I’ve recently had the good fortune to represent several clients on the sale of their family’s home after a parent passed away. Of course, the loss of a loved one is a difficult life event to handle, but the mourning process can be made worse when legal and financial matters are complicated on top of everything else a family is dealing with. Fortunately, there are several things you can do to protect your family in the event of a death of the patriarch or matriarch so that your heirs can focus on spending time with family and remembering the good times, and not embroiled in a stressful probate situation. We met with Anna Schneider at Stearns Kim & Stearns for some guidance on the topic of a Living Trust
Question: What is a Living Trust?
Answer: A Living Trust is the type of trust created during the Settlor’s lifetime. The Settlor is the person who writes the trust, i.e., you.
Question: Who needs a Living Trust?
Answer: Any person who owns real property or any person whose assets total over $150,000.
Question: What are the advantages to creating a Living Trust?
Answer: 1. Your assets are distributed to the people that you choose. 2. A trust lessens the impact of estate tax. 3. A trust can protect your children from the unexpected. 4. Most importantly, the most common advantage to creating a trust is to avoid a probate proceeding. The trustee of your trust is able to transfer assets according to your Trust without Court involvement. On the other hand, probate is a costly and lengthy judicial procedure where the decedent’s estate is distributed. The probate fees are set by California law and are determined by the value of the estate.
Aside from Anna’s advice, it’s important to discuss these matters with a trusted financial advisor, a CPA, and when it comes time to sell, work with your Real Estate Broker to make sure all the proper documents are in place and title has been updated to ensure a smooth sale. I hope all of you reading this have a long life ahead, but please, if you don’t already have a Living Trust, consider making it a goal to have one in place as soon as possible.