Other Estate Planning Services & Costs

COST

The cost to set up a revocable living trust starts at $1750 for a couple for a simple A-B trust (plus expenses and related fees) and the following related documents will be included with your trust:

• Wills
• Durable Powers of Attorney for property and for health care
• Deed to put house in trust
• Assignment of personal effects to Trust
• Community Property agreement
• Homestead Declaration

The cost is a bit less for single persons, and can go much higher, depending on the complexity of the estate and which attorney you choose to do the work. The cost of a simple will is usually a hundred dollars or so per person; cheaper now, but costly later.

INTESTATE SUCCESSION

If you have no will or trust, the law dictates where your property will go. Further, this law is changed from time to time. In addition, there is generally no alternative to probate and the attendant fees unless you do not own real estate valued at more than $20,000 and your total estate is less than $100,000. If this suits you, you don't care who administers your estate and you don't mind paying probate fees or paying taxes on your estate in excess of the tax-free amount ($1,000,000 for 2002, and for 2011 and later), then you don't need an estate plan.

JOINT TENANCY

Joint tenancy is often extolled as a cheap way to avoid probate, but it has some drawbacks. If you hold property as a joint tenant and you die, the other joint tenants get the property, no matter what your will or trust says, and despite the law of intestate succession.

Joint tenancy also has a tax detriment for married couples, when compared to community property. When one passes away, the survivor gets both halves of community property stepped up to fair market value for tax purposes, but only half of joint tenancy property gets stepped up. For example, an investment property worth $500,000 but which was purchased many years ago for $100,000, will have a new basis of $500,000 if community property, but only $300,000 if joint tenancy. This will mean $200,000 more taxable gain if sold, and $200,000 less basis to use for depreciation if rented out.

Under EGTRRA, the step-up in basis for decedents dying in 2010 will be limited to $1.3 Million worth of property chosen by the executor, and another $3 Million of property passing to a surviving spouse. The balance of property from a decedent will be subject to the carry-over basis rules that apply to lifetime gifts. This ends in 2011.

Further, if you put property in joint tenancy with your heirs, then creditors of any of the joint tenants can place a lien on the property. If the property is, instead, in a trust, then creditors of the heirs cannot touch it. Read more...