Living trusts are one of the tools used by experienced estate planning attorneys. A living trust has one distinct feature – it provides benefits to trust makers while they are still alive. However, a living trust is not just another document for your estate plan. It requires utmost compliance with state laws, otherwise, the trust can incur penalties.
While creating a living trust may be as simple as setting conditions for how you would like your assets to be distributed after your passing, there’s more to that. But first, you should have a clear knowledge of what a living trust is.
Living Trust Attorney Explains Why You Need To Create One
A living trust allows you to control how your assets are managed and distributed after your death. This estate planning tool has three key parties – the grantor, the trustee, and the beneficiaries. If you create a living trust, you (as the grantor) transfer ownership of your assets to the trust, and designate a trustee and beneficiaries. You as the grantor also write all the rules and conditions for managing the trust.
The trustee then manages the assets according to your wishes as outlined in the trust agreement. Upon your death, the assets in the trust are distributed to your beneficiaries without going through probate.
In some cases, the grantor can also be the trustee and the beneficiary at the start or while still alive. Additional conditions can be placed in the trust, such as a successor trustee. There are several ways to make a living trust, so it is wise to hire an experienced living trust attorney to ensure compliance with the law.
It may sound simple and you can probably sit down and create a living trust in a few minutes, on your own. However, the conditions in living trusts must also be carefully and concisely worded to prevent any disputes later on. That is why an experienced living trust attorney by your side brings a lot of advantages.
But what type of trust will work for you?
The Different Types Of Living Trusts
There are two different types of living trusts: revocable and irrevocable. A revocable living trust can be amended or revoked by the grantor at any time, while an irrevocable living trust cannot be changed once it is final.
A revocable living trust is the most common type in San Diego CA. It allows the grantor to retain control over the assets held in the trust during their lifetime. Under this agreement, the grantor can also revoke or amend the terms of the trust at any time.
In contrast, an irrevocable living trust is a more permanent arrangement. Once the trust is created, it cannot be changed or revoked by the grantor. This type of trust is often used to protect assets from creditors or estate taxes.
What Are The Benefits Of Living Trusts?
There are many benefits of having a living trust such as avoiding probate, protecting your assets from creditors, and reducing estate taxes.
Without a last will or a living trust, your assets will not be transferred to whoever you intended to receive them. Instead, they will go through the probate process, which can be time-consuming and costly. Additionally, information regarding your assets will be made public during probate proceedings. Thus, avoiding probate is a major benefit of having a living trust.
Privacy From Public Records
A trust is a private document. Unlike in probate, the general public can not look into it under whatever conditions may arise. That, by itself, already presents a huge relief. Such privacy protects your heirs or beneficiaries from being the target of scheming individuals. The only exception to this is when you die without leaving a last will, your legal heirs have the right to ask for a copy of your trust. Read about Last Wills.
Reduce Estate Taxes
Estate taxes can eat up a large portion of your estate if you die without a plan in place. Living trusts can help reduce estate taxes by allowing the transfer of assets to the beneficiaries over time, rather than all at once. This allows you to take advantage of tax breaks and minimize the amount of taxes owed by your estate.
So now, with all these significant benefits of a living trust, how do you create one?
How To Create Living Trusts In San Diego CA
Living trusts are a great way to protect your assets and ensure that your wishes are carried out after your death. If you live in San Diego CA, there are a few things you need to do to create a valid living trust.
First, you need to choose a trustee. This person will be responsible for managing the trust after your death and ensuring that the conditions under the trust are followed. The trustee can also manage the trust while you are alive or when you are incapacitated. Some grantors, also choose to be trustees at the beginning. But you can choose a family member, a trusted friend, or a professional trustee such as a bank or trust company.
Next, you need to transfer ownership of your assets into the trust. This can be done by retitling accounts and property in the name of the trust or by executing a transfer deed for real property.
Finally, you need to fund the trust by providing it with the resources to carry out your wishes. This includes money, investments, and property. Once funded, the trust becomes its own entity and is managed according to your instructions.
By following these simple steps, you can create a valid and effective trust that will serve you and your family for many years to come.
What Assets Can Be Placed In Living Trusts?
There are many assets that can be placed in a living trust, including:
- Real estate: This can include your primary residence, investment property, or vacation homes.
- Personal property: This can include cars, furniture, art, and jewelry.
- Financial accounts: These can include bank accounts, investment accounts, and retirement accounts.
- Insurance policies: This can include life insurance, health insurance, and disability insurance.
Do note that a living trust does not completely protect the grantor from creditors. If the grantor has debts, creditors can still go after the trust property. So, if you’re planning to make a living trust, it is best to do so with an estate planning lawyer to answer questions such as how to protect your trust’s assets from your creditors.
How Do Living Trusts Work After Death?
Once the grantor of a living trust dies, the trustee is responsible for transferring the assets in the trust to the beneficiaries. This process is called trust administration.
It’s best if someone trustworthy can manage your affairs. This should be someone who understands your wishes and will do everything in their ability to make them happen. In many cases, this person is a family member or a friend, but a trustee could also be a professional advisor. As the grantor, you can even designate multiple trustees.
If you are named as the trustee of a living trust, it is important to understand your responsibilities. You may want to seek legal advice to ensure that you comply with all applicable laws and regulations.
The Roles & Responsibilities Of A Trustee
A trustee is a fiduciary who holds legal title to the property for the benefit of another person, usually referred to as the beneficiary. The role of a trustee is to manage the trust in accordance with the terms of the trust agreement.
The duties of a trustee are numerous and vary depending on the type and purpose of the trust. However, all trustees have a duty to act in good faith, in a manner that is compliant with the conditions of the trust and existing laws. In addition, trustees have a fiduciary duty to exercise reasonable care, skill, and caution when managing trust property.
As fiduciaries, trustees must avoid conflicts of interest and self-deal. They must also maintain accurate records of all trust transactions and keep beneficiaries informed about trust activities.
Of course, a trustee’s designation is not permanent. While alive, the grantor of a living trust in most cases can remove a trustee and designate another. They can even revoke the entire trust altogether.
How A Living Trust Attorney Can Help
While creating living trusts is a relatively simple process, it still requires some legal paperwork. An attorney can help you with this part of the process by:
- Drafting living trusts documents and obtaining signatures from everyone involved.
- Preparing any other related documents that may be required for an estate plan such as wills, and powers of attorney.
A trust attorney will also be able to help with matters like financial planning and tax planning for your estate. This includes:
- Making sure all assets are properly transferred into the living trusts.
- Ensuring that any income earned through these assets remains tax-free.
- Creating investment strategies to maximize the value of these funds until they are distributed upon death or otherwise needed by beneficiaries.
If you live in San Diego CA and are considering setting up a living trust, this article has hopefully given you all the information you need to get started. Contact Weiner Law office in San Diego, CA. A living trust can be an excellent way to protect your assets and legacy after your death. If you have any further questions, you can speak with an experienced estate planning attorney from Weiner Law who can advise you on all aspects of setting up a living trust.