A Tale of Two Estates: Do You Need a Trust?


Are you wondering if you need a Trust? Here is why you do: Sister ("Sally") and her brother ("Bill") each had homes in Pacific Palisades worth $2,000,000. Sally died on May 1, 2020, with no estate plan. She was survived by two adult sons. Bill died in September 2020, survived by two adult daughters. Bill had a Trust.

Sally's estate had to go through probate; Bill's did not. Bill's daughters received their inheritance on December 15, 2020. As of June 10, 2021, Sally's sons are still waiting for their inheritance.

The Petition for Probate of Sally's Estate was filed with the Court on May 21, 2020, but the hearing was not until October 8, 2020. Sally's sons were ready to sell their mom's house in a hot real estate market immediately after her death, but they had no authority to sign a listing agreement, or a purchase and sale agreement until after the October 8 hearing. They had to wait over four months. Bill's daughters were able to list their dad's house right away.

Both houses closed escrow in November 2020. All of Bill's last expenses were paid. A reserve was set aside for final income taxes due in April 2021. Bill's daughters were his only beneficiaries, and they were able to distribute and close the Trust in December 2020.

Sally's Probate had to stay open for the four-month creditor's claim period after the October hearing. The four-month creditor's claims period ended in February 2021 and a Petition to close the Probate was filed at the beginning of March 2021. The hearing on the Petition to close the Probate is set for August 10, 2021. Nothing can be distributed to Sally's sons until after the Petition is approved at the hearing, still over a month away from today.

The fees and costs for Sally's Probate total over $35,000. The total fees and costs to settle Bill's Trust were under $10,000.


Sally's sons saw how things can go wrong and Bill's daughters saw how things can go well. For both reasons, all of them will make sure they have the proper estate plans.


Planning Ahead Column:

By Lisa Alexander, Esq.

Lisa can be reached by calling 310-656-4310.

alexander@jaklelaw.com

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