Living Trust  vs. Cost of Probate

People often ask me how the costs of creating a living trust “package” compares with the typical costs of probating one’s estate in court.  While every family situation has its own facts and circumstances, which may affect the cost of a formal probate proceeding, two typical (and actual) case summaries follow:

 COST OF A LIVING TRUST PACKAGE

 When a person or a couple decide to create a living trust, there are several documents which are usually included: a trust agreement, “pour over” Will(s), Advanced Health Care Directive(s), Transfer Deeds for any real estate, Assignment, Nomination of Conservator, Nomination of Guardian for Minor Children, Trustee(s) Certificate of Trust, Community Property Agreement, Durable Power - Financial, etc.

The typical cost for this “package” of related documents, including all consultations, varies as to many facts, such as a single person or a married couple, and to assets to be dealt with.  This is always less costly than a formal probate.

The entire set of documents is presented in a trust binder that is “user friendly” and permits ready reference at any time.  No tiny print is used.  An explanation is always provided to every client.

 REASONS FOR HAVING A LIVING TRUST

Many reasons are typically given for having a living trust package in place, whether for a single individual or for a couple.

Every family’s situation is slightly different, but some of those reasons are:

• To avoid probate upon death, including multiple probates (both spouses).

• Prevents court control of assets upon incapacity.

• Provides maximum privacy for financial affairs.  Not “public record”.

• Quicker distribution of assets to beneficiaries.

• Assets may remain in trust until you want them distributed.

• Possible reduction/elimination of estate taxes.

• Inexpensive to set up and maintain.

• Can be changed or cancelled at any time (with few exceptions).

• Difficult to contest.

• Prevents court control of minor’s inheritance.

• Permits professional management with corporate trustee.

• Peace of mind.

As one can see from the following real cases, the savings for those selecting a living trust are substantial by many thousands of dollars.

COST OF A TYPICAL PROBATE ESTATE -- Case No. 1

Assuming a probate estate has a value of $216,130 the various out-of-pocket expenses involved with the formal probate were as follows:

COST OF A TYPICAL PROBATE ESTATE -- Case No. 2

 Assuming a probate estate has a the value $950,000.00 the various out-of-pocket expenses involved with the formal probate were as follows:

MORE ARTICLES