Avoiding Probate

A common reason for setting up a trust is to transfer assets into the trust with the goal of avoiding Probate. Probate is the court-supervised legal process of collecting, valuing and distributing the assets (estate) of a deceased person. All estates worth $100,000 or more require a formal Probate proceeding. It can be expensive and time consuming. For example, an estate worth $500,000 could have fees and costs of $15,000. Maximum fees and costs are set by California statute.

The cost to create a trust is a fraction of the cost for Probate. However, trust administration costs should also be considered in the comparison. Such costs vary considerably. Legal fees and trustee fees during trust administration can be considerable. In my experience the trust creation and administration cost remains far less than the maximum Probate fees and costs.

Another consideration is to transfer assets using benenficiary designations and transfer on death accounts. These can be effective tools in avoiding Probate without a trust. Such transfers are usually limited to smaller estates where there are no real estate assets.

A thorough analysis of the estate assets and some creative planning can make Probate avoidance easy.

Self-directed IRA real estate investing

If you have not yet heard, let me be the first to tell you the good news. You don't need to limit your retirement savings held in an IRA to stock market investments. Most folks are not aware that an IRA can own real estate. I am talking about a rental property or a trust deed or perhaps a tax lien. These are all legitimate and legal investments within an IRA. I am a partner of www.freedomgrowth.com and we're on a mission to educate investors about ALL their options and assist them with making real estate investments in their IRAs. Take a closer look at this and you will see that right now there are many great opportunities to invest in real estate using a resource that you may not know you had.

Estate Plan Review

I am often asked how often a will or trust should be updated. Wills, trusts and other estate plan documents need to be updated when there are significant changes in health, family or finances. The best example is when a couple has a child. This is usually the best time to create a will and trust to provide for their family and handle important things like naming a guardian. A plan already in place needs to be amended or restated to address these changes.

I like to review my client's estate plans every five years. This allows us to make sure the decisions previously made still apply and will carry out the wishes of the client. If it's been five years or more, make sure you get your plan reviewed.

Another important consideration forthcoming is the status of the estate (aka death) tax. The federal government currently taxes estates larger than $3.5 million. This law will be repealed next year and then the estate tax threshold returns to $1 million in 2011. Congress will no doubt pass new legislation to change this but it's not entirely clear what the new exemption amount will be. As things develop, check the news or this site for updates.

Don't let a stale will or trust foil your otherwise good intentions. The cost of failing to review and update your documents can be extreme when litigation results from disputes over assets. Simple and inexpensive amendments will insure your wishes are carried out as they change over time.

The New B-LAWG

Greetings blog readers. In the effort to freshen my law office web site, I am also updating my blog.

I will provide information and insights on the law focusing mainly in my practice areas. Feel free to send questions or suggestions for discussion.