Here is how you can save your family around $15,000. The other day, I was talking to my friend Jennifer. She hasn’t done any estate planning because, as she explained, “All I have is my house and some money in a checking account.” She went on, “I have two kids, so they will get the house and the money. Right?” Her house is worth around $600,000. Jennifer’s belief that estate planning is unnecessary given her situation is a very common one.
Jennifer is indeed correct. Her children will get the property, but it will cost them a great deal of time and money to do so.
You see, here is the problem. After Jennifer passes away, Jennifer’s kids can’t simply take control of the property, put a for sale sign on the lawn and sell it the next day. No real estate agent, broker or title company will deal with them because the kids don’t have legal title to the property. You can’t sell something if you don’t own it. Imagine if you tried to sell your neighbor’s car. You can’t legally sell it, because you don’t have legal title to it. To get title to the property, the court must order a transfer title to the kids via the lengthy and costly probate process which typically takes nine to 12 months, involves a great deal of work and several court appearances.
How much does all this cost? Aside from the court fees which can be steep, the fees are typically four percent of the first $100,000 of the gross estate, three percent of the next $100,000, two percent of the next $800,000, etc. In the case of transferring title to Jennifer’s home, her family is looking at about $15,000 in fees just for the home. Additionally, the executor or administrator is often entitled to fees, which can potentially double the fees incurred.
Therefore, I explained to Jennifer that her kids would indeed get the property without estate planning, but it would potentially cost them around $15,000 to do so. If there are other items that must go through probate, the fee could be even higher. With a little planning, Jennifer’s family can avoid these unnecessary costs and the money can go to her heirs. Her kids would certainly appreciate that.
For more information please call 661-295-4610 or go to www.valencialawyer.com.