Have you ever wondered what your family would need to do to get their hands on everything you’ve left them if something happened to you tomorrow? How do they obtain title to your real estate and access to your bank accounts? What about your stock portfolio and your business interests?
In this article, you will find out that your family will not have automatic access to your things. They’ll need to go through the probate court to collect them.
You’ll also learn how expensive probate costs.
It’s a privilege to leave a lasting legacy and to pass on as much of your wealth to your loved ones as possible. So take advantage of it and be proactive while you’re still alive and well.
What Is Probate?
If your assets are worth more than $150,000, your family will likely need to go through the probate court to collect your things if you didn’t put a plan in place to avoid probate. Your family must prove to the probate judge that they are entitled to the things you left behind (defined as your “estate” and “assets” in legal terms) and California law will dictate how your assets are distributed among your family.
Your family will need to hire a probate attorney and the court will appoint a personal representative to handle the probate proceedings. The fees for probate attorneys and personal representatives are set by law, and they are very expensive (see chart below).
The entire probate process can take a year or even two years if your family fights over who should get what. So rather than taking the time to grieve and move on, your family will be stuck in court sorting out the uncertainty that you left behind.
How Much Is Probate?
This chart below helps you calculate how much money will be coming out of your pocket to pay for probate fees. Probate means less money for your family and more money for probate attorneys and the courts.
Let’s imagine that you have a $500,000 home, $100,000 in stocks, $50,000 in cash, and a $20,000 car when you pass away. Your estate will be valued at $670,000, which means your family will be paying almost $34,000 in probate fees, plus court filing fees, before they can receive whatever's left in your estate. Ouch! And there will be additional attorney's fees if your family fights over your assets.
(Not So) Fun Fact
Over sixty percent of Americans don’t have an estate plan, which is the reason the probate industry is a $2 billion per year business. That’s $2 billion dollars every year that families like yours are not pocketing from their loved ones.
Estate Planning Makes Financial Sense
Absolutely. Probate is likely 10 to 20 times more expensive than estate planning, so it's a no-brainer to plan ahead so your family can avoid probate. By permitting the use of living trusts and other tools to avoid probate, the law gives you a golden ticket to hand to your family.
Will you take advantage of it?
Also, estate planning has intrinsic value. Your family will know what to do with the things you leave behind without going to probate court. They will less likely be fighting over who should get what. And they'll spend more time honoring your legacy and moving forward with their lives. Click here to schedule a free consultation with our Los Angeles wills & trusts lawyer to help you.
So What's Your Excuse?
You can reach me Edmund Yan, Los Angeles estate planning lawyer, at firstname.lastname@example.org if have any questions.