By Tiffany A. Halimi |
To some, Trusts are believed to be used exclusively by the ultra-wealthy. Should your baby be a Trust fund baby? Is there a minimum level of wealth a person should have in order to benefit from a Trust?
Given today’s legal climate, a living Trust is a great tool for any individual whose total assets exceed One Hundred Fifty Thousand Dollars ($150,000) or whose real property assets exceed Fifty Thousand Dollars ($50,000). Once an individual’s estate exceeds either or both of those minimum thresholds, then that estate must go through the probate court system before it can reach the heirs, unless the deceased individual (“decedent”) executed a Trust, or took some other action, prior to the decedent’s demise.
The use of a Trust can (a) facilitate the avoidance of probate and (b) direct to whom and how assets will be distributed.
A. Avoid Probate
A funded Trust allows a decedent’s estate to pass directly to the decedent’s designated beneficiaries, without having to go through probate. Avoiding probate is beneficial to the beneficiaries for several reasons.
1.) Trust administration can expedite the time it takes to administer an estate.
First, the probate courts in Los Angeles County are severely backed up, and a probate administration often takes a year or more to complete. The decedent’s estate cannot be paid out until the probate administration is complete. Currently, a petition to open a new probate in Los Angeles Superior Court will not be heard for at least 4-6 weeks. A Trust, on the other hand, can often be administered without court supervision, thereby expediting the total process. Additionally, the Trustee will have immediate ability to manage the assets that are held by the Trust, and will not have to wait 4-6 weeks for a Court to grant such authority.
2.) Trust administration keeps the decedent’s information confidential from the public.
Second, a probate becomes public record, making otherwise private information relating to a decedent’s assets publicly accessible. A Trust administration without court supervision is private.
3.) Trust administration does not give an attorney a percentage of the decedent’s estate.
Third, an attorney is statutorily entitled to take attorneys’ fees as a percentage of the estate, regardless of how much time the attorney puts into the matter. See Probate Code Section 10810. With a Trust administration, an attorney can offer guidance to the Trustee and only bill for the attorney’s time, rather than take a percentage of the estate.
Thus, in order to avoid administration through the probate courts, an estate that is comprised of total assets valued more than $150,000 or real estate valued more than $50,000 should be administered pursuant to a Trust declaration
B. Decide Who Receives Your Assets
In addition to avoiding probate, there is another important reason to consider a Trust or a Will. A Trust or a Will allows a person to determine to whom they would like their assets to pass and when. For more information on the distributive benefits of a Will or a Trust, please see If Uncle Sam Already Bought You an Estate Plan, Why Hire an Attorney? The Pitfalls of Intestate Succession.
Thank you for joining us on ClarkTalk! We look forward to seeing you again on this forum. Please note that the views expressed in the above blog post do not constitute legal advice and are not intended to substitute the need for an attorney to represent your interests relating to the subject matter covered by the blog. You should certainly consult legal counsel of your choice when considering this or any other trust and estate issue. If you wish to consult with the author of this post, please contact Tiffany Halimi by email at firstname.lastname@example.org or telephonically by calling her at (213) 629-5700.
Circular 230 Disclaimer: To comply with IRS requirements, please be advised that, any tax advice contained in this article is not intended or written to be used, and cannot be used, by the recipient to avoid any federal tax penalty that may be imposed on the recipient, or to promote, market or recommend to another any referenced entity, investment plan or arrangement. For more information, please go to www.Clarktrev.com