Living Trust California

Living Trust uses in California

Living trusts are becoming a popular estate planning tool because of its ability to accomplish multiple tasks simultaneously.

Families with dependent children can use trusts to withhold assets from young beneficiaries until certain ages are reached, with exceptions for health, education, maintenance or support - as deemed reasonable by the successor trustees you appoint.

Trusts can hold and maintain assets. The trust can own title to a home, pay the mortage, taxes, ulitities and other upkeep until children finish school, after which the children and legal guardians must leave the home so it can be sold and proceeds distributed (should you not want to uproot children from their school or the guardian's home is not big enough).

Trusts can also allow the spouse of a blended family to continue living in the deceased spouse's residence for as long as he/she chooses without fear of the deceased's children forcing him/her out. Once the spouse leaves the property, then the home or proceeds from the sale of the home can be distributed to the deceased's heirs.

Probate in California is a common concern for families with $100,000 or more of assets subject to probate or $30,000+ of real estate in California. Assets in a living trust avoid probate, meaning a court is needed to supervise the transition of the estate, which has both benefits and potential disadvantages. Some assets avoid probate - including jointly held assets with rights of survivorship and assets with beneficiaries already listed, such as life insurance, retirement accounts and annuities.

Estate taxes, reducing the likelihood of an estate being contested and beneficiaries with special needs are other reasons people consider living trusts as part of their estate.

Are you without any estate planning documents?

Financial Power of Attorneys can help avoid the need for a court to appoint a conservator to manage your affairs should you become incapacitated, which takes both time and money.

An Advanced Health Care Directive declares your intentions regarding health care in any situation, including the use of life support in terminal situations.

A last will & testament provides instructions how to distribute your estate, who you would like to act as executor and who should be guardian for any minor children. Without a will, you could die intestate. Community property assets with a spouse all transfer to the spouse. Separate assets are split between the spouse and your children, grandchildren, parents, siblings and other close relatives.

A living trust is a tool used in addition to the documents above.

What is a trust?

While a power of attorney form, advanced health care directive or last will and testament can be thought of as instructions on a piece of paper, a trust can be visualized as a box.

The two most common trusts are testamentary trusts (created by a last will and testament after the will's creator passes) and a living trust (also called an inter vivos trust which is created before the creator passes). The big difference between the two: testamentary trusts do not help assets avoid probate.

When creating a living trust, it is imperative to understand that signing and notarizing documents does not signal the end of the process. The trust's creators must visit banks and other institutions to change deeds, titles and ownership from the person's name to the living trust's name. For many people, this step is not as overwhelming as one would think - it just takes a little legwork which can save lots of legwork for those taking care of your estate later.

Concepts to understand about living trusts:

1. The people involved in the trust (trustors, trustees, successor trustees and beneficiaries)
2. How to transfer assets into the living trust
3. The different reasons living trusts are used to hold assets

The site will help you understand how living trusts work in conjunction with other estate planning tools and prepare you with enough information to generate meaningful questions when sitting with an estate planning professional.