How Much Money Can a Living Trust Save You and Your Family?

A living trust is something most people aren’t thinking about on the daily. Unfortunately, it’s one of those things mentioned after the fact. Living Trusts are easy to create, easy to edit, and extremely affordable.

Why do people procrastinate on creating a living trust?

From my experience, there are two main reasons.

1. 1. Most people have only heard of a living trust but don’t really understand how they work.
   2. People underestimate the value of their estates. 

I’ll share the following story in reference to that second point. My wife and I are both schoolteachers, thus when it comes to money, it means we make just enough to pay our bills and that’s about it. Yeah, I know the tradeoff is that in retirement, I get basically the same amount as I make now. However, the gas company doesn’t really care about how much I will make after I retire. They want their money now. My wife and I just paid off our house after 30 years, except the money we used to pay for our mortgage is now going to the education of our children, both of whom are in college with another year to go. So, the money we save from paying off the mortgage is really not going to be seen for a while. For years, our friends have continually said we need a living trust, but we never really paid much attention because we really don’t have much. We have our life insurance, which already avoids probate, our pensions which will go to the surviving spouse, and when we both die, it ends. Therefore, not much of an estate to worry about. Well, the conversation again came up at a dinner party, and I was about to reply with my standard response when our realtor friend blurted out “how much is your house worth now?”. I said I have no idea; I assume a couple hundred thousand dollars. The realtor, yelled out ”you don’t know, how could you not know?” I responded I really did not know as I never cared as we have no intention of ever selling it. The realtor then said, you really need to check it out. Your house is worth well over a million! I said no way, we only paid $125,000 for it. That’s impossible. The realtor just chuckled. The friend who started this (Stan) then said we really need to find out as the house could easily be worth over a million dollars. I was stunned, as was my wife. But Stan wasn’t done. He then said you need trust, as you do not want your house going through probate. He further asked, “do you even know how much probate costs?” He finished off by stating “go talk to an attorney” and the conversation turned elsewhere. The conversation about trusts this time never left me. I kept thinking about it. About two weeks later I decide to do a little research on it. I looked up trusts, Wills, etc. But then I also decided to look up the cost of probate. The figures vary wildly depending on the state you live in, but 10% of the total estate seems to keep popping up, sometimes more. I saw a figure saying the singer Prince’s estate will cost over $2 million to probate. Yikes. In California, we have what is called a statutory fee system that can be used as a guideline. Basically, it ranges from 1%-4% for the attorney fees, but there are many other fees; filing fees, appraisers, probate referee, inventory fees, etc. As a result, I am now thinking, at a minimum, if our house gets probated we are looking at about $25,000-$30,000. And, that is only if there are no problems. Any problems will cost more. I did not think we had substantial assets as my bank account surely proves, but if we count the house, we do. Plus, we are not ready to go yet. In 30-40 years the house will be worth way more, and therefore the probate fees will most likely be way more. Stan was right, we do need a trust. Though we won’t tell him for a few as I hate it when he is right.  Now I understand why my friends have said if you own a house, you need a trust. I just never realized that California property has gone up that much through the years and that two teachers are actually millionaires without even realizing it. So, for a fraction of the cost of probate we can get a trust done, which will not only prevent probate costs but other costs as well. A trust will allow our kids to sell the property immediately which means they do not have to pay property taxes on it, nor insurance, utilities, or any maintenance fees. It’s a rather substantial saving when taking into account it could take a year or more to probate the estate.  If you would like to find out more about living trusts, we have an online video that in less than 45 minutes provides a great overview of everything you would ever want to know about a living trust. It also shows how to obtain an affordable living trust from an experienced attorney at a low price of only $599. There are no hidden fees and the notary is also included in the price. To view our educational video, simply click here right now.