Why Should You Establish A Living Trust Now?
A living trust is a legal document you create during your lifetime. It gives you control of your asset distribution when you pass away. It also names the persons you want to manage your affairs if you become incapacitated. Overall, a living trust can provide peace of mind and help you avoid many hassles.
But if you pass away without a living trust, the court will appoint an administrator to manage your estate. The court will allocate your properties following California intestate laws. This process is called probate. A probate procedure can be lengthy and expensive that could last for months or even years. Waiting too long to get the inheritance can be emotionally taxing for your loved ones.
You can avoid this pain by setting up a living trust. A living trust avoids these delays because it’s a private document that appoints beneficiaries to receive the assets you want them to inherit. Also, you, not the court, name your successor trustee to manage your estate during your lifetime. The successor trustee will oversee your trust if something happens to you before your passing.
Before creating a living trust and choosing the people involved, know your choices first – revocable and testamentary trust.
Types Of Living Trusts
While the two mentioned above are the most common types of trusts, consider other kinds. There are irrevocable trusts, intentionally defective grantor trusts, charitable trusts, and bypass or credit shelter trusts. This article focuses on revocable and testamentary trusts.
Revocable Living Trust
With this kind of trust, the settlor allows the trustee to hold their property on behalf of their beneficiaries. If the settlor wishes, they can also be the trustee and beneficiary. This arrangement is possible because the settlor has complete control of their property as long as they live. So, they can also enjoy all benefits that come with it.
As the settlor, you can transfer assets in and out of that legal document. You can also refinance assets and even wholly dissolve the trust.
A testamentary trust is similar to a will trust. Unlike the revocable trust, the beneficiaries will only receive the assets when the trustor passes away. Also, the terms of this type of trust are irrevocable. That means no one can alter or change anything on it once it is finalized and becomes a legal document. The terms of the trust, however, take effect after the completion of probate proceedings.
Depending on your situation, you should talk to a reliable living trust attorney in San Diego about which of these two is the best fit for you. You should also know the pros and cons these living trusts offer.
Benefits Of Living Trusts
One great advantage of having a living trust is privacy. When your assets undergo probate proceedings, all your documents will become public.
But a living trust is a private document, so if you pass away, its contents remain confidential.
A living trust is also a flexible tool that you can use to achieve your financial goals. You can use a living trust to provide for your family, charity, or business. You can also use it to plan for your retirement.
You can also manage how your beneficiaries will receive and how much they will receive after you pass away. This advantage is what probate won’t let you do. As mentioned, when you die without a trust or a will, the court will decide on your asset distribution, which may differ from what you planned.
Your loved ones can file to probate court to get your inheritance, but it’s a long and taxing process. What could’ve been a time for grieving and moving on for them might be a lengthy court trial to get what you have left. So, do them a favor and process your living trust for their benefit.
But then again, there are always two sides to a coin. A living trust also has its disadvantages.
Disadvantages Of Living Trusts
Although a living trust has its perks, it also poses some cons. For one, assets placed under revocable living trusts won’t save estate or income taxes. So, you also won’t receive immediate tax benefits.
Another thing, you can’t protect your assets against your creditors when you place them under your revocable trust. They can go after it as long as you live. But that’s not the case with an irrevocable trust. Assets under the irrevocable trust are out of reach from your creditors. Another way to protect your assets is by placing them under a family limited partnership or limited liability company.
Establishing a living trust also requires some work. To avoid going through probate, you must retitle your assets or add them under your living trust. Your successor trustee won’t be able to manage those missed assets. Thus, the court will handle its distribution. So, before creating a trust, list all the properties you want to place under it.
Although a living trust has disadvantages, you can avoid them with proper planning. You may need to file additional documentation to ensure appropriate processing.
Additional Documents Needed When Creating A Living Trust
You will need to prepare a Medical or Financial Power of Attorney. This document gives someone you trust authority to make medical decisions for you when you get incapacitated. They can also manage your financial affairs while you live and after you pass away.
Another document you must prepare is the Assignment of Personal Property to Trust. This document helps transfer your assets to your living trust. Note, though, that you can’t move properties here like a house. Set an appointment with a respected estate planning law firm to guide you on what assets to include in your living trust.
Lastly, prepare the Certificate of Trust. This certificate proves that the trustee you appointed has the authority to act on behalf of the trust.
Now that you know the different types of living trusts, their advantages and disadvantages, and the documents you need to prepare to create one, what should you do next? Are you still wondering if a living trust is for you? Consider the following questions to see if you should set up a living trust.
How To Know If You Should Set Up A Living Trust
When it comes to estate planning, setting up a living trust is one of the best ways to protect and distribute your assets when you’re gone. But do you need one?
Here are three things to consider before moving on to create a living trust:
- How much money and property do you have? If you have many assets, setting up a living trust can help ensure that they will get distributed according to your wishes.
- Do you want to avoid probate? The probate process can be long and expensive. If you set up a living trust, your beneficiaries will receive your assets without going through probate.
- Do you have minor children? If you have little children, setting up a living trust can help ensure that someone will provide and care for them in the event of your death.
These are big decisions. You can’t solve all of them in one sitting. You need to think things through and have someone explain the process of creating a living trust. You may want to do things on your own at first, but it’s wiser to hire an experienced living trust attorney.
Hire An Experienced Living Trust Lawyer In San Diego CA
Trust is essential to your estate plan, and a living trust lawyer will help you create and fund it correctly. They know which assets should go to it and which ones not to include. They can also help you on choosing a successor trustee. Since your trustee will make many important decisions in your stead, you must select the right one. An experienced living trust lawyer can guide you on that.
So when you choose your living trust attorney, consider the following things:
- Get recommendations from those you know and trust. Ask your friends, family, and financial advisors if they know of any good living trust lawyers in San Diego, CA.
- Once you have a few names, research each one. Look up their credentials and read online reviews to understand their reputation.
- Schedule consultations with the living trust lawyers on your shortlist.
Once you’ve chosen a few, prepare these questions for them, so you will know if they are the right fit for you:
- What is your experience with living trusts?
- Do you have any sample documents you can show?
- Do you offer a free initial consultation? How long does it generally last?
- How much does it cost to set up a trust? How much does it cost for an annual review?
If you request their sample documents, ask if they will customize them for your situation.
Deciding on how you want your beneficiaries to receive their inheritance when you’re gone may be the most important thing you can do for them and yourself. Remember that discussing these things with your family is never too early. If anything, it’s a loving act.
When it comes to Living Trusts, a reliable team of estate planning attorneys at Weiner Law provides professional and honest advice to help clients make the wisest decisions possible. If you want to set up a complimentary evaluation with them, you can book an appointment with their attorneys at no cost.