A GOOD CANDIDATE: ESTATES WITH LACK OF LIQUIDITY
The state of California requires any decedent’s estate in excess of $100,000 gross value to be made subject to the jurisdiction of the state courts in a probate proceeding. Fees for both attorneys and administrators of the estate start at $3,150 and increase according to a sliding scale. This means that, even an estate with a house worth $300,000, a mortgage of $350,000, and liquid assets of $100,000 would be subject to a minimum of $18,300 in probate fees even though the net value of the estate was only $50,000 in net value. If the house is sold or if income tax returns are filed during the probate administration process, the attorney and administrator may received “extraordinary” fees for additional services rendered to the estate.
The above illustration of a not-untypical situation in today’s real estate market, is why it is important for every home or business owner in the state of California to consider establishing a revocable trust for the management of their assets on incapacity or death. Assets held in trust are not subject to probate on the death of the beneficiaries of the trust. Neither are they subject to conservatorship proceedings if a beneficiary becomes incapacitated. A trust provides a cost efficient means of protecting the interests of your spouse, children, significant other, or any other individual or entity you wish to benefit.