Trusts are invaluable and diverse estate planning tools. They benefit people of all asset levels, not just multi-millionaires.
Trusts are simply an arrangement where one party holds property on behalf of another party. In estate planning context, a trust is created when someone declares property to be held by another person for the benefit of a third party. A trust is referred to as a “Living Trust” when it is created to hold and manage your assets during your life and the assets are distributed to your heirs up on death.
Here are the benefits of setting up a Living Trust as part of your estate plan:
Revocable. The default for California is that a Living Trust is revocable unless expressly made irrevocable. Being revocable means that you keep the ultimate power over the property – the power to take it back into your personal possession at any time.
Avoid Probate. The California probate process can be costly and time-consuming. Fees are statutorily set based on the size of your probate estate. Placing property in a Living Trust will avoid the probate process and allow your named successors to gain instant control and possession over your estate.
Privacy. Unlike a will, a Living Trust is NOT recorded with the state, not even at death. That means your nosey neighbors or aggressive creditors won’t be able to determine what property is in your estate, who are your heirs, and how much they received.
Flexibility. A Living Trust can be tailor made to handle a variety of situations. The most common involve minors or those with special needs. But a Living Trust could also be used to make sure your inheritance cannot be claimed by your heirs’ creditors or ex-spouses. You can control when your heirs receive their inheritance and under what circumstances. In effect, you can retain control over your estate beyond your death.
Tax Planning. A Living Trust allows some tax planning to minimize taxes. Depending on the size of the estate and the taxes involved, a Living Trust can be structured to show incredible tax savings. Such a savings may include using the full extent of your estate tax exemption or transfer the unused exemption to your surviving spouse for their future benefit.
There are many different types of trusts that can be customized to meet a variety of estates and goals. As part of a comprehensive estate plan, a Living Trust can greatly enhance your ability to carry out your wishes while saving your heirs time, money, and frustration.
Contact Yeager Law with your questions, comments, or concerns.