Here’s how the probate and trust administrations differ.
Today I’m joined by Dana Cannon of Cannon Legal Firm to discuss the differences between probate and trust administration.
According to Dana, one of the main differences is that probate administration involves the court. You’re basically at the court’s mercy, and all the delays caused by COVID have stretched even further what used to be a one-year timeline for resolving a probate estate. Now you’re looking at a timeline of one and a half to two years due to all the different entities and individuals involved in the process.
For most people, the biggest hindrance to getting a trust is the cost involved. Creating a trust does include the upfront costs of having the document drafted, and the exact figure depends on which attorney or estate planner you hire to do this. Dana charges, on average, $1,750 to $2,250 for an estate plan. Since the average price for a Long Beach home is about $800,000, a married couple would probably pay $2,000 to $2,500 to set up a living trust and ensure their assets pass on to whoever they want, however they want.
With probate, though, not only do the initial court costs have to be paid after you die—which typically range from $1,500 to $2,000—but there will also probably be at least $1,900 worth of legal fees that need to be paid. On top of that, the executor or administrator of your estate is entitled to another $1,900 in fees.
“Not all estate plans are created equal, so you need to make sure you have a good rapport with the attorney who’s drafting the document for you.”
So if you have assets you want to pass on to your heirs, you’re saving yourself a lot of money and one huge headache by setting up a trust. Trust also gives you a lot more freedom to do what you want before you pass away. The initial probate fees alone amount to almost as much as the entire trust administration process costs. Additionally, the distribution of a trust is handled privately between the trustee and its beneficiaries. Probate proceedings, on the other hand, are done publicly.
When setting up a trust, there are common mistakes people tend to make that you need to avoid. For example, many don’t understand that they’re not comparing apples to apples when price-shopping for a trust. Not all estate plans are created equal, so you need to make sure you have a good rapport with the attorney who’s drafting the document for you. They’re basically memorializing your wishes into a written document, and if you have to go to court for whatever reason to settle a family dispute, the court will look at that document to see what your intentions were. If you don’t have a good relationship with your attorney and ensure everything is documented according to your wishes, they may not be followed after you pass away.
If you’d like to know more about this topic, you can message Dana for a free consultation on her website. If you have any questions for me, feel free to call or email me. I’d love to speak with you.