Top 3 Reasons To Avoid Probate
Top 3 Reasons To Avoid Probate
(And Why You Should Consult With An Orange County Estate Planning Attorney Today)
If you live in California, and your assets are subject to probate, your heirs will be in for a few (unpleasant) surprises.
Without a proper estate plan in place, when you pass away your family will likely have to visit a probate court in order to claim their inheritance. This can happen if you own property (like a house, car, bank account, investment account, or other asset) in only your name. Although having a will is a good basic form of planning, a will does not avoid probate. Instead, a will simply lets you inform the probate court of your wishes – your family still has to go through the probate process to make those wishes legal. Let me repeat that – even if you have a valid will, your estate is still subject to probate.
Now that you have an idea of why probate might be necessary, here are the top 3 reasons why you may want to consult with an Orange County estate planning attorney to avoid probate if at all possible.
PROBATE IS ALL PUBLIC RECORD
Almost everything that goes through the courts, including probate, becomes a matter of public record. This means when your estate goes through probate, all associated family and financial information becomes accessible to anyone who wants to see it. This doesn’t necessarily mean account numbers and social security numbers, since the courts have at least taken some steps to reduce the risk of identity theft. But, what it does mean is that the value of your assets, creditor claims, the identities of your beneficiaries, and even any family disagreements that affect the distribution of your estate will be available, often only a click away because many courts have moved to online systems. Most people prefer to keep this type of information private, and the best way to ensure discreteness is to keep your estate out of probate. You may be thinking “who cares” if anyone sees what I get, or “no-one cares” enough to check the records. Your primary concern should not limited to nosy neighbors, or extended family members. Often times there is an unwelcome flood of solicitations, and fraudulent scams that target unsuspecting heirs. An experienced Orange County estate planning attorney can help you avoid probate, and keep the transfer of your assets completely private.
PROBATE IS EXPENSIVE
Thanks to court costs, attorney fees, executor fees, and other related expenses, the price tag for probate can easily reach into the thousands of dollars, even for small or “simple” estates. These costs can easily skyrocket into the tens of thousands or more if family disputes or creditor claims arise during the process.
To be specific, the California Probate Code § 10810 sets the mandatory attorney fees for probate:
(a) Subject to the provisions of this part, for ordinary services the attorney for the personal representative shall receive compensation based on the value of the estate accounted for by the personal representative, as follows:
(1) Four percent on the first one hundred thousand dollars ($100,000).
(2) Three percent on the next one hundred thousand dollars ($100,000).
(3) Two percent on the next eight hundred thousand dollars ($800,000).
(4) One percent on the next nine million dollars ($9,000,000).
(5) One-half of 1 percent on the next fifteen million dollars ($15,000,000).
(6) For all amounts above twenty-five million dollars ($25,000,000), a reasonable amount to be determined by the court.
In California, probate attorneys are awarded a percentage of the GROSS VALUE of your estate by the probate court. This means if you own a home worth $2.5 Million, and you have a $2 million loan – probate will charge a fee on the FULL $2.5 Million, or fair market value of your home! This will cost you a whopping $38,000 in probate fees for a $2.5 Million home that is subject to probate, regardless of how much you still owe on the house. Obviously, some estates are much smaller than this, and some are much larger – but with a little math, you can find out how much probate will cost you if you live in California. This money from your estate should be going to your beneficiaries, but if it goes through probate, a significant portion could go to the courts, creditors, and legal fees, instead.
Of course, setting up an estate plan that avoids probate does have its own costs. Benjamin Franklin wrote, “an ounce of prevention is worth a pound of cure.” Like the “ounce of prevention,” costs you incur now to put a plan in place are more easily controlled than uncertain costs in the future, especially when you consider your family may be making decisions while grieving. With proper planning, you can minimize the risk of costly conflict and also reduce or eliminate some costs, like court costs and executor fees; if there’s no probate case there won’t be any probate costs. It is a good idea to find a estate planning lawyer in Orange County, CA to help save you money by avoiding probate altogether.
PROBATE TAKES A LONG TIME
You may be wondering, how long does probate take in California? California courts are notorious for taking a long time to finalize probate. While the time frame for probating an estate can vary widely from state to state and by the size of the estate itself, probate is not generally a quick process. On average, you are probably looking at a year and a half to two years during which time your beneficiaries may not have easy access to funds or assets. This delay can be especially difficult on family members going through a hardship who might benefit from a faster, simpler process, such as the living trust administration process. Bypassing probate can significantly speed the disbursement of assets, so beneficiaries can benefit sooner from their inheritance.
If your assets are located in multiple states, the probate process must be repeated in each state in which you hold property. This repetition can cost your family even more time and money. The good news is that with proper trust-centered estate planning, you can avoid probate for your estate, simplify the transfer of your financial legacy, and provide lifelong asset and tax protection to your family. In California, a revocable living trust is the cheapest and easiest way for most estates to avoid probate completely. An Orange County estate planning attorney can help you set up a revocable living trust.
AN ORANGE COUNTY ESTATE PLANNING ATTORNEY CAN HELP YOU AVOID PROBATE
To recap, the benefit of setting up a revocable living trust in California is you will avoid probate. When you use a trust to avoid probate, your assets pass to your beneficiaries privately, it costs far less than probate, and it can be done almost immediately. To learn more about making a revocable living trust a central part of your California estate plan, call us to schedule a Family Planning Session. Dan Chudleigh, shareholder at Chudleigh Law P.C., is a experienced estate planning attorney in Orange County, California. He assists clients in Orange County, and throughout all of Southern California with their trust, and estate planning needs.
Chudleigh Law P.C.
410 Broadway St # 170, Laguna Beach, CA 92651