In California, if you do not have a Trust, your property will have to go through a court hearing process. This is called probate. The probate process involves the filing of a petition for probate, advertising the filing in the newspaper, and waiting for creditors to file claims, and then filing a closing petition, and asking that the court approve everything that the Executor has done, and to order the distribution of the assets of the estate. Most probates typically take 12 to 18 months, and it is a very public process. In California, with high real estate values – the cost is significantly higher, due to the statutory attorney’s fees, which are based on the value of the estate:
4% on first $ 100,000
3% on next $ 100,000
2% on next $ 800,000
1% on next $ 9,000,000
See Probate Code section 10800 & 10810
A property that is worth $500,000 would cost $13,000 in statutory attorney’s fees, and a property worth $1,000,000 would incur approximately $23,000 in fees. Executors are entitled to the same compensation.
If you have a Trust, your estate can be administered privately, outside of court, and it will cost much less to administer. You should still use an attorney to assist, and an accountant, but the costs will typically be based on an hourly basis, which will cost you much less to administer.
A Trust provides more privacy and keeps your costs lower. Of course, if there is a dispute, the Trust may have to go through a court process, but most Trusts are administered outside of a formal court process.
If you own more than $150,000 in assets, you should speak with an attorney about establishing a Trust.
Ian R. Greensides
Law Office of Ian R. Greensides