Advantages of a Living Trust
The first question I get from many clients is, “Which is best for me, a Will or a Living Trust?” There is no quick and easy answer to that questions, but I can offer some general advice.
In California an estate usually must go through probate when the estate value exceeds $100,000 in market value (not equity value). Probate is the court process to administer an estate with or without a Will. In other words, having a Will does not avoid probate, in fact, it generally guarantees probate. Probate is something most families want to avoid. It is very costly, takes many months to over a year, can be required in multiple states, and is generally a hassle for everyone.
There are many ways to avoid probate. Account beneficiary designations (TOD or POD accounts) and Joint Tenancy are two of the most common. However, each of these also has a downside in many cases. There are of course situations where these methods work, but in many instances problems occur.
This leads us to the best way to avoid probate for most clients: The Living Trust. A Living Trust not only avoids probate, it is usually the quicker, easier, cheaper, and most hassle-free way to administer an estate. For married couples it can minimize or completely avoid Estate Taxes. It handles situations where someone becomes incapacitated. In many cases it is more likely to achieve one’s wishes regarding estate distribution than other alternatives.
In short, for most Californians who have an estate with a market value over one hundred thousand dollars (meaning just about anyone owning real estate), a Living Trust is the preferred estate planning document. To read more about Living Trusts on my website click here.
-Ken