Do I need a Will or a Trust? 

By Jeremy Liem

 

For most individuals, a Trust has considerable benefits over a Will, or no estate plan at all.  This is because a Trust avoids the probate process which can result in substantial legal fees.  Generally, legal fees to probate an estate are set at a certain percentage of the overall value of the estate.  As of the writing of this article, the statutory fees are as follows: 

 

4% of the 1st $100,000

3% of the next $100,000.

2% of the next $800,000.

1% of the next $9,000,000.

 

This fee structure means that an estate worth $500,000 will incur $13,000 in probate fees.  It doesn't matter if there is a mortgage on a home, or other outstanding loans.  Statutory fees are based on the total value of the estate without accounting for debts.

 

On the contrary, the cost of preparing a Trust will be significantly less than those statutory fees.  Depending on the size of the estate, preparing a Trust may cost less than one tenth of the statutory probate fees.

 

For high-net-worth couples that expect to own over $5,450,000 in assets with they pass away, perparing a Trust also helps to avoid estate taxes by taking advantage of each individual's $5.45 million estate tax exemption, for a total of $10,900,000 that is exempt from estate taxes.

 

If you would like to discuss the best method for planning your estate, or have any other questions, please give us a call, or send an email by filling out the following form.