Estate or financial planning is vital in safeguarding and ensuring the well-being of your loved ones in the case of your death. These documents are among the most essential you’ll ever write or sign in your lifetime. If you’re a trustee of an estate in California, you need to acquaint yourself with the laws regarding trusts. The benefits of a living trust in California are lucrative, but you also need to know that probates in the Golden State are lengthy and costly. However, they’re still preferred over traditional last will because they save the family time, money, and effort.
Probate can be a lengthy and time-consuming legal process, especially in California, where the average probate process lasts between eight months to several years. Consequently, the properties you’ll leave are also likely to remain in court for several months or years. This lengthy process and hefty legal fees could deplete your financial resources in the long run.
Your beneficiaries don’t have to appear in court. You also don’t have to hire attorneys for the proceeding. After you die, your assets could be distributed right away according to your instructions. Furthermore, a properly structured living trust could even save your family money which could go to taxes.
Revocable vs. irrevocable living trust
A living trust is a legal means to specify when and how you want to distribute your properties, assets, investments, money in the bank and brokerage account, or anything of value to you after your passing. You can designate your heirs as your beneficiaries.
As the grantor of the trust, you can choose your trustee. Trustees are who you give authority to your assets during your life and after your death. Under the revocable living trust, the grantors commonly set themselves as the trustees. This way, grantors still have complete control over the assets they place in the trust.
If you choose yourself as the trustee, you need to name a successor trustee in your trust document. In the event of your passing or when you become incapacitated, successor trustees take over the trust, its management, and distribution of assets according to the instructions you establish. Living trusts allow you to transfer as many or as few assets as you desire.
Under the revocable trust, not only can you put as many or few assets as you choose and establish yourself as a trustee, but you can also add or withdraw as many assets anytime. You have the freedom to amend, modify, or cancel the trust anytime.
Meanwhile, the opposite happens when you choose an irrevocable living trust. You can’t take them back or amend them once you sign. They also need you to hand over complete control and ownership of your assets to the trust. However, irrevocable trusts can be advantageous if you’re after reducing taxes.
Living trusts are not only limited to individuals. Shared living trusts exist, frequently availed in conjunction with spouses or partners. In this case, you and your spouse co-own the properties you place in the trust. It is advantageous if one grantor dies; no transfer is required. However, both grantors retain the right to name beneficiaries for their respective assets.
Most will in California go through the probate process; living trusts don’t. It remains a confidential legal document that need not enter the court system. Hence, there will be no public records of your trust. This means that terms, amounts, assets, and names stated in the living trust are kept private.
This is particularly beneficial to families who value privacy and those with unconventional family dynamics.
Living trusts have a few drawbacks – although the advantages easily outweigh them. It does take ample time to set up and transfer your assets from individual ownership to trust. Also, since revocable trust allows not passing all assets to trust, properties not held in trust should undergo probate. And for irrevocable trusts, amendments are arduous, and a judge’s approval is needed.
This is when you need the help of qualified estate attorneys and revocable living trust lawyers. With their guidance, you can better understand both administration and trust difficulties. Even while you have complete control over the specifics, management, and distribution of your assets, they can be a massive help in strategizing or crafting your estate plan.