While helping clients protect their property and inheritance, here are the most common questions we receive. I hope this article answers a few of your questions, however there is much more to discuss with each unique situation. If you are ready to start your estate plan or if you have any more questions, feel free to reach out to our office.
The advantage to making a living trust is that property held by the trust does not have to go through probate court. Put simply, probate is the court-supervised process of paying your debts and distributing your property to the people who inherit it.
The average probate continues for months before the inheritance can be distributed. In many cases a significant percentage of the worth of the property is spent paying attorney and court fees. Your family will be paying for the court to give them what is already rightfully theirs.
Estates less than $150,000 (limits change by county/state) do not have to go through probate. If you are a property owner in California, you probably are past that amount and your property will go through probate if the property is not in a Trust.
How does a living trust avoid probate?
Property you transfer into a living trust before your death doesn’t go through probate. The successor trustee (the person you appoint to handle the trust after your death) simply transfers ownership to the beneficiaries you named in the trust. In many cases, the whole process takes only a few weeks, and there are no lawyer or court fees to pay. When all of the property has been transferred to the beneficiaries, the living trust ceases to exist.
Is it expensive to create a living trust?
No. We strive to make an estate plan affordable for every situation. Pricing will vary depending on the number of properties owned and any special customization of your estate, but investing in an attorney to prepare the estate plan for you will be well worth the price. Gallinger Law keeps costs low with free initial consultations, online communication and by taking advantage of county online submissions.
Is a living trust document ever made public, like a will?
No. A will becomes a matter of public record when it is submitted to a probate court, as do all the other documents associated with probate. The terms of a living trust, however, need not be made public.
Does a living trust protect property from creditors?
No. A creditor who wins a lawsuit against you can go after the trust property just as if you still owned it in your own name.
Generally, after your death, all property you owned (including assets held in a living trust) is subject to your lawful debts. For example, if your house is held in trust and passes to your children at your death, a creditor could demand that they pay the debt, up to the value of the house. Ownership of real estate is always a matter of public record, so creditors can always find out who inherited real estate. It can be more difficult for creditors to know who inherits other property, however (because a trust document, unlike a will, is not a matter of public record), and they may not bother tracking it down.
If I make a living trust, do I still need a will?
Yes. A will is an essential back-up device for property that you don’t transfer to yourself as trustee. For example, if you acquire property shortly before you die, you may not think to transfer ownership of it to your trust, which means that it won’t pass under the terms of the trust document. But in your will, you can include a clause that names someone to get all of the property that you haven’t left to a specific beneficiary.
If you don’t have a will, any property that isn’t transferred by your living trust will go to your closest relatives in an order determined by state law (per stirpes). These laws may not distribute property in the way you would have chosen.
Can a living trust reduce estate taxes?
A simple probate-avoidance living trust has no effect on state or federal estate taxes. Keep in mind that for deaths in 2020, only estates worth more than $11.58 million will owe federal estate tax. This means that very few people have to worry about this specific tax.
What is a living trust?
A trust is an arrangement under which a person, called a trustee, holds legal title to property for another person, called a beneficiary. You can be the trustee of your own living trust and keep full control over all property held in trust. Different kinds of living trusts can help you avoid probate, reduce estate taxes, or set up long-term property management.
Todd Gallinger is a California and New York licensed attorney experienced in Islamic Estate Planning. You can reach the Gallinger Law team at (888) 255-9147 or info@gallingerlaw.com.
This article is for information purposes only, and should not be construed as legal advice. For advice specific to your situation, please contact an estate planning professional qualified in the state where you live.