Who Needs a Trust?
Everyone’s situation is different, but there are generally three parameters for whether I recommend a trust:
You have more than $184,500 in assets.
You have minor children.
You own real property in California.
More than 184,500 in Assets
If you have more than $184,500 in assets, then your estate will trigger a probate in most circumstances. This dollar value excludes anything that has a living beneficiary on it. That said, if you name a beneficiary on an account that has $200,000 and they predecease you, then the account will likely need to go through probate.
Probate takes 18-24 months, costs way more than setting up a trust, and is a public proceeding. Avoid it.
Minor Children
If you have minor children, then you may have opinions about when you want your child to have access to funds. If you don’t have a trust, and leave everything to your child in a will, then the funds go into a custodial account and they will get it when they turn 18.
If you don’t have a will or a trust, then there’s more complications of who gets what and when — because the state will get to decide who gets your assets.
If you have everything go to your child through a trust, then your trustee can manage the money for your children until whatever age YOU decide you want your child to have control of their assets. It allows for ongoing money management.
Real Property in California
Real property in California can create a kerfuffle with regard to probate. Starting April 1, 2025, real property valued at $750,000 or less can go through a simplified court process for transferring title to the heir of someone who died. But it’s still involving the court. And is the heir who you would want to get it? Is it the best tax decision?
If you have a trust, you can determine who gets the real property in your trust, avoid probate, and potentially help decrease any conflicts.
If you have questions about whether you should have a trust, please reach out for a consultation!