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"What is Probate (and Why Do You Want to Avoid It)?"

 

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Estate Planning Update
March 2012
Greetings!

What is probate?
 
Probate is a legal proceeding that may be required when a person dies. During this proceeding, the decedent's creditors are notified and given a limited opportunity to make claims against the decedent's estate; and once those claims have been settled, any remaining assets are distributed to the beneficiaries named in the decedent's will, or to heirs at law if there is no valid will.

Although some assets may not be subject to probate because of the manner in which they're titled or because they will pass by beneficiary designation, the majority of your assets will be subject to probate unless you plan ahead.

Why do you want to avoid probate?

 

* Probate is costly - The statutory fees on the first $1M worth of assets subject to probate are $46,000. It is not uncommon for the probate court to award extraordinary fees in addition to the statutory fees, which may increase the total cost of a probate by tens of thousands of dollars. Also, the value of your house for probate purposes is its fair market value - not the amount of your equity in the house. Thus, a house that is worth $1M, but subject to an outstanding mortgage of $800K, is worth $1M for purposes of determining probate fees.
  
* Probate is time consuming - Probate may take a year of more to complete. 

* Probate is a matter of public record - Anyone, including nosy relatives and neighbors, may obtain a copy of your will from the probate court.

How can you avoid probate?
 
* Creating a revocable living trust to hold your assets is the most efficient and flexible estate planning solution to avoiding probate; and typically one will cost you a fraction of what probate would cost your estate. Furthermore, a revocable living trust can provide you and your family with other significant economic and non-economic benefits.

Please contact me at 323.654.9513 or brookspaley@paleylaw.com if you would like to discuss the creation or modification of a revocable living trust, or any other aspect of your current estate plan.

Brooks Paley, J.D., LL.M.
About Paley Law Corporation
Brooks_03.12
Paley Law Corporation is based in Los Angeles and specializes in providing personalized, sophisticated estate planning and related legal services. Brooks Paley, J.D., LL.M., is the managing principal of Paley Law.  Brooks has been a member in good standing of the State Bar of California since he was admitted in 1993. He is a member of the Trust and Estates Sections of the State Bar of California, the Los Angeles County Bar Association, and the Beverly Hills Bar Association. Brooks earned his Master of Laws in Taxation with High Distinction at Loyola Law School Los Angeles, his Juris Doctor at the USC Gould School of Law, and his Bachelors Degree at Stanford University.

The above material is provided for general informational purposes only and is not intended to constitute legal advice in any particular matter. Transmission of this material does not create an attorney-client relationship. Paley Law Corporation does not warrant the content of this material and is not responsible for any errors or omissions associated with it.

To ensure compliance with requirements imposed by the Internal Revenue Service, Paley Law Corporation informs you that any U.S. tax advice contained in this communication (including any links to other websites or material) is not intended to be used, and cannot be used, for purposes of (i) avoiding penalties imposed under the Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

    

3301 Barham Boulevard, Suite 402A, Los Angeles, California 90068 

323.654.9513 Tel 323.417.4730 Fax

 

2012 Paley Law Corporation