Considering Living Trust

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
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nesdog
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Considering Living Trust

Post by nesdog » Thu Oct 31, 2019 10:55 am

Could use a little feedback on this, married and living in CA, one 25 year old daughter.

House is paid off and probably worth about $800-900k at this point. No intention of moving any time soon.

Various retirement accounts and cash, roughly 2mm value, with daughter named as beneficiary.

Probated a relatives estate last year and cost was nearly $30,000, with much less value than ours. Plus it took almost a year.

I know retirement accounts don't end up in the trust, so could be just the house or bank accounts. Does it still make sense?

Thanks..
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unclescrooge
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Re: Considering Living Trust

Post by unclescrooge » Thu Oct 31, 2019 10:57 am

What assets were in your relative's estate?

In California, there is a new transfer on death beneficiary form for your real estate.

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nesdog
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Re: Considering Living Trust

Post by nesdog » Thu Oct 31, 2019 11:15 am

unclescrooge wrote:
Thu Oct 31, 2019 10:57 am
What assets were in your relative's estate?

In California, there is a new transfer on death beneficiary form for your real estate.
It was a house and several cash accounts.

I looked at that TOD, interesting. I wasn't aware we could do that.

We met with the attorney last week. I think one of the pros to doing the entire package is to get the other docs as well; directives, etc.
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bsteiner
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Re: Considering Living Trust

Post by bsteiner » Thu Oct 31, 2019 11:21 am

The fees for administering your relative's estate covered much more than just probating his/her Will. Probating a Will is usually a small part of the work in administering an estate.

Nevertheless, probating a Will is more work in California than just about anywhere else. See Professor David Horton's article, where he examined every estate in Alameda County, California, in one year: https://georgetownlawjournal.org/articl ... robate/pdf. So revocable trusts are common in California.

However, the more important issue is whether you want to provide for your daughter in trust rather than outright, to keep her inheritance out of her estate for estate tax purposes, and to protect her inheritance against her creditors and spouses, and Medicaid.

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nesdog
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Re: Considering Living Trust

Post by nesdog » Thu Oct 31, 2019 11:49 am

Attorney fees for probating in CA are set by law and based on the value of the estate.

As it happens, one of our concerns is that our daughter isn't that financially astute yet and we are thinking of adding a co-administrator for a short period of years (probably 5) as a way to provide her some guidance in the event something happens to my wife and I at the same time. The POD for real estate discussed earlier doesn't allow that.
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unclescrooge
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Re: Considering Living Trust

Post by unclescrooge » Thu Oct 31, 2019 12:40 pm

nesdog wrote:
Thu Oct 31, 2019 11:49 am
Attorney fees for probating in CA are set by law and based on the value of the estate.

As it happens, one of our concerns is that our daughter isn't that financially astute yet and we are thinking of adding a co-administrator for a short period of years (probably 5) as a way to provide her some guidance in the event something happens to my wife and I at the same time. The POD for real estate discussed earlier doesn't allow that.
Good point.
How would your living trust address that?

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CAsage
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Re: Considering Living Trust

Post by CAsage » Thu Oct 31, 2019 4:24 pm

There are amazingly clean and cheap ways to avoid probate by naming a beneficiary on every single account or asset, including the real estate in CA and your car! However - that presumes you really just want to hand it all over immediately. Otherwise - get thee to a lawyer and put it in trust! There's no real half alternative on that. And then make really, really sure you retitle things into the trust. Probate in CA is a nightmare, and to be avoided if at all possible! I had one parent probate, and one TOD everything. Thanks Mom !!
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nesdog
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Re: Considering Living Trust

Post by nesdog » Thu Oct 31, 2019 6:34 pm

unclescrooge wrote:
Thu Oct 31, 2019 12:40 pm
nesdog wrote:
Thu Oct 31, 2019 11:49 am
Attorney fees for probating in CA are set by law and based on the value of the estate.

As it happens, one of our concerns is that our daughter isn't that financially astute yet and we are thinking of adding a co-administrator for a short period of years (probably 5) as a way to provide her some guidance in the event something happens to my wife and I at the same time. The POD for real estate discussed earlier doesn't allow that.
Good point.
How would your living trust address that?
Our attorney told us the trust can be set up with a co-administrator besides our daughter. As mentioned, we can do this for a set period of time. So would have my brother, for example, take that role until she is 30 or so. Our concern is really the next 5-10 years as she matures. While my wife and I are just 60/65 and healthy, we worry about some horrible accident that takes out both of us.
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afan
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Re: Considering Living Trust

Post by afan » Sun Nov 10, 2019 11:47 am

As bsteiner suggested, your daughter is better off having the money in trust for her life, not distributed to her outright at any age. It does not matter how mature, responsible or financially astute she may be. Leaving it in trust provides her with asset protection and keeps the money out of her estate for tax purposes.

You can set up the trust with her as trustee and she can manage it. You can have your brother serve as her co trustee with your daughter becoming the sole trustee at a specified age. Or you can leave it to your brother to decide when to turn everything over to her as trustee.
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