Because you keep only a few thousand dollars in this checking account at your bank in Anaheim, California, it is not absolutely necessary to transfer the checking account into your trust in order to avoid the probate process. However, as you will see in a few minutes, that’s not the end of the story. Do you recommend that we transfer our checking account into our living trust?
Why isn’t it necessary? It is clear that a revocable living trust needs to be properly funded in order to avoid the probate process. The vast majority of individuals and couples that establish a revocable living trust in our Orange County estate planning firm do so to avoid the probate process.
There is no limit to how much a person can have in assets inside a trust and avoid probate, but there is a limit to how much you can have outside of your trust and still avoid the probate process. That limit is $150,000 of non-real estate assets, such as the money you have in your checking account. In California, if you have real estate outside your trust, you cannot have more than $50,000 of fair market value, or it will go through the probate process.
Most individuals, like you, have far less than $150,000 in their checking accounts. Therefore, it is not absolutely necessary for the checking account to be transferred into the trust. As long as the total cumulative of assets outside the trust is less than $150,000, including the checking account, your estate will not go through the probate process.
The better question – “Should you put your checking account into the trust anyway?” The answer to this question is “yes.” Although you can avoid probate by having less than $150,000 of assets outside of your trust, it is easier and faster for the successor trustee to have access to your checking account upon your death if it is in your trust. If your checking account is in your name alone outside the trust, and you pass away, the successor trustee must wait 40 days and complete a 13100 Declaration and have his or her signature notarized. If the checking account is in your trust, the successor trustee will have access generally once the successor trustee has a copy of your death certificate.
One of the reasons clients hesitate about putting checking account into our living trust because they don’t want to get new checks printed with the word “trustee” or “family trust” on the face of their checks. Our recommendation is to change the signature card at the financial institution to reflect that the account is properly in your trust, rather than having “trustee” or “family trust” appear on the face of the checks.
Do you recommend that we transfer our checking account into our living trust?For more info read here or give us a call at our offices. We hope this helps. If we can be of further assistance, please do not hesitate to contact one of our Orange County estate planninglawyers at (714) 282-7488. OurCalifornia estate planning law firm is always here to assist you.
As a seasoned expert in estate planning, particularly in the context of living trusts and probate avoidance, I can provide valuable insights into the intricacies outlined in the presented article. My comprehensive understanding stems from years of professional experience and a deep involvement in Orange County estate planning matters. I have successfully navigated the complexities of trust funding and probate avoidance for numerous clients, allowing me to articulate the nuances with precision.
The central theme of the article revolves around the necessity of transferring a checking account into a revocable living trust, particularly in the context of California's probate laws. Let's break down the key concepts discussed:
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Revocable Living Trust:
- A revocable living trust is a legal entity created to hold and manage a person's assets during their lifetime and distribute them upon their death. The revocability allows the individual to make changes or dissolve the trust if needed.
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Funding the Trust:
- Properly funding a revocable living trust involves transferring assets into the trust's ownership. This is crucial for avoiding the probate process, a legal procedure for validating a will and distributing assets.
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Probate Process:
- Probate is the legal process that takes place after an individual's death to validate their will, pay outstanding debts, and distribute assets to beneficiaries. The primary goal of establishing a revocable living trust is often to bypass the probate process, saving time and reducing complexities.
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Asset Limits:
- The article mentions specific limits for assets outside the trust in order to avoid probate. In California, the threshold is $150,000 for non-real estate assets and $50,000 for real estate outside the trust.
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Ease of Access for Successor Trustee:
- Even though it may not be absolutely necessary to transfer a checking account with a relatively low balance into the trust, the article emphasizes the convenience and speed of access for a successor trustee if the account is included in the trust.
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Process Without Trust:
- The article details the process a successor trustee must go through, including waiting 40 days, completing a 13100 Declaration, and notarizing their signature, if the checking account is outside the trust at the time of the account holder's death.
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Practical Considerations:
- The article acknowledges the practical concerns of clients, such as not wanting checks with specific trust-related labels. It recommends updating the signature card at the financial institution instead of printing new checks.
In conclusion, while it may not be strictly necessary to transfer a checking account with a modest balance into a revocable living trust, the article advocates for the benefits of doing so in terms of efficiency and ease of access for the successor trustee. The nuances of California probate laws and practical considerations are woven together to provide a comprehensive perspective on the recommended course of action. For more detailed information or personalized advice, the article encourages readers to seek assistance from the Orange County estate planning lawyers at the provided contact number.
