The Financial Stress a Simple Document Could Have Prevented
You or your parents may think a will is enough — until probate creates costly delays and stress. One simple document could help your family avoid a financial nightmare.
I recently helped a friend go through probate after her father passed away. Although he had a will, he did not have a Revocable Living trust— the document that can help families avoid lengthy and costly time in court called Probate.
What many people do not realize is that a will alone does not avoid probate. Probate is the legal process of settling someone’s estate after they die, and it can take many months — sometimes more than a year — to complete. During that time, families often cannot fully access the deceased person’s money or property.
In my friend’s case, her father left her his house. But because the property still had to go through probate, she could not immediately access his bank accounts or other assets. For over a year, she had to use her own money to pay the mortgage, insurance, taxes, and maintenance on the home just to keep the property from falling into foreclosure.
All of this could likely have been avoided if her father had created a Revocable Living Trust and transferred the deed of the house into the trust while he was a live. Instead of waiting more than a year, she could have had access to the property and assets within weeks.
Probate can also be expensive.
In states like Florida and California, attorney fees for probate are often based on the gross value of the estate — not the equity.
For example, in Florida, statutory “presumed reasonable” attorney fees are generally around 3% for estates between $100,000 and $1 million.
That means if your mother owns a house worth $500,000 with a $400,000 mortgage, the probate estate may still be valued at $500,000. Even though there is only $100,000 of equity, the probate attorney fee could still be about $15,000.
California can be even more expensive because both the attorney and the executor are entitled to statutory fees based on the gross estate value. In a similar example, the combined fees could easily total $20,000 or more.
A revocable living trust can help families avoid much of this expense, delay, and stress.
A revocable living trust is flexible and can be changed at any time while you are alive.
I often explain it this way: the trust is like a suitcase, and your assets — especially your home and financial accounts — are placed inside that suitcase. Your will then explains how those assets should ultimately be distributed.
A Revocable Living Trust saves time and money.
Many people assume estate planning documents are extremely expensive, but that is often not true. An attorney can usually prepare a revocable living trust, will, durable power of attorney, health care documents, and advance directives for approximately $2,500–$4,000 — often far less than the eventual cost of probate.
A much simpler and less expensive tool is Suze Orman’s Must Have Documents,which allows families to create and update important estate planning documents online. You can create this in under an hour and the lifetime price is $99. I highly recommend this if you don’t want to pay for an estate attorney. This is a great website that explains all of the documents even if you decide to use an estate attorney.
If you or your parents do not yet have a revocable living trust in place, it is worth taking the time to set one up now. It can save your family significant money, delays, and unnecessary stress later.
Losing a loved one is already such a sad and difficult time. I personally know how overwhelming and emotional it can feel.
My goal is to help women avoid the costly and stressful mistakes I so often see families go through after someone passes away — and to make this process a little easier for the people you love.
