Why Use a Trust?
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A revocable living trust is a legal method of passing assets from one owner to the next without going through probate.
In California, the first and most important reason to use a revocable living trust is probate costs. If your gross estate (don’t subtract your debt!) is over just $100,000, your probate costs will be around 4% based on this gross value. Debts still have to be paid, but they provide no relief from your probate fees.
Avoid the Fees
A simple trust can avoid these fees entirely. Assets passed through a trust are simply retitled with the help of an attorney who, yes, may charge $400 per hour. But the total costs will be far less than probate costs which, for example would be about $45,000 for a $1 million estate.
Also, if you have assets in multiple states, they may have to go through the probate process for each individual state. This can be a paperwork and expense nightmare. Again, assets passed through trust avoid probate entirely.
Keep Your Privacy
A second reason is the privacy trusts provide. Any assets that go through the regular probate process become publicly knowable while assets passed through a trust are entirely private. Disclosures made during probate could place a target on the back of your heirs from fraudsters and scammers.
Greater Protection for Your Heirs
A third reason is trusts provide a stronger legal footing for passing assets the way you intend.
Anyone can contest a will and many wills are written poorly enough to open themselves up for a lengthy and costly series of lawsuits. Trusts, on the other hand, typically provide much greater protection for your wishes.
One note of caution when using a revocable trust: you may want to update your trust as things change. Each time you do, you may have to pay a fee and might even need to create an entirely new trust. However, you’ll have the peace of mind that your trust is structured for current laws and considers your ever-changing and growing asset base.