Estate planning is all about preparing for the future, ensuring that your legacy, your assets, and your end-of-life wishes are upheld with minimal hassle to your heirs and beneficiaries. One way in which residents of California might prepare for the future is to put a revocable living trust into place. While this isn’t a necessary component of every estate plan, it’s certainly something worth exploring.
If you have specific questions about using a revocable living trust in California, we invite you to contact Singh Law Firm directly. In the meantime, here are some important considerations about what living trusts are and how they may benefit you.
We’ll start with a very basic definition: When we talk about a living trust in California, what exactly are we talking about?
In the State of California, a revocable living trust is defined as a document that allows a Grantor to specify how his or her assets are meant to be managed, both during the Grantor’s lifetime and in the Grantor’s death.
With a revocable trust, the Grantor may choose to act as Trustee, managing the funds himself or herself. Note that this option is only available with revocable trusts, not with irrevocable ones.
Items included in the trust are not subject to probate and are distributed to the named heirs upon the Grantor’s death.
Now, let’s get into the why. Specifically, why would you want to have a living trust in California?
A common misconception about estate planning is that all you really need is a will. While we certainly recommend having a will in place, that’s not sufficient for smooth, seamless estate planning. Indeed, even if you have a will, your assets may pass into probate court, a potentially long and arduous process that will delay your heirs in receiving the items you want them to have.
The main reason why so many Californians choose to put a living trust into their estate plan is that it lets them avoid probate court, and thus it allows their wishes to be carried out without any undue legal burdens.
Next, we come to the question of who. That is, who needs to consider a California revocable living trust?
Again, a living trust is one of the best ways to keep your assets from entering probate court, and as such it can save your heirs a lot of time, hassle, and expense. As such, we would really recommend trusts to just about anyone who plans to leave their heirs assets of any significance at all.
Whether you choose a revocable living trust over an irrevocable living trust is another matter altogether. Both can help you accomplish the basic goal of keeping assets out of probate, but beyond that, each option offers some unique strengths and weaknesses.
When it comes to the advantages of revocable living trusts, there are a couple of major benefits to point out… and both of them ultimately come down to the issue of control. With a revocable living trust, rather than an irrevocable living trust, you can exercise a little bit more control over how your assets are managed and used.
For one thing, the person who sets up a revocable living trust is legally allowed to be a self-appointed trustee, meaning you can have sole responsibility over how your trust is managed for as long as you’re alive. With an irrevocable living trust, the Grantor is not allowed to serve as trustee, and must appoint someone else.
The other significant advantage of a California revocable living trust is that you can make changes to it during your lifetime, amending the terms of the trust to reflect changes in your estate or family.
There are some clear reasons to select a revocable living trust, yet there may also be some good reasons to choose an irrevocable living trust, instead.
One potential drawback is that a revocable living trust doesn’t shield your assets from the estate tax. You’ll need to implement additional tax strategies in order to preserve the full value of your estate. This is one area where an irrevocable living trust may prove more advantageous, as it does offer some tax protections.
It’s also important to note that a revocable living trust doesn’t offer asset protection, which means the items in your trust are not beyond the reach of creditors. Again, this is an example of where an irrevocable living trust may be more advantageous. With an irrevocable trust, the assets are treated as though they don’t belong to you, and thus creditors can’t touch them.
One final note is that, when setting up any kind of a trust, there is some administrative work that needs to be done on the front end; there’s more to the process than just completing a form. That’s what makes it important to work closely with an estate plan expert, like the attorneys at Singh Law Firm.
Wealth planning matters, and one step you can take in protecting your own financial legacy is to learn more about the benefits of a revocable or an irrevocable living trust. Our lawyers are here to answer your questions and assist in any way we can. Reach out to Singh Law Firm at your next convenience.