Revocable Living Trust
The Living Trust is a popular estate planning tool in California. Our California estate planning lawyers can help you determine if a Living Trust is advantageous for your circumstances. Potential benefits include:
A Revocable Trust can spare your family the trouble and expense of dealing with the Probate Court. This is of particular importance to California residents since California’s probate system can be cumbersome and family members often live at great distances.
AVOID GUARDIANSHIP AND KEEP THE COURT OUT OF YOUR PERSONAL AFFAIRS
Unlike a Will, which is a death instrument only, the Living Trust also protects you while you’re alive by allowing you to appoint someone to handle your business affairs in the event you become incapacitated. This minimizes the chances of guardianship and court involvement in your personal affairs.
MAINTAIN FAMILY PRIVACY AND DISCOURAGE CHALLENGES
The Living Trust is a private document and need not be filed with the court. That offers another advantage: privacy. Your dispositions are not public record, as they are with a Will. That also reduces the possibility of your plan being challenged by any disgruntled heirs.
MORE CONTROL OVER DISTRIBUTIONS TO BENEFICIARIES
A Living Trust gives you greater ability to control when and how your beneficiaries use their inheritance. For example, you may want your grandchildren to receive their money only when they attain a certain age. If you have an adult child who is not responsible with money, the provisions of your Trust could specifically give him only certain amounts at specific ages, and/or for specific purposes.
ESTATE TAX ADVANTAGES
For couples with taxable estates, the Living Trust can offer additional advantages. A Credit Shelter Trust, (also known as the AB Trust or Bypass Trust), allows couples to pass more tax- free money to beneficiaries by taking full advantage of each spouse’s estate tax exclusion. When the first spouse dies, his or her assets equal to the amount exempt from estate taxes — currently $11.2 million — flow into a Credit Shelter Trust. The survivor has access to the income from that Trust, but not the principal. When the survivor dies, the money from the Credit Shelter is not included in the survivor’s estate, thereby allowing twice as much money to be passed tax-free to heirs.
CHOOSING YOUR SUCCESSOR TRUSTEE
When you establish a Revocable Trust as part of your estate planning, you (the grantor, also known as the trustor) make yourself the trustee of the assets you place in the Trust. You are still free to sell, trade and give away the assets as you see fit. You may also change the terms of the Trust, or revoke it, at any time. But once you pass on, the successor trustee(s) you’ve designated take control of your assets, and distribute them in accordance with the provisions of your Trust.
Choosing a successor trustee is a serious decision. The person must be willing to serve, obviously. The successor trustee should also have sufficient financial experience, sound judgment and adequate time to handle the responsibilities that come with the job. The successor Trustee should always hire professionals – lawyers, accountants, etc. – to assist with the tasks the trustee lacks the proficiency or comfort to do him/herself.
In certain circumstances, you may find it preferable to appoint a third party rather than a relative as successor trustee. For example, you may believe that time constraints or questionable integrity will interfere with your adult child’s ability to handle the job. Also, if your adult children do not get along, choosing a third party can be preferable to choose just one child, which may inflame sibling rivalries, or to appointing all your children as co-trustees and somehow hoping that they can work together amicably. A bank or brokerage may serve as a third-party trustee.