Estate Planning as a Career

Have you been told that you don’t need a revocable trust because you don’t own 2 million dollars worth of assets? This may be true if all you care about is estate taxes. However, the main reason for setting up a revocable trust is to avoid probate and the cost and inconvenience associated with it.

While a trust can minimize or eliminate estate taxes for persons with a net worth of over 2 million dollars, the benefits of avoiding probate are available to almost anyone. And there are plenty of benefits to avoiding probate.

Probate is expensive. In Florida, the law requires that the personal representative (or executor in other states) hire an attorney to help administer the probate estate. This same law suggests that a reasonable fee for that attorney is three percent of the total gross value of the property passing through probate. Add to that another three percent for the personal representative’s fee and you can begin to see how expensive probate can be.

If you own a $400,000 home and have $200,000 in investments, the six percent of fees can total $36,000. That’s money that your loved ones and heirs will not receive.

Compare this with the trust, where the trustee (person administering the trust) is usually a family member and does not charge a fee. The trustee is generally capable of administering most of the estate without help, and only hires an attorney for specific tasks. As a result, the legal fees are usually in the hundreds of dollars as opposed to the tens of thousands of dollars paid in probate.

Probate is also time consuming. The minimum time to administer an estate in Florida is five months and it is not unusual for a probate administration to last more than a year. On the other hand, many trusts, even those with large estates, have been administered in a matter of weeks.

Setting up and managing a revoc (more…)