Whether you are 24 or 94, if you own property, investments and other items that have a total value of at least $100,000 it would be a good idea to have a living trust prepared.
“Everyday there are thousand of dollars lost in probate (court) in our community,” explained John Milligan, owner of Alpha Paralegal, a Los Angeles company that specializes in living trusts, estate planning and more.
According to Milligan, a living trust is like a will and does the same thing as that legal document except for one crucial factor: “A will must go through the probate court system. A living trust avoids probate.”
That little difference could save your heirs at minimum of $3,000 added Milligan, who said that if a will goes through probate there are court filing fees to be paid, lawyer fees to be paid–3.5 percent for $100,000 and 2 percent for each additional $100,000 of the estate’s value.
“If you have investments of $95,000 for example, with the expectation that they will appreciate, you should also establish a living trust,” pointed out Milligan, adding that the trust can and should include all property in California and any other communities or countries you have them in. Additionally, the beneficiaries of a trust can obtain their inheritance after 40 days whereas the length of time in probate is considerably longer, and all fees due must be paid in cash. Should heirs not have the money or are not able to borrow it, they might be forced to sell any property or valuables.
In a living trust, an individual signs all property over to the trust and specifies what heirs can do, Milligan said. An individual can set up the trust so that it dissolves upon their death, or so that it continues and pays beneficiaries at selected intervals. This is particularly important, if you have property that you want to bequeath to minor children or have an offspring who is not capable of handling financial affairs.
Trusts can be set up by paralegals, lawyers, or by yourself, if you are competent in that area of law. Milligan advises choosing the person who will handle setting up your trust carefully. “The better way is finding them through referrals. Then look at their background. How stable are they? Have they moved around a lot or been in business in one place or area for a long time? How many years of experience have they had?”
Attorneys must also register with the state bar and you can check their status at www.calbar.cal.gov. Paralegals are not required to register anywhere but seeing if the educational program they took is approved by the American Bar Association can add to the comfort level.
If a paralegal has worked for another company, get the name of that firm and check the individual out by calling the company. Ask for referrals to current and ex-clients.
Milligan said the answers to some real basic questions will help you pinpoint how knowledgeable the practitioner is: Who should establish a living trust? How much of your real property should go into a living trust? The answers–anybody with an estate valued at $100,000 or more (in California); and all real property.