Once & Done
The importance of a living trust.
Planning ahead, in the form of a revocable or living trust, brings peace of mind today and makes life easier later for your loved ones upon your death.
“I always advise people that if you don’t have a plan, the state of California has a plan for you and it’s called the Probate Code,” says Douglas Wright, a Redding attorney who has been providing estate planning services for the past 16 years.
An estate valued in excess of $166,250 will go through the probate process if a trust has not been created, notes DeAnne Parker, a Redding attorney and certified public accountant who has been assisting clients with trusts and wills for more than 20 years.
Probate is a court process involving a series of proceedings and hearings where a court-appointed administrator gathers an estate’s assets, pays any debts and expenses and distributes the remainder to those who have the legal right to inherit. It’s long, expensive – Parker says the probate costs on a $300,000 estate are approximately $20,000 – and oftentimes it adds another layer of burden to those already dealing with grief and heartache.
Long and involved proceedings are the last thing mourners should have to contend with, but that’s usually the case if a home is involved and no trust is in place. “If you own real estate, you’re going to be in court,” Wright says.
Wright recalls one probate case involving a milliondollar property, five children, “a ton of infighting” and a child-support judgment that stretched out through six real estate agents and eight years. Two of the heirs died before the case was settled “and it was totally avoidable with some kind of plan.”
It’s one thing to say “Mom and Dad wanted this to happen, but if it’s not in writing, that’s not going to happen. You have to follow the rules of California, and that may not possibly be what that person intended. We’ve had to cut checks to distant relatives who happen to be next in line,” Wright says.
Trusts are also important in the event of illness or incapacitation to ensure one’s end-of-life healthcare decisions are honored as well as matters like burial arrangements. The alternative is a court-appointed conservator. “With a trust, you won’t need a conservator. You can have everything managed. Their agent or whoever they appointed can take care of things,” Wright says.
“It doesn’t mean you have to have a large estate,” Parker adds. “Incapacity happens to everybody, regardless of wealth. And we all have ideas of where we want our property to go. The whole idea is to carry out your wishes.”
The typical fees for creating a living or revocable trust are $2,000 for a couple and about $1,750 for an individual. Fees can be a couple hundred dollars higher for more complex estates.
“My normal process is I meet with clients, they provide the financial information on their assets, I go over their wishes and their family. I prepare an estate plan that takes about two weeks, we review it and make an appointment to sign,” Parker says. “What I always hear from clients is, ‘I expected it to be more difficult.’”
A last will and testament can outline what to do with possessions, identify an executor and establish guardian arrangements for minor children and other surviving dependents. This still requires probate proceedings.
While most attorneys assisting with estate planning and trusts are on the up-and-up, there are some financial predators out there, warns Shasta County District Attorney Stephanie A. Bridgett. “Seniors are especially targeted as they have spent their entire lives building up their nest egg and their assets are often more substantial,” Bridgett says, and predators will seek personal information for purposes of identity theft or other fraud.
Bridgett says “red flag” behaviors to watch out for when hiring an estate planning advisor include receiving unsolicited offers; being told to take action and/or sign documents immediately; being pressured to move funds or assets to a single institution or advisor; being denied requests for copies; and being advised not to seek second opinions or share information with family members and friends.
Timeliness is key, Parker says. “As an estate attorney, the worst calls I get is where they don’t have an estate plan. It’s a call from hospital and there’s no power of attorney and no one to take care of them. Or they’re without a will and only a verbal commitment that won’t get recognized. When a trust is created, everything is in place. It makes it much easier for the family.” Wright sums it up succinctly: “It’s never too early to plan. It’s only too late.” •
People who feel they may have been victimized are encouraged to call the Shasta County District Attorney’s Consumer Protection Unit at (530) 225-5391 and visit www.co.shasta.ca.us/index/da/boi/consumer-protection to fill out a complaint form.