Reasons to Avoid Probate Court on Death

 

In California, if the total gross value of your Real Estate and Personal Property is over $184,500.00 when you die, then formal Probate Court Proceedings are necessary to transfer assets.

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Probate Court is Expensive

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The lawyer in a probate gets paid by statue as follows:

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1. 4% of 1st $100,000.00;

2. 3% of 2nd $100,000.00;

3. 2% of the next $800,000.00;

4. 1% of the next $9,000,000.00

5. 1/2 of 1% of the next $15,000,000.00;

6. Above $25,000,000.00, a reasonable amount as determined by the court.

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The Personal Representative or "Executor" of the will is entitled to the same fee as the lawyer, so, multiply the lawyer fee by two. Also, there are filing fees, appraisal fees, and other costs associated with managing the case. A probate is quite expensive indeed.

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Probate Court is Time Consuming

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A fast probate takes nine months to complete. A typical probate takes 18 months. It is very common to have a probate last for many years. The size of the estate and "will contests" usually cause delays. A trust can help you avoid these lengthy delays. They typical trust administration takes about 3 months.

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Probate Court Lacks Privacy

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Anyone can go down to the courthouse and ask to see the probate file. They can see the names of your children and what you owned when you died. The system allows the general public, including "predators", to hunt for opportunities to deprive your family of their inheritance. Also, it would be easy for someone to copy your file and publish it on the internet, YIKES!  A Revocable Living Trust is private and is not available to the public. You control who can see your trust. I always recommend my client's to keep it as private as possible. If you want privacy, the trust is the way to go.

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Probate Court's are Busy

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Probate Court calendar's are notoriously busy. After meeting with a lawyer to hire him to help with the probate, he needs time to complete the paperwork to file with the court. Once ready, it is common for the court calendar to be booked up for six weeks before a hearing can be scheduled. This applies several times during the probate process. If a mistake is made, it could cause even more delay. It is very easy to avoid these delays with a Living Trust.

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Probate Court Trigger

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In General, when the gross value of a decedent's property is above $184,500.00, a formal Probate Court proceeding will be required in order to transfer the decedent's assets to his heirs. "Gross value" means the fair market value of the asset regardless of whether there is money owed (i.e., mortgage amount due). You can own a house worth $200,000.00 and owe a mortgage of $195,000.00. If you die, a probate would still be required, even though you only actually own $5,000.00 in equity in the house. The Lawyer and Executor fees are based upon the Gross value of $200,000.00, not net value of $5,000.00. ​

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How a Living Trust Avoids Probate

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A Revocable Living Trust is a legal "entity" that can own property. It is like a human being,  However, it will never die. Each trust you create has a name, just like each human has a name. We call the trust name the "trust title". Each asset you own (i.e., your house, bank account, brokerage account...) needs to be re-titled into the name of the trust. That way your trust owns the asset. The process of transferring asset titles into the name of the trust is called "Funding" the trust. Although your trust will own your assets, you still own and control the trust while you are alive. When you die, you don't own your assets for Probate Court purposes, your trust owns them. Therefore, the Probate Court system is not triggered and Probate Court is avoided.

 

Benefits of a Revocable Living Trust

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A Revocable Living Trust is one of the most versatile and powerful tools in estate planning, offering numerous benefits that extend well beyond the basic provisions of a Last Will and Testament. While both documents serve to manage the distribution of assets after death, a revocable living trust offers a range of advantages that provide more control, flexibility, and protection for you and your beneficiaries during your lifetime and after.

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One of the primary benefits of a revocable living trust is its ability to help you avoid probate. Probate is a court-supervised process required to validate a will and administer an estate, and in California, it can be time-consuming, expensive, and stressful for your loved ones. Probate fees, which include attorney fees and executor fees, can significantly reduce the value of your estate, and the process can take many months or even years to complete. By placing assets into a revocable living trust, your estate avoids probate entirely. Upon your death, the trustee can distribute the assets directly to your beneficiaries, saving time, legal fees, and the hassle of probate. This is particularly important for individuals with significant assets, real estate, or complex family structures, where the probate process could be more cumbersome.

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Another key advantage of a revocable living trust is the privacy it offers. When a will enters probate, it becomes part of the public record, meaning that anyone can access the details of your estate, including the value of your assets and the names of your beneficiaries. In contrast, a trust is a private document, and its contents remain confidential, protecting your family’s financial details from public scrutiny. For individuals who value privacy, particularly those with large estates or business interests, this confidentiality can be a critical factor.

