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Will or Trust in Southern California – an Obvious Choice

Will or Trust in Southern California – an Obvious Choice - Estate Planning

As experienced trust and estate planning attorneys we are often asked which is better – a will or trust in Southern California?  Simply stated, if you own any real estate whatsoever, or have more than a few thousand dollars in your accounts a revocable trust is almost always the least expensive and safest legal vehicle to protect your assets, reduce taxes, reduce or eliminate probate costs, and ensure that your designated beneficiaries actually receive the funds and assets you wish for them to have.

A will must be “probated” through our local probate court system.  The cost for probate is staggering:

  • 4% of the first $100,000 of the gross value of the probate estate
  • 3% of the next $100,000
  • 2% of the next $800,000
  • 1% of the next $9 million

Lets assume you have a modest house in San Diego that is valued at $500,000 (appraised value, not equity – the actual sale value of the home regardless of existing financing or encumbrances).  Following the formula – the cost to simply take that home through the probate court would be:

  • 4% of the first $100,000  or $4,000
  • 3% of the next $100,000 or $3,000
  • 2% of the next $800,000 (2% of remaining $300,000) or $6,000

It will cost you a minimum of $13,000 to probate a home worth $500,000 in San Diego’s Probate Court, and that does not include attorneys fees and other associated costs.  The cost for establishing a revocable trust is significantly less than $13,000 and this house (placed in a trust) could pass directly to your beneficiaries without any probate or estate tax costs whatsoever.

The cost/benefit of a trust is easy to understand, and the greater the appraised value of your home and the value of your investments and assets, the more you should consider a trust.  There are additional issues to consider such as the passing of one spouse before another, and the ability of the surviving spouse to draw enough of the existing assets to support their needs and lifestyle.

Additional considerations include the special needs of a child, charitable giving, business succession planning, and the protection of specific heirs in a blended family situation. Estate planning provides peace of mind, preserves family assets and wealth, and should reduce disputes that could arise amongst your heirs.

If you would like to learn more about trusts and estate planning we invite you to learn more about the integrated tax, legal, accounting and business consulting services of Allen Barron and  contact us or call today to schedule a free consultation at 866-631-3470.