Elaine Luong's Real Estate Blog

Although living trust is often mentioned during the estate and gift tax planning, the purpose of setting up a living trust is to avoid probate, not tax savings.

WHAT IS A LIVING TRUST?

A living trust is created so that we can put our assets in it. We then can administer the trust for our benefit and transfer the asset to our beneficiaries when we die. Assets in a trust are not subject to probate because they are not owned by us. The living trust is also known by other names, such as revocable trust and family trust.

DO YOU NEED A LIVING TRUST?

Living trust is not for everyone. But it will avoid the probate and administrative cost if it is set up properly. You can see the damage of probate to the famous person below:

Individual: Elvis Presley
Estate Value: $ 10,165,434
Value after Probate: $ 2,790,799
Probate Cost: $ 7,374,635
Probate Cost % of Estate Value: 72.55%

Individual: J.P. Morgan
Estate Value: $ 17,121,480
Value after Probate:$ 5,227,791
Probate Cost: $ 11,893,689
Probate Cost % of Estate Value: 69.47%

Individual: Alta Rockefeller Prentice
Estate Value: $ 12,775,531
Value after Probate: $ 4,103,216
Probate Cost: $ 8,672,315
Probate Cost % of Estate Value: 67.88%

Individual: John D. Rockefeller, Sr.
Estate Value: $ 26,905,182
Value after Probate: $ 9,780,194
Probate Cost: $ 17,124,988
Probate Cost % of Estate Value: 63.65%

Individual: Marilyn Monroe
Estate Value: $ 819,176
Value after Probate: $ 370,426
Probate Cost: $ 448,750
Probate Cost % of Estate Value: 54.78%

Individual: General George Patton

Estate Value: $ 844,364
Value after Probate: $ 577,539
Probate Cost: $ 266,825
Probate Cost % of Estate Value: 31.60%

Individual: Franklin D. Roosevelt
Estate Value: $ 1,940,999
Value after Probate: $ 1,366,132
Probate Cost: $ 574,867
Probate Cost % of Estate Value: 29.62%

Individual: Walt Disney
Estate Value: $ 23,004,851
Value after Probate: $ 16,192,908
Probate Cost: $ 6,811,943
Probate Cost % of Estate Value: 29.61%

Individual: Dwight D. Eisenhower
Estate Value: $ 2,905,857
Value after Probate: $ 2,234,428
Probate Cost: $ 671,429
Probate Cost % of Estate Value: 23.11%

WHAT NEXT?

We all expect the Congress will do something to fix the estate tax, which will be repealed next year. At this time, we do not recommend drafting a comprehensive estate tax planning. However, we should get a better understanding of trust, will & estate planning before talking to a legal professional later. The free information provided by The State Bar of California at below will be a good starting point:

http://www.calbar.ca.gov/state/calbar/calbar_generic.jsp?sImagePath=Living_Trust.gif&sCategoryPath=/Home/Public%20Services/Consumer%20Information/Pamphlets&sHeading=Living%20Trust&sFileType=HTML&sCatHtmlPath=html/Pamphlets_Living-Trust.html

This information comes from my CPA and some from continuing education.