I hear people all the time talking about avoiding probate and avoiding attorney fees. Let’s be clear probate is no walk in the park. However, it’s not the end of the world. Additionally, I understand people do not want to pay an attorney unnecessary amounts of money. The problem is a lot of people are so focused on avoiding probate and avoiding attorney fees that they just create more problems after their death. Let’s go through some of the big ones.
First and foremost people create taxes for their loved ones. They avoid probate AND avoid attorney fees by creating a “joint tenancy” deed and all they do is create a capital gains tax for their loved ones when their loved ones go to sell the house. Is that really what they meant to do? Maybe a trust would have been $1,500 but the capital gains tax could be tens of thousands of dollars. Thus a lot of people are better off, and leaving their loved ones better off, by creating a trust which will avoid probate AND avoid capital gains tax!
Paperwork, paperwork, paperwork. I have a case right now where a young man died without a will or trust. He had about $75,000 in assets spread out all over the place. Among the issues we have had to clean up for him: 2 automobiles that needed to have title cleared through the California DMV transfer without probate forms, a last paycheck, a 401k that had no named beneficiary, an IRA with no named beneficiary, 3 or 4 small bank accounts, and an assortment of personal property that needed to be divided up. Luckily his surviving family, a loving brother and sister, are very nice and are not fighting.
People die out of order. There are two things you can count on in life right? Death and taxes as they say! However, you can NOT predict the order of death! I have had several cases where people created joint tenancies, or even gave assets outright to their adult child, and then that seemingly healthy adult child died… before mom or dad. Then the parent was doing a probate for their child. Don’t let that happen to you.
I could go on but the point is review your proposed estate plan with a qualified California estate and probate attorney. Let them tell you if your plan is as good as you think it is.