“I only own a house, I don’t need a trust!”

Let me tell you a story……

Mike’s daughter Jessica came to him one day after attending a seminar on living trusts, and told her father that he needed a living trust.   “Why do I need a living trust,” Mike replied, “all I have is the house your mother left when she died.”

Here are some of the reasons that Mike should strongly consider having the home put into a living trust:

1.       Mike didn’t realize that ownership of a house or any other real estate in California with a market value of $50,000 or more (as of January 1, 2012) was sufficient to require that a Probate proceeding in the Probate Court would be necessary in order for him to pass the family home on to his daughter at his death.   Because the house is worth $600,000, well over $50,000, Jessica, will have to go through a Probate proceeding that could end up costing court filing fees, publication fee, court appraiser’s fee, and attorney’s fees of thousands of dollars, perhaps as much as $10,000 to $15,000 or more.   Also, because the Probate process has many time delays, it would probably take her at least 1 year to 2 years or more before Jessica would actually own the family home or receive the proceeds from the sale of the home.   Owning the home in a living trust will avoid much of the lost time and expense of Probate;

2.       If Mike becomes disabled and it becomes necessary for Jessica to take over Mike’s finances to help him out, without a living trust owning Mike’s house, Jessica will have to start a Conservatorship proceeding in the same Probate Court, incurring thousands of dollars of additional expense in attorneys fee, filing fees, Court Investigator’s fees, and accountant’s fees.   With a living trust and a document called a Durable Power of Attorney, Jessica can handle things for her father without getting the Probate Court involved;

3.       Additionally, if Mike becomes disabled and needs medical care, Jessica will likely have to use the same Conservatorship proceeding to request authority to make medical and health care decisions for her father, again incurring the lost time and expense noted above.   An additional document called an Advance Health Care Directive can grant Jessica the authority she needs to handle her father’s medical and health care needs without getting the Probate Court involved.

To sum this story up, a comprehensive estate plan involving the use of a well-drafted living trust, pour-over will, Durable Power of Attorney, and Advance Health Care Directive is essential for Mike to make sure that his daughter Jessica does not have to spend thousands of dollars and countless weeks waiting to inherit Mike’s house.

Unfortunately, self-help books and legal websites are inadequate to prepare a good, comprehensive estate plan.  Mike needs the help of a qualified estate planning attorney who can ask the hard questions and craft a plan that is unique and suited to his needs.

If you or your loved ones need more FREE information regarding estate planning design, contact our Redwood City estate planning office to assist you.

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