Living Trust Attorneys in Roseville Love Aretha
Living Trust Lesson: The Cost to Probate Aretha Franklin’s Estate in California (a hypothetical)
Aretha Franklin, beloved American music icon and definitely not an estate attorney, passed away with an estate reportedly worth $80,000,000.00. And she passed without a living trust. In fact, she had no estate planning at all. Had she been an estate attorney, especially in California, she probably would have died with a trust plan in place. She died in Michigan, so the laws of California would not apply. But let’s pretend that she did live in California. What happens?
Living Trust Defined
A living trust is a plan for how your stuff is passed to the next generation and can have different names. A living trust is the opposite of a “testamentary trust,” which is a trust that comes into existence at death. Typically, these trusts are revocable, meaning, it can be changed or flat out cancelled. A living trust attorney typically recommends revocable living trusts because of the flexibility. Had Aretha made a trust she may have called it “The Aretha Franklin Revocable Family Trust,” or “The Queen of Soul Living Trust,” or anything she wanted.
Purpose of Trusts
The function of a trust is to pass your stuff on to the next generation, but this isn’t the only goal in California. The main reason to have a trust is to avoid probate – a court case to used to pass your stuff to the next generation. Probate is typically time consuming, but a living trust can cut the time between death and distributing stuff dramatically. Probates a time consuming because there is a LOT of things to do: publishing in a newspaper a few times, notifying creditors, waiting for creditor replies court approval on everything… Usually an attorney is hired to assist in this process just because it can be daunting.
But the biggest reason to get a trust is the fees an attorney collects for their assistance. If you missed it, here’s an example.
California’s Probate Statutory Fee Scheme
In the Golden State, an attorney typically collects the statutory fee for probate which works like this:
- 4% of the first $100,000
- 3% of the next $100,000
- 2% of the next $800,000
- 1% of the next $9,000,000
- .5% of the next $15,000,000
- … and over $25,000,000? The court determines what is “reasonable.” This varies wildly, but likely in the .25-.5% range.
Additionally, the court can award “extraordinary” fees to an attorney for extraordinary services.
Why Living Trust Attorneys Love Aretha
So why all the love for Arthea? Let’s run her $80,000,000 estate through California’s probate fee scheme.
- $4,000 +
- $3,000 +
- $16,000 +
- $90,000 +
- $75,000 +
- “reasonable” ~ $137,500 – $275,000 =
Total Base Fees: ~$325,500-$463,000.00
And let’s not forget the extraordinary fees, which an attorney would likely get, given the massive intellectual property rights, marshaling, creditors, family, and a host of logistical problems of distribution. These fees are only for those services that benefit the estate outside of typical probate, which could happen in investigating creditors claims, “heirs” coming out of the woodwork to attempt to take advantage of a profitable situation, dealing with media (as in rejecting most every phone call received from them), and so on. These fees can also vary wildly and can be in in the hundreds of thousands.
Living trust attorneys also handle probates and would gladly accept these fees, including yours truly.
So, Why Would Attorneys Recommend a Trust??
I recommend a trust for LOTS of reasons, besides what we’ve just covered. A trust is private where a probate is public, therefore, there’s no public disclosure of your assets. You’ll STILL likely need the help of an attorney to administer your trust after you die, and it’s usually a good idea to go with the attorney who helped create the trust in the first place, but the fees are negotiable. Typically, the cost to establish a trust is a fraction of the probate fee cost. Also, IT’S JUST GOOD BUSINESS! I would MUCH rather recommend a trust that accomplishes everything a probate does for a fraction of the cost and get referrals for how well I took care of my client than make a lot of money off of ONE good, and exceptionally rare, client.
My clients are small business owners, parents, and blue collar workers, doctors, financial advisers, and professionals who deserve the cost and time savings of a trust. Give me a call today at 916-282-9799 for a free phone consultation or message me here.