This is a personal story, but I hope it helps you in buying a home, or perhaps it will help your kids buy a home someday. While it was devastating to experience the loss of both of my parents this year, it was good to find out that my father had created a Revocable Living Trust many years ago, which helped our family immensely.
His thoughtful and prudent action is now allowing us to legally avoid Orange County (California) Probate Court Review. NOTE: Make sure to check with your state’s and county’s legislation in this regard.
Here are the 3 reasons why Revocable Living Trusts make perfect sense:
1. Avoid Hassles. In California, a Revocable Living Trust will relieve you from estate-close-down hassles, attorney involvement, and costly court fees. Even if you leave a Last Will & Testament, your heirs must “prove your estate and absolve your debts.” It’s up to the Court to establish who you were, who your legal heirs are, the value of your financial assets, what income taxes are owed, exposure of personal debt including credit cards, outstanding property tax debt, liens and promissory notes. With a Revocable Living Trust in place, you don’t have to submit to that process.
2. Keep More Money. We’ve been informed that the county court can charge the family between 15 and 20% of the value of the estate. Wouldn’t you rather keep the money in your heirs’ pockets than give it to attorneys? When ALL DEBTS are paid, then the estate is finally cleared for distribution to the heirs.
3. Escape the Wait. Probate Court review can take up to 3 years, depending upon the county in which you own property. More importantly as it relates to your buying a home, you would have to wait for any assets to be freed before being able to use the money for a down payment or as an asset to be used for qualifying for a loan. Your dream home could slip through your fingers while you’re waiting for the Probate Court review to be completed. If you read our March 4, 2015 Blog Post, “11 Reasons to Find a Mortgage Lender NOW,” you would be very frustrated by the Probate Court’s delay!
If you are in Southern California, I have a wonderful friend, Linda Rippin, who is a Living Trust Advisor and has been helping people set up Living Trusts for the last 15 years for $1,350, which is a fraction of the cost of hiring a private attorney. She has set-up a Revocable Living Trust for my family. She met with me, asked questions about my family, and explained all aspects of the trust so I could decide appropriately how to allocate my assets. Once the application was complete, her attorneys reviewed, approved and completed the Trust. Otherwise, there are many professionals that can help you with creating a Revocable Living Trust. Be sure you ask for references and fees, and it’s actually best to have someone you know recommend a person they have worked with. Otherwise, I’ve heard horror stories of charges of $4,000 or of trusts not being set up correctly.
If you would like Linda’s contact information, please contact me via email or at the phone number below.
For more ideas to help you in purchasing your first home see our May 7, 2015 Blog Post, “17 Great Down Payment Ideas for Your First Home Purchase.”