California probate is complicated, time consuming and very expensive. A typical California probate could take 18 months and cost over $30,000 -...
How to Avoid California Probate with a Revocable Living Trust
California Probate is time consuming and expensive. A Revocable living trust will help your family avoid probate.
California Probate is a Pain
California probate is complicated, time consuming and very expensive.
Probate is what happens if you do nothing. It’s the default status of your estate. If you don’t do any estate planning, your estate will be considered “intestate” and it will have to go through probate. If you do basic estate planning and create a will, your estate will still have to go through probate.
But with a bit of time and guidance, you can create a living trust estate plan and avoid the burden of probate altogether.
A revocable living trust is part of a complete estate plan, which also includes a pour-over will, durable power of attorney and advance health care directive, HIPAA and a deed to transfer title of your home to your trust.
How Does a Revocable Living Trust Avoid Probate?
When you pass away, your assets must be transferred to someone. The default process for this transfer is probate. Probate in California is a complicated legal procedure led by a probate attorney under the demanding scrutiny of a probate court judge.
However, if you transfer your assets to a revocable living trust, your assets will be distributed according to your wishes as spelled out in your trust. Instead of requiring a judge and the probate court system to oversee the distribution of your assets to your loved ones, the successor trustee of your trust can take care of it without court involvement.
When you have a funded revocable living trust, then when you pass away, your family will take your assets through trust administration rather than probate. Trust administration is much less complicated, faster and much less expensive than probate.
I’ll explain how this works with an example.
Joe and Mary met with an attorney to set up their revocable living trust estate plan. As part of the process, they signed and notarized a deed transferring ownership of their home from Joe and Mary, husband and wife, as joint tenants, to Joe and Mary, Trustees of the Joe and Mary Family Trust.
They also transferred ownership of their assets that would otherwise go through probate, including their savings account and their brokerage accounts.
When they passed away, their son John, who they named as their successor trustee, hired an estate planning attorney to guide him through the trust administration. Trust administration does involve certain legal steps, but nothing like probate.
Without any court involvement, John was able to transfer his parents’ assets to his brother, sister and himself according to the terms of his parents’ trust. The trust administration took about four months.
Contrast that with probate. If Joe and Mary didn’t have a revocable living trust, and if they only had a will or if they didn’t even have a will, John would have to hire a probate attorney and take the estate through probate. Most California probates take 12 to 18 months to complete and are very very expensive. Since Joe and Mary owned a home and a brokerage account the probate attorney fee alone would be around $25,000, and add to that the executor fee (also $25,000), court costs and appraisal fees.
Because Joe and Mary took the time to create and fund their revocable living trust, they saved their children tens of thousands of dollars in probate fees and set in motion a smooth and efficient transfer of their assets without the stress and hassle of probate.