Because the probate process in California takes longer and costs more than in many states, Californian estate planners are especially likely to use a living trust as part of an estate plan. While they are intended to save time and money when settling an estate, setting up and funding a California living trust does consume some resources. The financial cost of setting up and funding a living trust in California can range from nothing to several thousand dollars. The main determining factor is whether you do it yourself or hire an estate attorney. Other elements include your location, the size of your estate and the type of assets it will contain. If you’re considering using a living trust as part of your estate plan, a financial advisor can help you determine whether and how it fits with your situation.
California Living Trusts in Brief
Living trusts are basic tools of estate planning in every state because they allow assets in the estate to go directly to beneficiaries without the delay and cost of going through the probate process. As one of the states that doesn’t follow the Uniform Probate Code, California’s probate process is longer and more costly than most. State-mandated probate fees consume 4% of the first $100,000 of an estate, and executor and attorney fees add costs. The process generally requires at least eight months and can go two years or longer.
Setting up and funding a living trust as part of your estate plan lets you avoid probate. This means your beneficiaries will receive the support you intend them to have much sooner, and the site of your estate won’t be reduced by probate costs. It does cost money to set up and fund a living trust, but it is likely to be a bargain when compared with probate.
The least costly way to create and transfer assets into a living trust is to do it yourself for free. You can download templates for living trusts for free and fill them out yourself. Online trust-creating tools such as FreeWill can walk you through generating trust documents tailored for California, again without having to pay anything. You will, however, have to pay recording fees to transfer real estate assets into the trust, but there is no cost to transferring most financial assets.
Do-it-yourself estate planning is not necessarily the right approach for everyone. Hiring an attorney may be appropriate if you’re unsure of how to do it yourself or have a large or complicated estate. An attorney specializing in estate law will charge from about $900 to as much as several thousand dollars to set up and fund a trust.
California Living Trust Cost Considerations
The legal bill for establishing and funding a California living trust can vary due to several factors, including where you are located, the complexity of the trust and your marital status. A revocable trust may cost less than a more complicated irrevocable trust. A major factor is the rate charged by the attorney, which may be between $200 and $400 per hour depending on the attorney’s expertise, experience and business practices. There’s no set hourly rate or cost for a living trust. However, an average California attorney may charge about $2,000 for the job.
In exchange, your lawyer will first take some time to hear your situation and explain your options when it comes to living trusts. Next, they will draft the paperwork establishing the trust. An attorney will likely have you sign the trust documents in front of a notary, which may involve a fee of $15 or so. However, notarizing signatures is not required for living trusts in the state.
Transferring assets into the trust is a required step and could take significant additional time. The process of transferring bank accounts and similar financial assets varies by institution but may be as simple as listing the name of the trust as a beneficiary of the accounts. Transferring real estate is more complicated and involves filling out, signing, notarizing and filing a new deed for the property along with a document reporting the change of ownership with the county clerk. Filing fees for this task vary by county but may be $50 for a primary residence and $150 for a vacation home or similar property.
California Living Trust Caveats
Attorneys set their own fees and you may be able to find one who will do the work for significantly less than most. If you can, it may be worth getting paid help compared to doing it yourself for free, because an attorney can ensure that forms are filled out and recorded properly. An attorney can also help you address complicated scenarios, such as transferring oil and gas interests or ownership in a business into the trust. If your situation changes, an attorney can advise you on updating or revising your trust.
Not everyone needs a living trust, even in California. State law allows a small estate worth less than $184,500 to bypass probate without a living trust, eliminating one of the main advantages of a living trust. The California attorney general suggests being alert for living trust mills that sell people living trusts they don’t need and may also attempt to sell other products that are inappropriate.
Bottom Line
You can create a living trust in California cost-free if you do it yourself and don’t need to transfer real estate into the trust. For a more complicated or larger estate, you may want to hire an attorney to advise you. This will likely cost at least $900 and perhaps several thousand dollars, depending on your situation and location and the attorney’s expertise, experience and hourly rate.
Tips for Estate Planning
- A financial advisor can help you understand the costs involved in creating a California living trust and develop a plan that fits your budget and priorities. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Making your estate plan can actually be very straightforward. Here are five steps you should take to make sure that you have a competent and complete estate plan.
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