If you own a vacation home outside of the great state of California, you can enjoy getaways with your family members and friends. You can put your worries behind you and make memories with the people you love, and as the icing on the cake, you are making a sound investment.
This is well and good, but you should be aware of the estate planning implications, and we will look at the details in this post.
The Probate Process
Probate is the legal process of estate administration, and it would be necessary if you arrange for the transfer of your property through the terms of a will. This process serves a purpose, because final debts are paid during probate, and the court determines the validity of the will.
Though it is not inherently negative, it is somewhat of a hassle for the rightful heirs to an estate. No inheritances are distributed until it has run its course, and it is time consuming. Probate expenses reduce the value of the estate, and this is another drawback.
Most people like to conduct their financial affairs confidentially, but there is a loss of privacy when an estate passes through probate. It is a public proceeding, so the records are available to anyone that wants to access them.
If you own property in another state, and you use a will to facilitate the transfer of the property, ancillary probate would be needed. This is an additional probate process that would take place in the state where the property is located.
One probate procedure will add an administrative hurdle after your passing, and a second probate out-of-state will further complicate the matter, and your loved ones will pay the price due to hiring a local attorney and incurring local administration expenses.
Revocable Living Trust
You do not have to transfer your property through the terms of a will. A revocable living trust is another asset transfer vehicle that can be the ideal choice for out-of-state property owners and others.
There are those that do not think about creating a trust because they do not want to lose control of their assets. You don’t have to be concerned about this if you have a living trust, because you would act as the trustee, so you would have access to your resources at all times.
And of course, this is a revocable trust, and that term is quite literal. If you want to revoke the trust and take back direct personal possession of the property, it is within your power to do so.
When you establish the trust, you name a trustee to succeed you after your passing and designate a trustee can also be empowered to step into the role in the event of your incapacity. Your heirs would be beneficiaries of the living trust.
After your death, the trust would become irrevocable, and the assets would be protected from the beneficiaries’ creditors. If you want the beneficiaries to receive limited distributions over an extended period of time, you can leave instructions in the trust declaration.
When the time comes, the trustee would follow the directions and distribute the assets to the beneficiaries in accordance with your wishes. There would be no need for probate in Texas, and ancillary probate would not be necessary.
We Are Here to Help!
A living trust will provide a solution if you want to avoid ancillary probate, and even if this is not a source of concern, this type of trust can be the ideal estate plan centerpiece.
However, it is just one of the tools in the estate planning toolkit. When you work with our firm, we will gain an understanding of your objectives and explain your options so you can make fully informed decisions.
At the end of the process, you will go forward with a custom crafted plan that ideally suits your needs.
If you are ready to schedule a consultation at our Burbank, CA estate planning office, we can be reached by phone at 818-937-2335. There is also a contact form on this site you can use to send us a message, and if you reach out in this manner, we will get back in touch with you promptly.
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