If you own a house you should have a trust in the San Diego area. All assets, including your home, that are not protected by a trust must pass through the probate Court. The costs of probate are directly associated to the value of your estate. The key point to remember is this:
The value of your home in probate is not the equity in your home. It is the retail appraised value of your home, regardless of the underlying financing or equity.
Lets assume the only asset a person had was a home worth $500,000 appraised value. Their heirs/executor must open a case with the probate court in order to be able to transition the home. The initial cost of filing for probate is $435, and each petition thereafter (i.e. to sell the house in our example) is $435 as well. Any probated estate must provide “public notice”, usually an ad in a local newspaper. The ad must run 3 times, at an average cost of $250 for the 3 weeks of required notice. The probate court referee is paid one-tenth of one percent of the estate’s value. If your home is worth $500,000 the referee would receive $500 if that was the only asset in your estate. Executor fees start at 4% of the estate’s value up to $100,000 and drop a bit from there. For a $500,000 estate, the executor’s fee would be $13,000 in our example. Estates that are probated usually require an attorney to ensure all legal and tax obligations are discharged. This protects the executor who is legally responsible (carrying a personal fiduciary duty). The attorneys fees are the same as the executor, in our example another $13,000 in expenses.
If we total these simple costs:
$435 Probate Filing Fee
$435 Filing to Transfer Title or Sell the House
$250 Legal Notification Publications
$500 Probate Referee
$13,000 Executor’s Fees
$13,000 Attorney’s Fees
$27,620 in total costs to probate the simple estate of a single home worth $500,000
The costs associated with probate only go up from there. Why should anyone who owns a home in the San Diego area have a trust? The cost of a trust would be a fraction of the cost of probate, and provides much greater control over any assets you own and the money in bank and investment accounts. Trusts allow assets to pass to your heirs and beneficiaries much more quickly than probated assets, which usually take more than a year to get through probate court. If you own a house you should have a trust.
We invite you to contact our experienced trust and estate planning attorneys for a free and substantive consultation at 866-631-3470.