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A trust is a legal arrangement that gives a third party (a trustee) the power to manage assets within a trust. The creator of the trust, or the grantor, names beneficiaries who will receive benefits from the trust, typically in the form of monthly payments. There are many different types of trusts, and in some trust cases, the grantor can assign themselves as trustee to continue managing the assets.
The grantor chooses which assets to move into the trust. The trustee will manage these assets to ensure they remain profitable. Once the grantor passes away, the assets will be distributed to the beneficiaries named within the trust.
There are multiple kinds of trusts to choose from, and some may work better for your financial goals than others. Whether you want to reduce your tax liability, maximize your estate, or preserve your wealth, our team of California trust lawyers can recommend the right trust for your estate plan. Contact our estate planning law firm today to speak with our experienced estate attorneys.
There are many benefits to creating a trust. The main one is that it avoids the probate process after death. The probate process is a legal process that all wills must go through once the creator of the will has passed. The court will examine the will to determine its validity and also hear any disputes from family members. Unfortunately, the probate process can take months or even years to resolve, which means your assets will not be distributed until then. Trusts are not required to go through probate, meaning your family members will likely receive their assets much sooner than if you leave them in a will.
Other benefits of a trust include:
If you create a trust, you will likely be asked to create a revocable or irrevocable trust. These are the two main types of trusts, but they are different in how they operate.
Below are the main differences between revocable and irrevocable trusts:
A revocable trust allows you to manage and control the assets within the trust after it has been created. The grantor can add assets, remove assets, or even revoke the trust altogether at any time if they choose. In most cases, a revocable trust becomes irrevocable after the grantor passes away.
Revocable trusts do not offer the same tax advantages as irrevocable trusts; however, they do offer a sense of ownership and control over the assets within them. If you want to maintain your assets while still creating a trust, a revocable trust may be right for you.
Irrevocable trusts cannot be modified by the grantor after the trust has been established. Once the assets are in the trust, they cannot be modified, added to, or revoked in any way. Because the assets are out of the grantor’s control, they are no longer considered part of the estate and are not subject to estate tax.
If you are looking to lower your tax liability, an irrevocable trust may be right for you. However, an irrevocable trust can be riskier since you are giving up control of those particular assets. If you need assistance deciding which trust is right for you, contact our attorneys today.
The most common types of trusts include the following:
The information contained here has been prepared for informational purpose only and not legal advice. The use of this website and the sending or receipt of information does not create an attorney-client relationship between you and Singh Law Firm.
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