What You Need to Know to Keep Your House Out of Probate
What is Probate?
Probate is the court supervised process of transferring your assets (e.g. your home) to your heirs upon your death.
Why do you want to avoid Probate?
Several reasons, but most notably: 1) it is expensive (approximately $30,000 for a $1 million home); 2) it takes between 1-2 years before your heirs receive your home; and 3) it is open to the entire public to witness.
How do you avoid Probate?
The best way to keep your home out of Probate is by setting up and properly funding a Trust. There are other options, but they all fall short for various reasons. A common alternative to a Trust is holding your property in joint tenancy. With joint tenancy, upon your passing, the property passes to the surviving joint tenants (the other people on title) without probate. There are several downsides to this method, including increased income taxes, potential creditor liability and still ending up in probate when all joint tenants pass away.
Common pitfalls.
1) Refinancing. The refinancing company will take your home out of Trust, but they never put it back in for you. If you don’t put your home back into your Trust, your home will end up in Probate. 2) Legal Zoom and Inexperienced Attorneys. Whether it is cost savings or inexperience, they do not fund your Trust properly. If your home is not properly put into the Trust, your home will end up in Probate.
What is a Trust?
At the most basic level, a Trust acts like a separate entity, such as an LLC. You put assets in your Trust. You decide who controls your Trust during your lifetime (usually you) and who controls your Trust after your death (usually someone you trust). You decide who receives the assets in the Trust after your death. By having your assets in your Trust, and controlled by someone else after your death, these assets can be passed to your beneficiaries without probate.
Certified Probate and Trust Specialist by the California State Bar
As a Certified Probate and Trust Specialist by the California State Bar, John L. Wong has the experience and knowledge necessary to assist you with transferring your house into Trust and avoiding Probate. Please contact John Wong, Orange County Estate Planning Attorney at Modern Wealth Law to discuss your options in more detail.
John Wong advises on all aspects of estate planning, probate, asset protection and trust administration. He believes that estate planning is about planning for life; while having protections in place should the unexpected occur.
