Why Every Homeowner Should Consider A Living Trust
- Jun 28 2016
Congratulations! You are a homeowner. You achieved the American dream (or at least part of it) and now you own a piece of real estate in one of the most desirable parts of the United States – California.
For a lot of people their house is their largest asset, and the value of this asset will only grow with time. Thus, if you bought your house 10-15 years ago, the chances are that by now your house has already doubled or even tripled in value, which, of course, is a good thing, except, when it is time to pay taxes.
Nothing is Certain but Death and Taxes
Death is not the topic most people like to think about. Unfortunately, it happens to the best of us, sometimes unexpectedly, and it is a good idea to have your estate planning documents in order sooner rather than later, otherwise, your loved ones might pay a hefty price for your procrastination. Coping with death of a loved one is hard, couple it with the necessity to face expensive and time-consuming administration procedures and outrageous estate taxes, and it might just be the proverbial straw that broke the camel’s back.
Depending on the size of one’s estate, as much as forty percent (40%) of it could be decimated by taxes. Currently, individuals may pass estate and gift tax-free, up to five million four hundred fifty thousand dollars ($5,450,000.00) in assets to his or her beneficiaries. This five million four hundred fifty thousand dollars ($5,450,000.00) credit is commonly referred to as the “unified credit” as provided in the tax code. It is indexed to inflation and will increase each year. All assets above this five million four hundred fifty thousand dollars ($5,450,000.00) credit are exposed to the estate tax. A couple can pass on a total of ten million nine hundred thousand dollars ($10,9000.00), however it is a complicated process which requires the assistance of an estate planning attorney.
I’d like to leave you with this – if you are a homeowner and you live in California you might want to consider establishing a living trust to avoid unnecessary expenses and headache of a lengthy probate proceeding for your loved ones upon your death, even if the estate tax is not a concern. Seeing an estate planning attorney might do you good regardless. You might not need a living trust right now, but it is always good to know your options. Usually, the first consultation with our office is free, so you do not risk anything, but will gain a valuable insight on your estate planning situation. Our office provides and Estate Planning Questionnaire for you to complete and which will assist our estate planning attorney to formulate the best plan for you.
Finally, if you decide that you want a living trust, than please do yourself a favor and choose a reputable lawyer to do your estate planning. I am aware that these days there are places where you can buy a living trust for about $400 – $600. DO NOT BUY IT! I cannot stress it enough. In estate planning there is no such thing as “one trust fits all”. Most likely you will end up with a product you do not need at all. Every trust and every estate plan is one of a kind, just like people. You might be able to save some money now but your loved ones will be paying dearly later. Remember the old saying – stingy always pays twice. Plus, if your estate plan is prepared by a reputable attorney, he or she will notify you of any changes in the law that might affect your estate plan, and advise you what changes, if any, are necessary to be made to your estate planning documents, so that your personal representative will have no “surprises” later.
Contact Schneiders & Associates, L.L.P. today for your estate planning questionnaire and to schedule your complimentary consultation. During your consultation, our estate planning attorney will review your family and financial situation, discuss your wishes, answer your questions and suggest strategies to protect your family, wealth and legacy.
Posted in: Estate Planning