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A revocable living trust also provides essential protections during your lifetime, particularly in the event of incapacity. If you become incapacitated due to illness, injury, or age-related conditions, the trust allows your successor trustee to step in and manage your financial affairs without the need for a court-appointed conservator. This seamless transition of management ensures that your bills are paid, your investments are managed, and your assets are protected while you are unable to handle your financial matters yourself. Without a trust, your family would have to seek a conservatorship through the court system, a time-consuming and costly process that could cause significant delays and hardships.

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One of the often-overlooked but important benefits of a revocable living trust is its ability to protect the family home from "Medi-Cal estate recovery". Medi-Cal, California’s Medicaid program, can provide long-term care benefits to qualifying individuals, but after the recipient’s death, the state may seek reimbursement from their estate for the cost of care provided. For many families, the family home is the most significant asset, and without proper planning, it could be subject to Medi-Cal estate recovery. However, assets placed in a revocable living trust, including the family home, are generally not subject to Medi-Cal recovery. By transferring ownership of the home into the trust, you can shield it from potential claims by the state, ensuring that it passes to your heirs intact. This protection can be a vital safeguard for individuals concerned about preserving their family’s legacy.

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In addition to avoiding probate and protecting against Medi-Cal recovery, a revocable living trust provides greater control over how and when your assets are distributed to your beneficiaries. A will typically distributes assets outright to beneficiaries upon your death, which may not always be the best approach depending on the age or financial responsibility of the beneficiaries. A revocable living trust, on the other hand, allows you to set conditions for distributions. For example, you can stagger distributions over time, provide for education or healthcare expenses, or set specific criteria that must be met before certain assets are distributed. This flexibility is particularly beneficial when you have minor children, beneficiaries who are financially inexperienced, or family members with special needs.

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Another key benefit of a revocable living trust is its ability to accommodate assets located in multiple states. If you own property in more than one state, a will could subject your estate to multiple probate proceedings—one in each state where property is located. This is known as ancillary probate and can further complicate the administration of your estate. A revocable living trust, however, holds all assets within the trust, avoiding probate in any state, and streamlining the process for your beneficiaries.

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It’s also important to note that a revocable living trust can be modified or revoked at any time during your lifetime, as long as you remain competent. This means that as your life circumstances change—whether through marriage, the birth of children or grandchildren, or changes in your financial situation—you can easily update the trust to reflect your new priorities and wishes. This flexibility makes it an ideal choice for those seeking to maintain control over their estate while still planning for the future.

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While the initial cost of setting up a revocable living trust can be higher than drafting a simple will, the long-term savings and benefits often far outweigh the upfront expense. By avoiding probate, minimizing legal fees, protecting assets from Medi-Cal recovery, and providing for a smoother transition of management in the event of incapacity, a revocable living trust offers a comprehensive and flexible solution that ensures your estate is handled according to your wishes.

 

A revocable living trust is a powerful estate planning tool that provides numerous benefits over a will. It offers privacy, avoids the lengthy and costly probate process, ensures seamless financial management during incapacity, and protects the family home from Medi-Cal estate recovery. Additionally, it provides greater control over the distribution of assets and flexibility to adapt to changing life circumstances. For individuals seeking to protect their assets, provide for their loved ones, and simplify the estate administration process, a revocable living trust is often the superior choice.

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Avoid Conservatorship

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The only thing worse than going through a probate court proceeding after death is having to go through a probate court proceeding while you are still alive. The Living Probate is known as a "Conservatorship". A conservatorship is necessary when a person is disabled and can no longer make financial or health care decisions for themselves. A Probate Court judge will appoint a "Conservator" over the finances and health care decisions of the "Conservatee" (disabled person). In addition to the process being a time consuming, expensive, public process that requires a lawyer, the conservatorship process requires at least two lawyers. The person trying to help the disabled person gets one lawyer and the disabled person gets their own lawyer to defend them against the conservatorship.

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Generally, everyone works together for the good of the disabled person unless that person does not want to be helped. Once a Conservatorship is granted, anytime a conservator wants to do anything for the Conservatee, they have to go to court to get the judges permission. The Conservatee must attend each hearing if he/she is able. Also, the Conservator must file accountings with the court once per year. The conservatorship will last until the Conservatee dies or no longer requires a conservatorship. The nightmare of conservatorship is easily avoidable with a Revocable Living Trust, Financial Powers of Attorney, and an Advance Health Care Directive. These documents are very inexpensive alternatives to the Conservatorship proceedings when considering all the factors. 

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