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.