We already covered the details yesterday of California’s terrible plan for you if you die.
Now let’s put a price tag on California’s plan for you if you die without making your own arrangements in advance.
For the wise guys out there who say, “I’ll be dead and won’t care,” I’ll be with you in a moment.
If you do not have a trust – which is like a contract with someone you trust to transfer your house and other assets to certain people – when you die, the state appoints two people to do it instead.
Those two people are the local probate judge and a family member (called an administrator) that is selected from a hierarchy that does not take into account your personal relationship with the person. It starts with a spouse, goes to children, then a parent, sibling, and on from there. So long as they are not a felon, they get control unless someone else wants to do it, petitions the court and can give a good reason why the other person shouldn’t do it if they wanted to.
The judge is a second set of eyes to make sure everything goes where it is supposed to, and for that, there is a cost.
For someone who dies with an average house (with or without a mortgage), a small savings account, a car or two and maybe some personal assets (jewelry, furniture etc.), but has no trust, the current costs and fees set by state law is approximately $36,000 (We will talk about how we get there in our workshop). The fees consist of attorneys fees, administrator or executor fees and court costs.
Ouch.
It gets tricky when the spouse or children living in the house do not have the cash to pay these costs out of pocket. In that case, the house has to be sold.
We see this a lot when one of the kids has been living with the parent to take care of them. The worst happens, and while in grief over losing you, exhausted after having taken care of you, and with the diminished financial prospects of adult caregivers who have not worked in awhile, they are forced to sell the house to come up with the cash to transfer it to the rightful heirs.
It’s hard to put a price tag on that from an emotional standpoint, but you can see that it is high. Maybe you won’t care because you will be dead, but that’s no reason to leave the burden on your family. I always tell my clients, proper estate planning is the best last gift you will give your loved ones.
By the way, this process takes a minimum of six months, requires all of your random and weird family members to be notified no matter how much you dislike them, and involves publishing notice in the newspaper so creditors can come forward and claim their piece of the pie.
This is totally avoidable! #Getatrust If you are ready to make the decisions that need to be made to avoid this, and want to do it from home, without booking an appointment with a lawyer, stick with us. We already have 20 people in here so, I’ll walk you through everything during the end of March.
In the next blog post I’ll give you the details on what happens when you don’t have a guardian picked out for your minor children.