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"I am not rich enough to buy cheap things" - the REAL cost of Cheap Estate Planning

Posted by Maria N. Jonsson | Mar 22, 2019 | 0 Comments

When it comes to living trusts, it is not easy for a layperson to distinguish a robust, well-written trust document from a mediocre one. There is the misconception that “I don't have much, therefore I only need a “simple” trust.” The opposite is true: a trust should contain essential provisions that allow “room for growth” – in terms of your wealth. If today you own only a bank account, and sets up a bare-bones “probate avoidance” trust, what happens tomorrow, when you purchases your first home – or add a financial portfolio, or an LLC/Corporation to the wealth mix? What happens is that such person's trust is no longer suited (lacks provisions) for the additional assets, so it would need to be scrapped and completely redone (restated). So, the person who only needed a simple trust today because they only had one bank account, would spend twice as much on estate planning tomorrow, when their assets grow.

In fact, a well-written living trust should be flexible and robust enough to anticipate creditor protection, divorce protection, distribution to young or incapacitated beneficiaries, substance abuse issues, trust contest, flexible distribution of real property (such as a right of first refusal), or ownership of business entities, such as LLCs or Corporations. It should include the all-important powers of the Trustee to manage/control digital assets (online content, online banking, social media, cloud storage, etc.), intangible and intellectual property (such as royalties, etc.); it should contain IRA conduit provisions, foreign trust tax savings provisions; it should properly provide for contingent distributions, for care of companion animals, and even for the specific inclusion or exclusion of certain beneficiaries.

A trust document should be closely customized to meet the needs and lifestyle of the individuals who create it, and “grow” with its creators. Of course, even the most flexible estate plans need to be periodically reviewed and updated. Still, Less is not always More when it comes to Estate Planning. Or, as the wise man said: “I am not rich enough to buy cheap things.”

Ultimately, if a trust document lacks essential clauses, lacks collateral documents (such as a Pour Over Will, a General Grant and Assignment, or Assignments of Business Interests), or is not current with the family dynamic or the law, its administration (possibly, litigation) will cost an immeasurable amount more than the cost of a well-written trust document that is constructed to anticipate such events.

You get what you pay for” is truly the applicable adage when it comes to estate planning.

This is especially true when, to save money legal advice is circumvented when it comes to FUNDING the Trust – meaning, properly titling assets into the Trust, thus avoiding the possibility of Probate in or out of California. In this regard, selecting an estate planning attorney who truly understands Title to Real Property is instrumental to ensure real property – anywhere situated in the United States – is properly conveyed into the Trust. Attorney guidance is invaluable also in terms of the various types of financial assets, life insurance and personal property, and how the Trust affects each.

For that reason, question living trusts that are offered at the cost of a Disneyland ticket; your heirs might end up paying a whole lot more in the end, more like the cost of a ticket to the Moon, if bitter litigation erupts on account of poorly drafted estate planning.

About the Author

Maria N. Jonsson

Founding Attorney and a Certified Specialist in Estate Planning, Trust & Probate Law by the State Bar of California Board of Legal Specialization


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Attorney Maria N. Jonsson, Esq. is a Certified Specialist in Estate Planning, Trust & Probate Law by the State Bar of California Board of Legal Specialization. The Law Offices of Maria N. Jonsson, PC is committed to providing a comprehensive and holistic analysis of your specific circumstances as they relate to Estate Planning, Probate and Trust Administration issues in California. Schedule a one-on-one discussion of your case with Attorney Jonsson directly.