This article looks at how you build an inheritance firewall to optimize wealth for your future generations to come.
For many of us, our home is our most valuable asset. We save money to purchase our home and then we work hard to pay the mortgage each month with hopes to fully pay it off one day. We also enjoy the appreciation of value in our homes as well as the real estate market has been good to us over the years. At the end of the day, when we still own the home we love and work hard for, we can see how we want to preserve the home and pass it on to our loved ones in the next generation. –
In California, homes are subject to a costly and timely probate procedure if the home is not protected during your lifetime in a revocable living trust. You have to protect your home as it is your most valuable asset. Do you have a plan in place to protect this asset? Have you sat down with your loved ones and discussed what happens if and when you pass away and how your assets will be distributed among your loved ones?
In California as in all other states, there are laws put in place to determine how to transfer assets like your home where there is no planning in place. These laws are typically referred to as probate laws. In general, probate is a legal proceeding designed to wrap up a person’s legal and financial affairs after their death with court supervision. For those who die in California, probate matters are heard in the Superior Court for the county in which the decedent lived or owned a home. Probate in California takes at least 9 months from start to finish and usually takes about a year with the delays in the court system and hearing dates. A larger probate can take years to wrap up. Besides the length of time involved, there are costs associated with probate. California Probate Code Section 10810 sets the statutory fees attorney can charge to handle a probate matter. For example, if your probate estate is worth $500,000, the court may award the attorney the fee of $ 13,000 for handling the probate. If your probate estate is worth $1m, the fee will be $23,000. At $20m , the fee is $163,000 and anything larger than $25m , the court will determine the fee. And that’s only for attorney fees!
Aside from attorney fees, there are costs that are paid at the filing window and to vendors in a probate matter. The filing cost to open a probate right now in Los Angeles County is $465.00. This is the same filing cost to close a probate: $465. Then there’s a cost to run the required legal notice in the paper and that’s a range between $500 to $800. This does not include costs for bond and other things that may come up. These costs are on top of the attorney fees.
At the end of the day, probate is very expensive but could be desired as the handling of your estate is overseen by a judge. For most people this is not important and instead they desire to have their estate handled by a loved one, kept out of the courts and kept private. Given that you have worked hard and have a nice home and a wonderful family, it’s nice to put things in place to avoid a probate nightmare if you were to pass. This is where setting up a living trust comes in.
Preventing probate is possible. You need to get with an estate planning attorney at TLD Law. They will walk you through all the necessary steps to keep your assets of probate. Think of setting up an estate plan as an inheritance firewall – protect your assets and protect your money from going to attorneys and the court system needlessly!Build your inheritance firewall today with TLD Law. We have offices in Long Beach, Downey, Irvine and Beverly Hills, California.