trusts are essential
“Revocable living trusts are essential for real estate owners in California.” - Meghan Mcnulty
Attorney | Trusted Advisor |Fiduciary
Meghan McNulty, a licensed California attorney specializing in estate planning, outlines a structured three-level approach to estate planning, with a strong emphasis on revocable living trusts as essential for real estate owners in California. This outlined three level approach was discussed on episode, “A Business Owner's Guide to Estate Planning | Why 67% of Americans are Making a Critical Mistake”
Only 24% of Americans have any estate plan, and just 13% include a trust, leaving the majority vulnerable to probate court delays, costs, and family disputes when owning property. Her advice is tailored to homeowners and investors, focusing on avoiding probate (which can take 1+ years and cost 4-7% of estate value) while addressing liability.
Level 1: Basic Documents (Foundation for All Real Estate Owners)
Components:
Will: Directs asset distribution post-death but does not avoid probate—it still requires court filing, even for real estate.
Healthcare Power of Attorney: Appoints decision-makers for medical choices if incapacitated.
Financial Power of Attorney: Allows asset management (e.g., paying property taxes or mortgages) if unable.
Relevance to Real Estate: Without these, courts decide guardians for minor children or asset handlers, potentially freezing property sales/rentals.
2. Level 2: Revocable Living Trust (Core for Homeowners)
What It Is: A trust where you (as grantor) transfer real estate title during life. You retain full control; upon death/incapacity, a successor trustee seamlessly manages/transfers assets without court.
Key Benefits for Real Estate:
Benefit Explanation CA-Specific Threshold Avoids Probate Bypasses an approximate 9-18 month court process; immediate transfer to beneficiaries.
Setup for Homeowners:
Young families buying a primary residence: Immediately fund the trust with the deed (e.g., via quitclaim).
Example: $1M home not in trust → probate; in trust → trustee sells/gifts instantly.
Limitations: No liability protection—like a "red wagon with no cover," creditors can access assets.
3. Level 3: Asset Protection (For Rental/Investment Properties)
Primary Tool: LLC Integration:
Primary Residence: Use revocable trust only (avoids probate; no rentals = low liability).
Rental Properties: Hold in LLC for liability shield (e.g., tenant slip-and-fall lawsuit limited to LLC assets, not personal home).
Then, nest LLC ownership inside revocable trust for probate avoidance + seamless succession.
Example: Rental portfolio → LLC holds deeds → Trust owns LLC membership → Beneficiaries inherit without court.
Key Advice from Meghan for Real Estate Owners
Start Now: Buy house/kids → Get Level 1-2 immediately
Update Regularly: New property/divorce → Refile deeds
Avoid DIY: LegalZoom covers basics but misses nuances (e.g., CA deed funding); use licensed attorney.
Business Owners: Align with operating agreements for seamless transfer.
Statistics Impact: 67% "critical mistake" = relying on will alone, per title (verified: 76% lack trusts).
Contact Meghan:
620 Newport Center Drive #1100
Newport Beach California 92660