If a person dies with a will, or without any estate planning document (intestacy), and the decedent owned a home, other real property, or certain types of personal property, then the decedent’s estate would have to be probated in order for the property to pass to the beneficiaries under the will, or the heirs if there is no will. However, there is a simplified procedure when all the property passes to a surviving spouse.

A Revocable Trust sometimes referred to as a Living Trust or A-B Trust is an estate planning tool designed to avoid probate. Avoiding probate is desirable because probate is a relatively costly and time consuming court process in comparison to the use of a trust. For example, if the decedent owned a home with a Fair Market Value of $500,000, then the cost to probate the decedent’s estate would be approximately $27,000 computed as follows: attorney’s fees $13,000; estate representative fee $13,000 (may be waived by estate representative); court costs $850. These fees and costs are mandated by the probate code and approved by the court. The probate process takes a minimum of 8 months.

On the other hand, if the person had died with a trust, for less than $500 the property could be transferred almost immediately without any court involvement. For married couples with assets in excess of several million dollars, a trust may also reduce or eliminate any inheritance tax. A revocable trust can easily be modified or revoked and does not effect property taxes or income taxes. The average cost to prepare a revocable trust is about $2,000. For additional information regarding wills and trusts please call my office for a free 30 minute consultation (415) 626-6975.