San Diego Civil Attorney Tara Burd says, “Wills do not protect homes from probate. Joint tenancies only protect homes temporarily. Trusts protect homes always.”
Probate is the court process by which a will is proved valid or invalid. Properties that are not in a trust must pass through probate with or without a will. During the probate process, the court plays an active role in determining how the property is handled. Depending on the extent of the powers the will designates to the executor, the court may have more or less control. At the very least, the court requires a formal appraisal of estate and must confirm sales price. At best, this process takes months in California. In some instances, court approval is required at every step of the way.
Probate is also expensive. Attorneys fees in probate are set based on the value of the estate. The executor – the person in charge of distributing the assets – is also entitled to statutorily set fees based on the value of the estate. For example, an estate valued at $350,000 allows attorneys fees of $10,000 and executor fees of another $10,000 plus costs. That’s a more than a $20,000 dollar expense just to distribute a single property. In a tough economic market or otherwise low home equity, this could result in significantly diminishing the inheritance of an individual’s loved ones. In some instances, the property may lack sufficient equity to probate and faces foreclosure.
In contrast, a probate avoidance estate plan that includes a trust can be prepared for only $1,500. Attorneys fees to administer the trust are flexible, based on the attorney hired, but often significantly less than the statutorily-set probate attorney fees. Additionally, there is no requirement to pay the administrator of a trust unlike statutorily-set executor fees in probate. The result is a significant benefit to the descendant’s beneficiaries.
When actor James Gandolfini died in 2013, there was significant public debate over his estate planning methods. The biggest flaw in Gondolfini’s estate plan was his lack of a revocable trust. Not only did his estate’s probate attorney make out well, but his failure to create a revocable trust caused multiple problems in the administration of his estate. One issue was that no trust was created to protect the assets that his baby daughter received. This means that her inheritance was – and is – subject to creditor’s claims.
Wills still play a role in today’s estate plans. They are often drafted in conjunction with revocable trusts as “pour-over” wills. In a pour-over will, the will decrees that the descendant’s property belongs to the trust. The trust then dictates the distribution of the estate. More importantly, wills dictate the guardianship of children at the death of their parents.
Joint tenancies, quite simply, are only as strong as the estate plan of the last living owner.
If there are any significant assets or a real property in an estate, a will alone will not protect the estate or sufficiently provide for the descendant’s loved ones. While there are many estate planning tools that do not involve a revocable trust, it is a powerful tool that can protect most estates and pass on a greater benefit to loved ones.
To read more about James Gandolfini’s estate planning woes, see here: http://www.nytimes.com/2013/07/20/your-money/estate-planning/the-intrigue-surrounding-gandolfinis-will.html.
For more information, visit Tara Burd San Diego Civil Law Attorney’s “Who Is Page” in the San Diego Professional Journal at: http://whois.sandiegoprofessionaljournal.com/tara-burd-civil-law-attorney. Or, visit her website at: http://www.TBurdLawGroup.com.
Tara Burd – San Diego Civil Law Attorney
You may contact her at her office:
T.Burd Law Group
945 Fourth Ave., #307
San Diego, CA 92101
Or, by telephone at (858) 215-2873.