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Estate Planning IS Recession Planning

Posted by Maria N. Jonsson | Mar 11, 2019 | 0 Comments

The “Recession” buzz is all around us. One of the worst things that can happen during a recession is to lose a loved one and to actually inherit from their estate through probate. The lessons of 2008-2010 remind us that, during a recession time, not only property values decline, but when you add the prohibitive cost of Probate administration (roughly 7% of the gross date-of-death value of the property), heirs had to literally walk away from inheriting a home, and let the bank (or the county assessor) repossess it. As such, the cost to inherit is tremendous when a property is not held in trust.

Conversely, owning real property in trust completely eliminates the thousands upon thousands of dollars in probate fees and court costs.

A second factor is a huge delay: to inherit property through Probate, the heirs have to wait a year and a half or more. During that entire time, often the family has to advance mortgage payments, property taxes, etc. costs associated with the property that is tied into the Probate.

Conversely, when a property is owned in trust – the transfer to the heirs can only take a few short weeks.

A third important factor is Creditors. Creditors' rights are front and center in Probate court and the ability to negotiate down debt is very curtailed. MediCal Recovery is a right to recover 100% of all costs advanced. Not so when a property is held in trust.

A fourth factor to consider is the Creditor Protection provisions a trust offers to its residual beneficiaries – during a recession, if an heir is going through divorce or bankruptcy, their inheritance remains shielded from all such creditors and predators in the trust.

There are many other very valuable benefits of setting up a Trust and owning your assets in your Trust, all of which have to do with passing MORE of what one leaves behind to their heirs. This is especially significant and meaningful during recession years. So, the time to plan for recession is NOW – and one step towards that is setting up an estate plan including a living trust.

About the Author

Maria N. Jonsson

Founding Attorney


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