Why do I need a trust if I have a will?

Although everyone has different assets and different needs, in general* I advise that anyone with young children or who owns property in California does need a trust.

If you only have a will or if you have no will at all, then the estate must go through the probate process. Probate is the name of the court that handles the procedures when someone dies – and at other times, but that’s a different blog post.

Probate is notoriously cumbersome because it takes a really long time before any assets go anywhere, which is really difficult when you’re talking about minor children whose guardian may need access to those funds. It’s also extremely expensive. The cost of probate is a percentage of the gross assets. (Gross assets = the value of your house, not discounted by your mortgage.) How expensive?

            4% of the first $100,000

            3% of the next $100,000

            2% of the next $800,000

            1% of the next $9,000,000

            .5% of the next $15,000,000

What does this mean? If you have a million dollar gross estate (which is likely if you own a house in California), the cost is $23,000. But it’s not just $23,000 for the executor. It’s another $23,000 for the attorney that the executor hires. In other words: up to $46,000 just in probate fees if you have a million dollars in gross assets.

While less convincing than the cost, the other reason people want to avoid probate is because it’s a public proceeding.

So how do you avoid probate? One way is by setting up a trust. The trust also allows for incapacity planning, just in case you are ever unable to make decisions for yourself.

What’s a trust? Contact me for a complimentary consultation and I’ll explain more – and I’ll make sure the information is specifically about your circumstance.

* “In general” because circumstances vary and there may be reasons for doing something different depending on those circumstances. This is why you should speak to an attorney to see if you do need a trust.