Legal Question in Wills and Trusts in California

Re: Living trust or simple will?

Mom has 3 options:

1. She can put the property in joint tenancy with herself and the 3 children. Assuming she dies first, at her death the children file an affidavit of death of joint tenant with the County recorder and title is effectively transferred to the 3 children. This can create 2 types of problems. If Mom has owned the property for a long time or it has a low cost basis for calculating capital gains tax, then only her remaining interest in the property will be stepped up at her death and the children may have a significant capital gains tax to be paid when they sell it. Also, putting title to property in the childrens names may have adverse affect if the child has a judgment or tax lien.

2. She can prepare a will giving the property to the 3 children when she dies. This will reuslt in a steped up basis in the property after her death which will save a significant capital gains tax on the propertys subsequent sale but will req

MICHAEL MILNES

Law Office of Michael A. Milnes

1320 West Herndon Avenue, Suit 103

Re: Living trust or simple will?

In most cases a living trust would be the best and most complete solution, saving time and money now and later. It avoids probate court during lifetime (conservatorship), and probate court after death.

However, she may be more comfortable with a will and durable powers of attorney for finances and health care. This is more expensive in the long run, but less complex now.

Joint tenancy is another option, but it's the least attractive because it leaves the property vulnerable to the other joint tenants' creditors, and if she needs the property deeded back to her, the other joint tenants may not oblige. It also may result in higher capital gains tax when the property is sold.

No matter what she chooses, make sure it's complete and covers her in case of disability during life and takes into account all property at death.

Chris Johnson

Christopher B. Johnson, Attorney at Law

614 East Colorado Boulevard, Pasadena, CA

Re: Living trust or simple will?

A simple Will ends up in Probate Court, costing $9,150 in legal fees, plus $750 of other useless costs.

A Living Trust avoids probate.

Joint Tenancy also avoids Probate, but it subjects Mom's house to risks of the children:

What happens is a child (then a co-owner) is sued, liened by IRS, dies, files for bankruptcy? Mom's house is at risk.

Marc Weissman

Weiss & Weissman, Inc

601 California Street #1307