THINKING about one’s demise is not something people want to spend time thinking about. However reality is that we all have to face this one day. It is just a matter of whether you depart this world prepared or unprepared.
If you pass away with at least $150,000 in gross assets and you do not have a living trust (even if you have a will), your beneficiaries would have to open up a probate case before title to the assets can pass to them. When I say gross asset, I mean regardless of how much debt you owe on them. For example if you own a house valued at $350,000 at the time of your death, it does not matter that your mortgage balance is $300,000, a probate case has to be opened in order to pass title to that property. The same is true with other types of assets such as owning a business, a professional practice, bonds, equities, etc. This is a very low threshold to exceed specially in California where real estate prices, even after the economic crisis, remains in the upper end of the curve among the 50 states.
Commencing a probate case is expensive and a very slow process. Someone qualified will have to file a Petition with the probate court to have someone appointed as executor or administrator. The Petitioner’s attorney gets paid a statutory rate for attorney’s fees commencing with 4% of the gross estate. The probate referee will have to be paid for appraising the assets of the estate. If it is necessary to post bond, the premium on the bond would have to be paid as well. There is also the cost of administering the estate such as selling some of the assets to satisfy the estate’s obligations and to divide the estate according to the will or the intestate line of succession if there is no will. The entire process could take up years specially if certain beneficiaries and creditors file certain claims. The probate court file would be public record.
On the other hand if you have a living trust, your estate can avoid the entire court system and court supervision. In certain situations, the process may also save you estate taxes which may be substantial if your assets exceed a certain threshold. Basically, you and/or your spouse can be named as the initial trustee of the trust while you are alive. The trustee is the person who manages the trust. This means you retain control of all your assets the same way as if you never had
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Please note that this article is not legal advice and is not intended as legal advice. The article is intended to provide only general, non-specific legal information. This article is not intended to cover all the issues related to the topic discussed. The specific facts that apply to your matter may make the outcome different than would be anticipated by you. This article does create any attorney client relationship between you and the Law Offices of Kenneth U. Reyes, P.C. This article is not a solicitation.
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Attorney Kenneth Ursua Reyes is a Certified Family Law Specialist. He was President of the Philippine American Bar Association. He is a member of both the Family law section and Immigration law section of the Los Angeles County Bar Association. He has extensive CPA experience prior to law practice. LAW OFFICES OF KENNETH REYES, P.C. is located at 3699 Wilshire Blvd., Suite 747, Los Angeles, CA, 90010. Tel. (213) 388-1611 or e-mail email@example.com or visit our website at Kenreyeslaw.com.