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Our Clients Save Thousands and Thousands of Dollars on Estate Plans

Estate planning is often put on the back-burner. Sometimes people never get around to it. However, planning ahead is important because doing so can save you thousands and thousands of dollars; especially if you live in Orange County. In this blog post, we’ll discuss the practical implications of planning versus doing nothing and eventually going through probate.

Key Takeaways

  • Probate is time consuming, expensive and often gets messy

  • Trusts and estates attorneys love probate because state-set fees are high, but we prefer those that plan ahead

  • Schlau Rogers clients save thousands and thousands of dollars on estate plans

According to Core Logic’s 2018 Home Price Index, which we’ve mentioned before, the median home price in Orange County is $715,000. According to demographic information from Onboard Informatics, the average net worth from an Orange County family is $834,531. For our purposes, let take note of the lesser $715,000 figure.

Now for probate. I’m sure you’ve heard of probate; that it’s expensive, you should avoid it, it can be messy, etc. All of this is true, but the key is understanding the practical implications of probate because more often than not, at least in my experience, this is what will move the needle for most people and get them planning ahead; because if you don’t plan ahead, there are very real consequences.

Before we get to the consequence that I want to focus on (and circle back to that $715,000 home price), first let’s start with a general definition of probate:

Probate is the court-supervised administration of a decedent’s estate.  It can be a long process, generally lasting between 8 and 12 months in California. There is something called simplified probate, which for certain eligible estates can be a way avoid a full probate; full probate being the version that lasts quite long in California.

Probate is also expensive. The state sets attorneys fees as follows:

4% of the first $100,000; 3% of the next $100,000; 2% of the next $800,000; 1% of the next $9 million; and so on. As you can imagine these fees get quite high.

On the one hand, as trusts and estates attorneys, we love probate because it means more fees. On the other hand, more fees isn't always the goal for us, even as business owners.

Actually, our ideal clients are your typical orange county family, married, with a couple of kids, a home and some retirement assets; maybe they own a small business; maybe they have some investment properties.

These clients typically see the value in planning ahead and thus avoiding probate. We earn markedly lower fees in providing planning assistance to this type of client. The reason we prefer this transactional-based estate planning to probate despite the lower fees is simply because we like working with people when they’re happy – things are good, lets check estate planning off our list.

Probate clients are in the midst of a very trying time. Usually we work with family members after the passing of a loved one. With all the weight of a death on their shoulders, they in turn have to deal with an attorney, a judge and a generally uncomfortable process that is out there for the world to see.

On top of that, probate usually gets messy. When money is involved, even the closest of families seem to run into trouble.

To avoid probate, you’ll need a trust. Having a will alone is not enough. In fact, a will guarantees you’ll go to probate.

To really see the consequences of failing to plan ahead and thus having to go through probate, let’s take that $715,000 home value. Let’s also assume that number is the value of the entire estate at issue – meaning there are no other assets and we’re just dealing with the value of the home (by the way if you’re thinking “most people have a mortgage, so doesn’t that affect the value” the answer is no, California only cares about the gross value of the estate).

So again, our number is $715,000. What are the probate fees for an estate of that size? They are $17,300. Of course your probate attorneys fees would be higher if you used the $834,531 number we mentioned earlier. Either way, $17,300 is not an insignificant number at all. That’s a lot of money for most families, and a lot of money that in turn cannot be inherited, cannot go to charity, etc. 

This situation is easily avoided by planning ahead. What we do with clients is sit them down in a complimentary consultation and go over the numbers.

Our estate plans start at much lower numbers and can usually stay low for typical Orange County families. This ends of saving clients thousands of dollars and in the end we get the type of client we prefer and hopefully develop a lifelong partnership that is valuable for everyone involved.

If you know of someone who is on the fence and needs some guidance as to the importance of estate planning, I’d be happy to run through the numbers with them.

To ensure you save money by planning ahead, schedule a strategy session today. Keep planning smarter.

Matthew Schlau is a co-founding principal of Schlau|Rogers and an estate and business planning lawyer practicing in Orange, San Diego, Los Angeles and Riverside counties. He is a husband, father, blogger, crossfitter, and really good at helping people achieve their goals.

At Schlau|Rogers, we do more than just estate and business planning, probate and trust administration. Our objective is to provide individually-tailored plans that allow you the opportunity to reach your goals, all while minimizing headaches and risk, and maximizing peace of mind.

On our blog, you'll find useful information about estate and business planning, probate and trust administration, as well as some tidbits on personal finance, taxes, and anything else we think will help minimize headaches, worry and risk, all while maximizing peace of mind.

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Disclaimer: This blog is a resource for educational and informational purposes only and should not take the place of hiring an attorney. Using this blog does not create an Attorney-Client relationship between you and Schlau|Rogers. Individually-tailored legal advice is not provided within this blog. Instead, this blog is a resource designed to make you aware of various legal issues. Your use of this resource is subject to our Terms and Conditions, which you can read here. If you would like to hire an attorney, you can get in touch with us at (949) 873-0662 or request a strategy session.