Dear Len & Rosie,
I am a widow, my husband Richard having passed away four years ago. I own a modest home, all paid off, and nearly three hundred thousand dollars in savings. My old will leaves everything to my husband, and then to my three children, share and share alike.
I recently visited an attorney to get a living trust. He told me that I did not need a trust, and that all I needed was a will. He made a new will for me, and a durable power of attorney.
I’m not sure he did the right thing. I have heard you talk about how living trusts avoid probate. I do not want the state to take my money away from my children after I go. I spoke to my children last week, and they all agree that I ought to have a trust. What should I do?
Except under unusual circumstances, almost everyone who owns a home should have a trust. Let’s say that your home is worth $450,000. Including your savings, your entire estate is worth about $750,000. The statutory attorney’s fee for probating an estate of that size is $18,000. That’s $18,000 that won’t pass to your children. Probate also takes a long time to do. Most estates take anywhere from 9-15 months to pass through probate, assuming there are no complications.
If you have a trust, it will be much easier for your children to divide your assets after your death, as long as they get along with one another. Your home could be transferred to your children with an affidavit of death and a single deed, and your trustee can divide your bank accounts and investments after paying off your bills. While there are still legal documents to prepare, and tax issues to address, nobody would have to go to court, and your children will spend much less than $18,000 in legal fees.
Even if your trust is complicated - let’s say your children don’t get along so well and someone refuses to waive the trust accounting, it will still be cheaper to administer a trust than it would to probate your estate in the courts.
Why did your attorney say you did not need a trust? Is your home a modular home in a mobile home park? If so, then your ownership is registered with the California Department of Housing, not the County Recorder. If this is the case, then you can avoid probate without a will if you name your children as pay-on-death beneficiaries on your accounts. That way, your estate won’t be subject to probate in the courts, and your children may collect the mobile home forty days are more after your death using a Small Estate Affidavit under Probate Code section 13101.
Otherwise, the lawyer’s advice doesn’t make much sense. He may have a very good reason to not to make a trust, but it cannot hurt for you to have a second opinion. See another estate planning attorney, and find out what he or she thinks.
Len & Rosie
Dear Len & Rosie,