One of the biggest misconceptions I hear is that, if you have a living trust, there are no costs after you pass away. The truth is that both probate and trust administration involve legal and administrative work. The difference is that trust administration is usually far less expensive, significantly faster and much less stressful for your family.
In California, probate is a court-supervised process used to transfer assets owned in a person’s individual name at death. The cost of probate is set by statute and is based on the gross value of the probate estate, not the equity. This often surprises families.
Consider this example: A person dies owning a home worth $1,000,000 with an $800,000 mortgage. Although the estate has only $200,000 in equity, probate fees are still calculated using the full $1,000,000 value.
When the estate goes through Probate:
- Attorney’s statutory fee: Approximately $23,000
- Executor’s statutory fee: Approximately $23,000
- Additional costs: Court filing fees, probate referee fees, publication costs, bond premiums (if required), accounting fees and other expenses
- Estimated total cost: More than $50,000
- Typical timeline: 12 to 18 months and often longer if complications arise
By comparison, trust administration is handled outside the court system. The successor trustee gathers assets, pays debts, prepares required notices, handles taxes and distributes the trust assets according to the trust terms. California law does not impose a statutory fee schedule. Instead, trustees and attorneys are entitled to reasonable compensation based on the work performed.
That same $1 million estate goes through trust administration:
- Attorney’s fees: Typically, $5,000 to $15,000, depending on the complexity of the estate
- Trustee compensation: Based on reasonable compensation or the terms of the trust
- Additional costs: Appraisals, tax preparation, recording fees and other necessary administrative expenses
- Estimated total cost: Often less than half the cost of probate
- Typical timeline: 6 to 12 months for most straightforward administrations
The savings are not just financial. Trust administration is generally more efficient because there is no court supervising every step of the process. The trustee can act immediately, allowing assets to be managed and distributed without waiting months for court hearings or approvals.
Privacy is another major advantage. Probate files become public records, meaning anyone can review the court file and learn about the deceased’s assets, debts and beneficiaries. Trust administration remains a private matter between the trustee, beneficiaries and the professionals assisting with the administration.
Of course, a trust only avoids probate if it is properly funded. Assets that were never transferred into the trust may still require probate or another court proceeding, which is why reviewing and updating your estate plan over time is so important.
For most California families, a properly funded revocable living trust is one of the best investments they can make. While trust administration is not free, it typically costs a fraction of probate, is completed much more quickly, preserves your family’s privacy and allows your loved ones to focus on healing rather than navigating a lengthy court process. Proper planning today can save your family tens of thousands of dollars and many months of unnecessary delay tomorrow.
Send your questions to ccolan@colanlegal.com and use “Alpine Mountaineer estate planning question” as the subject. We’ll answer your questions in our upcoming issues. This article is provided by your local estate planning attorney, Corina Colan. The Law Office of Corina I. Colan / (909) 265-3315 / www.colanlegal.com
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