Are You Prepared For The Unexpected

Now, what is this plan that the State of California has for us, and why is this attorney on the air telling me that it's not gonna be a plan that I would appreciate? Well, that plan involves something called probate court, and 70% of Americans, their families will have to go through this probate court process.

70%.

That means 70% of Americans do not have any written plan on how their assets are going to be distributed af- they, after they pass away.

Now, why is probate court so bad? Well, first of all, probate court is the court that administers your estate when you do not have a written plan.

Now, every adult in this country should have an end-of-life plan, whether that's a power of attorney, a medical directive, a will, or a trust.

And the threshold to have to go through this probate process is not very high.

So if you pass away after April 1st, 2025, that threshold is about 209,000.

To be exact, it's 208,850, so $208,850.

If your estate total equals that or more and you don't have any written plan, you haven't created a trust, your estate is gonna fall into the hands of the probate court.

Now, why do we not wanna go through this process? Why is it so bad? Why is it so scary? Why is this plan not in the interest of your family members? Well, for a couple reasons, but number one, and I think the reason that most individuals would not want their families to go through this process, is that this is not a free plan that the State of California has for you.

Probate court is expensive, and what I mean by that is your family is gonna have to hire a probate attorney to help them through this process.

This is not an easy process where you can go down to the court and file paperwork and everything's gonna be okay.

The probate attorney is able to collect fees in two ways: statutory fees, which I'm gonna explain, and extraordinary fees.

So there's two methods in collecting.

Statutory fees mean that based on the value of the estate, the attorney can take a percentage.

So I'll just quickly go over what th- those numbers look like.

The first $100,000, they take 4%, which is $4,000.

Now, I just wanna stop really quickly and let you know that some end-of-life plans or estate planning packages cost less than the first 100,000, uh, statutory fee requirement for an attorney to take through probate, and that's $4,000, okay? The next $100,000, the attorney can take 3%, which is three grand, so we got seven grand right there.

The next 800,000, they're able to take 2%, which is $16,000.

And on the next nine million, they can take a percentage, which is $90,000.

So this can add up very, very, very quickly depending on what the value of your estate is.

Now, when I say the value of your estate, sometimes clients will ask me, "Well, I have a mortgage.

I have a balance left to pay off my loan." So let's say their house is a million dollars and they have a $800,000 mortgage, and the equity is 200K.

They will ask me, "Does only the 200K get counted because I haven't paid off the mortgage?" No, the total value of the property gets counted towards the value of your estate, okay? Now, in addition to these statutory fees, the attorney can charge extraordinary fees.

So if the attorney is litigating the estate, if there is tax work, if they have to sell property, they are able to bill you hourly.