; and 1% of the next $9,000,000.  Additionally, for extraordinary services the court may allow additional compensation.

By way of example assume that the only asset subject to probate is a home valued at $600,000 with a mortgage of $500,000.  The minimum attorney fees would be $15,000 ($4,000 on the first $100,000; $3,000 on the next $100,000; and $8,000 on the next $400,000).  Remember attorney fees are based on the value of the asset and not the equity in that asset.  The executor would be entitled to the same fee of $15,000.   Throw in court costs of approximately $2,500 and the family ends up paying roughly $32,500 to probate the estate.

2. Privacy

Probate is a public proceeding.  Any person can walk into the probate court and pull up the decedent’s estate.  By doing so they can learn the name, address and age of all beneficiaries; the nature and value of all assets in the estate; and a list of all the estates creditors.  Many of us do not wish to subject our loved ones to such public scrutiny.  By establishing a revocable living trust you keep all this information private.  Upon your death there is no need to publish the administration of the trust in a local paper; and notify certain family members.  The administration is kept private.

3.Control

The revocable living trust is a contract that you enter into which contains your instructions for managing your assets, and the use of those assets in the event of your death or incapacity. While you are alive and competent you can make any changes you wish to the document, including the revocation of the entire trust.  Should you not be able to manage the trust yourself a person whom you appoint will step into your shoes to manage the trust.  This person is called a successor trustee.  The successor trustee is under a fiduciary obligation to carry out your wishes as outlined in your trust.

 

Orange County's # 1 Probate, Estate Planning and Trust Attorney rated by Orange Coast Magazine!
 
 
Law Offices of Steven F. Schroeder
2107 N. Broadway, Ste. 204
Santa Ana, CA 92706
(714)480-0529
 

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The Law Offices of Steven F. Schroeder is a: Probate Attorney in Orange County | Estate Planning Attorney in Orange County

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