Guide to Estate Planning in the SF East Bay: Trusts
In the second part of my Estate Planning Frequently Asked Questions, we'll review some estate plan basics as well as go over what you'll need to get started. So, first things first, if you have a will in Contra Costa or Alameda County, do you need a trust?
If I have a Will, do I need a Trust?
The answer is yes - if you have over $150,000 in assets. Homeowners in Alameda County and Contra Costa County almost always meet this cutoff. A will and a trust are both legal documents whose purpose is to pass real property and assets to the beneficiaries of your choosing upon your death. If you have only a will, however, and your assets total more than $150k, your estate will most likely be required to pass through probate. The cost of probate is generally higher (due to executor and attorney fees), and the process takes significantly longer. The state of California will oversee the distribution and management of your assets.
If your assets are in a living trust, however, the process by which they are distributed to your beneficiaries does not have to be overseen by the court. As such, it is less expensive to administer, and can be distributed more quickly. A well constructed trust also has the advantage of providing significant clarity on powers regarding your asset distribution.
An experienced Estate lawyer can draft a living trust (also called a revocable trust) that meets you and your family's needs. A well drafted trust will allow you the flexibility you need to manage your assets going forward, while also providing specific instructions for distribution. An example of this would be to set up a sub-trust for a minor through which they would inherit assets after an age designated by you. Once the trust has been established, your Estate attorney will assist you in "funding" the trust. This essentially means placing the desired assets in the name of the trust. The deed on your house, for example, would be placed in the name of your trust, rather than your own name. The trustee of the trust (typically the person who set up the trust) would then manage the assets inside the trust. Trusts not only avoid probate - they are generally a safer and more secure way to manage the transfer of assets to beneficiaries upon your death.
What is the responsibility of a Trustee in California?
When you first set up your trust (or set it up jointly with a spouse), you (and/or your spouse) will generally be the trustee. In your trust, you will name a successor trustee, who will be responsible for managing the trust when you pass or are no longer able to fulfill your duties as trustee.
The responsibilities of a trustee in California are first and foremost to honor the wishes of the grantor(s). The grantor is the person or persons who set up the trust originally. Specific duties of a trustee include managing properties, investments, bank accounts, insurance policies, and other trust assets. The trustee must also manage the distribution of trust assets to beneficiaries. California probate law specifies that a trustee must act in good faith. If beneficiaries believe that the trustee is in any way mismanaging the trust, they can petition the court to have the trustee removed. As such, careful attention to the details of the trust are required to properly, and legally administer a trust. Often trustees will enlist the help of an experienced trust attorney to ensure that everything is carried out smoothly.
If I have a Trust, will my beneficiaries need a lawyer when I pass?
A lawyer is not necessary to administer a trust of which there is a trustee in place. As such, your beneficiaries will not need to hire one upon your passing. However, there are several instances in which an attorney can be useful to beneficiaries. These include:
Trust Administration: When an estate is complex in nature, a trustee may wish to hire an attorney to assist with the distribution and administration of the trust.
Trust Litigation: If a beneficiary or other interested party wishes to contest any portion of the trust, or there is a disagreement about the original intent of the grantor, they may wish to hire an attorney to represent their interests. Litigation can best be avoided through communication with beneficiaries prior to one's passing, as well as specific and detailed language in the trust document itself.
What is the cost of a trust in Contra Costa County?
The cost of setting up a trust with an attorney in Contra Costa County or the surrounding San Francisco Bay area typically starts at about $1500. This is the base cost of a revocable living trust, which is adequate for most people in the SF East Bay. Multiple or more complex trusts, such as Charitable Remainder Trusts, Children's trusts, Pet Trusts, and other sub-trusts can be an additional cost. I personally try to keep my estate planning costs on the lower end, as I believe they are a necessary and essential part of an organized financial and familial life.
Most people will opt to have a complete estate plan because they are typically a better bargain, starting at around $2500. A complete estate plan includes a living will, revocable trust, power of attorney, advance health care directive, and certification of trust. However, if you already have these documents in place, you may wish to have your attorney draft the trust a la carte.
When do I need to Amend my Trust?
An amendment to your trust is needed if you wish to make a change to any part of the trust. Common reasons for review and amendment include births, deaths, divorce, marriage, and health conditions. Other factors to consider include:
- Has your financial situation substantially changed?
- Have you acquired significant assets which are not in the trust?
- Have estate tax laws changed in a way that will effect you or your beneficiaries?
- Have you relocated to another county or a new state?
- Have you bought or sold a business?
I offer a free 30 minute consultation to answer any questions you have about your trust or estate plan. As an experienced Trust and Probate lawyer in Contra Costa County, I have been helping clients set up their trusts and estate plans, and resolve trust matters for nearly eleven years. Feel free to call me at 925-322-1763 to get started.