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Can Proper Estate Planning Save Money in the Long-Run?

On Behalf of | Mar 21, 2016 | Estate Planning |

A revocable trust is an estate planning instrument (1) created by a Settlor (2) during his or her lifetime, and (3) funded during his or her lifetime with the bulk of the Settlor’s assets (4) for the purposes of avoiding probate. Although there are certainly other purposes of a revocable trust, many of our clients opt for a revocable trust in order to avoid probate and save the cost/time associated with that court-supervised process.

Generally, probate – a court supervised procedure used to transfer a deceased person’s assets to the beneficiaries in their will – is necessary when an individual dies without proper estate planning instruments and his or her assets exceed $150,000. The costs associated with probate are typically based on the estate’s gross asset value. According to Section 10810 of the California Probate Code, the personal representative and attorney who probate the typical estate are due: (i) 4% of on the first one hundred thousand dollars, (ii) 3% on the next one hundred thousand dollars, (iii) 2% on the next eight hundred thousand dollars, and so on.

In other words, if an estate’s gross value is approximately $500,000, the personal representative will earn approximately $13,000 and the probate attorney will earn approximately $13,000. In addition, special fees for the sale of assets, filing fees, tax preparation, and litigation fees have not even been calculated yet! In this example, the estate’s gross value was only $500,000, which is approximately the median home price in San Diego County, and $26,000 in probate fees were due before any extra costs were calculated. Even if the personal representative – usually the spouse – declined compensation, by using the Firm’s personalized, flat-fee revocable trust packages (starting at $1,250 for an individual and $2,500 for a couple), the deceased could have saved well over $10,000 in court-mandated costs and over $20,000 if the personal representative was not the spouse and accepted compensation.

With smart, forward-thinking estate planning, these unduly burdensome costs can be avoided. Further, the proper estate planning instruments will allow you to decide how your assets will be distributed and will help you maintain confidentiality of your personal estate planning goals. At The Loftin Firm, we understand that every family is different and has unique estate planning goals, so we have a variety of flat-fee, comprehensive estate planning packages that can help you avoid the high costs and time of probate.

Ariel Bedell is an experienced attorney at The Loftin Firm. For questions relating to any other California real estate, corporate governance, land use, or estate planning matter, contact Ms. Bedell at .