I understand if an asset is worth $100K, it should be put in a living trust. I have a home worth $350 K, and the equity is $100K. I am a tenant in common with an equal share with someone else so my equity portion is 50K, and we share the loan. Which value do I use as my benchmark to determine whether I should put the home in a living trust, the market value of my share of $175K or my share of the equity of $50K?
Michael Raymond DaymudeLitigation LawyerSherman Oaks, CA ·
The present market value of the home is used to determine whether probate is necessary to clear title, and probate fees are based upon your interest in the residence on your date of death.
There is no particular dollar amount required to title your interest in the house as trustee of your living trust. The advantage of a living trust is that, if done properly, probate is avoided saving your estate money and distribution is not unnecessarily delayed.
I recommend, however, that you consult with an attorney and have an attorney draft your estate plan. I have yet to see a self-drafted estate document that did not create more problems than it solved. Good luck.
In California, if a decedent's interest in real property is over $50,000 (gross fair market value), a court order is necessary to pass the property to the decedent's intended heirs. If the gross fair market value of all the decedent's assets is over $150,000 (regardless of the value of the real property), then a full probate is necessary. There are carve outs for assets held in joint tenancy or in trust or that pass pursuant to a beneficiary designation. In reality, these rules function so that if you own improved real property in California then it is usually cheaper and more efficient to use a trust to pass your estate in to your beneficiaries upon your death. Please note, thought, that the rules and limits for determining the proper transfer mechanism for a decedent's assets are very nuanced and intricate, so it is best to consult with a qualified trusts & estates attorney to get a personalized recommendation.
There is no monetary dollar requirement to place an asset into a trust. While it is true that if the home is worth less than the current limit, it does not have to go through the traditional probate process, it is always best practice to place your assets into the trust no matter what their current worth is. There is no telling when a person will pass away and what the value of the asset will be at that point. It is better to not gamble and protect your assets now.
