The artist formerly known as “Prince” died recently without so much as writing a will for his estate valued between $300 and $500 million. His lack of preparation will cause his estate to be subject to “death taxes” and will lose his heirs over half of the value from federal and local taxes! If he were married and prepared, he could have passed his entire estate, tax free. You may believe your family is just fine as long as you prepare a will to disperse your assets. You may even believe that living trusts are something needed only by the rich that have a complicated financial picture. There are some key differences between the two products that can greatly affect how difficult the process will be for your heirs and how much of your estate will actually get to them.
A will is a simple instrument wherein you state who receives each of your assets. Writing a will can be free or very little cost. Some may think a will avoids probate, but that is simply not true. Through probate the California court system reviews your estate and decides where your assets will go, after the state takes their cut. This process ties up your assets for at least 8 months and can take years before your heirs receive what is left. The attorney fees on an estate valued at $400,000 would be $11,000 plus state imposed taxes and fees, appraisal fees, bond fee, and public notice fees. Debts are not a factor when determining attorney fees; if your home appraises for $1,000,000 and has a mortgage of $900,000, it would add $1,000,000 to the value of your estate. If your probate is complicated, or has tax issues, the attorney can petition the judge for even higher fees off of your estate.
A living trust or a revocable trust is a legal document that puts all of your assets into a trust for your benefit during your lifetime and then transferred to your chosen beneficiaries upon your death. The fees can range from $300 if you use a self-help service like Legalzoom.com or as much as a few thousand dollars if you go through an attorney. Perhaps the greatest benefit of a trust is that it avoids the cost, time, and headache of going through probate. It may only take a few weeks to distribute your assets in a trust. Your asset distribution remains private in a trust; whereas probate is public and your distributions can be viewed by anyone. You can choose to include a medical directive wherein you state how you would like to be cared for, and if you wish to be revived. It allows you to give someone a medical power of attorney over you in case you are unable to make decisions on your own. You may also choose to include a general power of attorney of your choosing to make financial decision for you, if you become unable. If you still have children in your care, a trust allows you to choose who would take care of them if you become unable. You can also specify details of your funeral and final resting place in your trust.
As a father in my late 30s I learned that a revocable trust gives me great peace of mind to know that my family will be protected and taken care of as I would like through my living trust and life insurance. Retirees can have the same level of peace, knowing that their decisions for their estate and family will be taken care of ahead of time; that they will pass the most of their estate on to their heirs and not the state. Taking the time now to prepare your living trust is something you can do to help your children in a difficult time for them. Please consult your attorney for clarification.
Robert Snow Krepps, NMLS #255191, at HighTechLending Inc, call today to discuss how a reverse mortgage may be able to help you (877) 567 – 7476 or firstname.lastname@example.org .
HighTechLending Inc, NMLS # 7147, is an Equal Housing Lender. Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act.