2. Executor's commissions, both statutory and extraordinary, are
eliminated. A chart can be found on the last page of this document
listing the amount of these fees. The Trustee, if not you or your
spouse, will get a fee, but the amount is not set by statute, and is
usually far less.
3. The Attorney's statutory fees, necessary with a will, also
included in the chart on the last page, are eliminated. If the trustee
consults an attorney, the fees would be far less than the statutory fee
in nearly all cases.
4. The Court costs of going through probate are eliminated. A
Living Trust does not normally go to Court at all.
5. If you become mentally or physically unable to act for
yourself, either temporarily or permanently, conservatorship proceedings
become unnecessary to handle your financial affairs, as your
prenominated Trustee will step in on your behalf.
6. Your Trust's assets (which is normally everything you own)
may be distributed immediately to your heirs upon your death, for their
immediate benefit and welfare. As mentioned above, it may be nine
months to two years or longer to fully distribute your assets under a
7. However, should you wish, you may also delay the distribution
of the Trust's assets to, for example, your minor children, until they
are older. Such assets will be invested, with the income, and if
necessary and desired the principal being spent on your children's
education and general welfare until whatever age or event (i.e.,
finishing college) you choose. A will can also provide for these
delayed distribution benefits, although such a will would not be
considered a simple one.
8. Should you die leaving minor children, a guardian appointed
by the Court to care for your children's inherited property is
eliminated. Again, the successor Trustee you have chosen, usually a
trusted family member, will act in your shoes. This benefit is also
available with a will, although not a simple one.
9. A Living Trust prevents any information about your assets,
liabilities, and beneficiaries from becoming public information. The
probate of a will, including the will itself and a detailed list of all
your assets, is public knowledge. (For example, because she had no
Living Trust, the world knows that Natalie Wood died with 6 million
dollars and 39 fur coats.)
10. Additional probate in other states, where you may own
property, is eliminated. A will would require that all such
out-of-state property go through the other state's probate proceedings.
11. A Living Trust reduces vulnerability to a contest by
Living Trust can assist in creating a new cost basis for all of your
property at the time of your death, thus lowering taxes. If the
property is held in Joint Tenancy, only one-half (2)
of the jointly owned property receives a higher cost basis upon the
death of the first spouse. This problem can be eliminated with a trust
or will (or even with neither) by holding any appreciating property as
Community Property with your spouse if you are married. (If you so
choose – remember the trust does not in itself convert separately owned
property to community property.)
13. If you own a family-run business, with a Living Trust, the
income from your business will continue without interruption to your
family, and the turn-over in management can be accomplished more
smoothly. Under a will, the income could be restricted until the
probate proceedings are completed, and the executor may have to
temporarily (for up to several years) run the business until the probate
14. As mentioned before, the Trustee of your estate may buy and
sell assets or securities at any time, taking advantage of the market or
money exchange of the day. Under a will, new investments are strictly
limited while going through the probate process, with the exception of
15. A Living Trust gives the Trustor a feeling of satisfaction
that he or she has set their financial house in the best possible order
for their children or heirs. Additionally, real savings are created by
dramatically lowering expenses, funds that would not be available to
your family under a will.
16. A Living Trust has no periodic trust reports or accountings to
the Court, with their accompanying public record and legal expense,
unless you choose to require such accountings.
properly prepared Living Trust may reduce or eliminate estate taxes.
Without proper planning, any amount over one million dollars (including
life insurance) in your estate is subject to estate taxes of
approximately 35% to 50%. (The one million dollar exemption from estate
taxes will gradually increase from 2004 to 2010, but then reverts back
to one million dollars in 2011.) We can also achieve this tax planning
with a will, but again, such a will would be far from a "simple will."
18. Revocable Living Trusts are easy to establish, and once
established, you maintain them yourselves, without needing an attorney.
Additionally, they involve a minimum amount of paperwork. If set up
correctly, the paperwork should be no more difficult than what your
assets require without a Trust.
19. A Revocable Living Trust may be amended inexpensively or
revoked at any time. A will is more difficult to amend.
20. There are no income tax consequences involved during your
lifetime in setting up a Revocable Living Trust. In fact, the Trust is
not even required to file a separate tax return. All income and losses
of your Trust are reported on your individual federal and state tax
21. Revocable Living Trusts are legal in every state. Your Trust
goes with you from state to state as easily as you do, and need not be
modified if you move to another state. This is true with most wills in
most states also.
22. Assets can easily be placed in your trust once it is
established, by changing the title on your stocks, real estate, bank
accounts, etc., from "MARY DOE and JOHN DOE" to "MARY DOE and JOHN DOE,
TRUSTEES, U.D.T. dated [the date of your trust]." (Or "STEVEN
ROE" to "STEVEN ROE, TRUSTEE, U.D.T. dated [date of trust]". ("U.D.T."
stands for "Under Declaration of Trust.") Although the property is
titled in the name of the Trust you retain the right to the use,
possession and enjoyment of the property during your lifetime, the same
as if it were not in trust.
23. Assets are removed from your Trust by either selling them or
changing the title back to your individual name or names, e.g., from
"MARY DOE and JOHN DOE, TRUSTEES, U.D.T. dated [date of trust]"
to "MARY DOE and JOHN DOE."
OF A SIMPLE WILL
A simple will is a written document drawn under
legal formalities that directs how a person's property will be disposed
of on death. It is ineffective until your death, and thus has no effect
on your property during your lifetime, unlike a living trust.
Probate is a procedure that all wills are
subject to, whereby the validity, genuineness, and interpretation of the
will is determined by the Court. It is a procedure that is, in most
states, including California, expensive, time-consuming and publicized
in the newspapers. Living Trusts are not subject to probate.
3. A Conservatorship could be forced upon you should you be
found mentally or physically unable to act for yourself. An attorney
would need to appear in Court to establish a formal conservatorship for
you, and although your preferences are given weight, the Court will
decide who the Conservator will be. This is an expensive,
time-consuming, often publicized, and embarrassing procedure. All of
your assets would normally then be subject to the conservatorship.
4. If you own property as Joint Tenants:
the death of your spouse, only one-half (1/2)
of the appreciation of your estate's assets is exempt from a federal
income tax, when you (the surviving spouse) sell these assets;
(b) All of your assets are subject to a potential conservatorship,
unlike with a Trust where they are protected
(c) Probate is necessary on the death of the last Joint Tenant
(d) Your federal estate taxes may be increased if you are married,
although a complex will can solve this problem also.
5. Although certain unusual estates may benefit by probate; for
example, an estate with many large or complex debts, the costs and
delays inherent in probate usually outweigh the advantages even in those
few estates. Certainly in most estates, the probate procedures offer no
advantages and significant disadvantages.
CALIFORNIA PROBATE COSTS
Below is a table of the basic fees, as set by statute, for probate
administration in California. The figures below include both the fees
for the attorney who handles the estate administration and the fees for
Value of Probate
If the spouse of the person who died serves as executor, and if all the
property is left to that spouse, the basic fees may be less (1/5 to 1/2
as much) for the estate of the first spouse to die.
If the Executor or attorney performs any so-called "extraordinary"
services on behalf of the estate, the Court awards them additional
fees. These "extraordinary services" include filing any of the tax
returns required by federal or state officials, selling estate assets,
conducting the decedent's business, selling real estate owned by the
decedent, or defending the estate against claims.
Are you ready to find out more about securing your
family's financial future? Please Contact Us
so we so we can help you find the best solution for your needs.