In estate planning, a last will and testament may not always be sufficient. In fact, Singh Law Firm advises many of its clients to consider the value of a revocable living trust. In this post, we’ll explain the merits of having a revocable trust in California. Hopefully, this will help you ascertain whether this might be a useful component of your own estate plan.
What is a Revocable Living Trust?
To begin with, let’s define our terms.
When we talk about living trusts, we’re talking about any trust that’s created while the person is still alive. Basically, the person who creates the trust (called the grantor) places assets into a trust; these assets could be money, stocks, property, or something else. A third party, or trustee, helps to manage these assets. These assets are managed on behalf of the beneficiary; that is, the person to who the assets in the trust are ultimately intended.
The Benefits of a Living Trust in California
There are several reasons why it might make sense to have a revocable living trust, as opposed to just having a will.
Most of these reasons have to do with probate court. If you die and have a will in place, your assets will need to pass through probate court before they are ultimately dispersed to your heirs or beneficiaries. This can be time-consuming, and it may come with some legal fees that your heirs will need to pay. Additionally, the contents of your estate may be made public, which means a loss of confidentiality.
With a revocable living trust in California, you can avoid probate court, and thus avoid all the negative aspects associated with it, including the lost time, the expense, and the invasion into your privacy.
Why Choose a Revocable Living Trust in California?
A trust can often be more helpful than a will, but why choose a revocable living trust over an irrevocable one?
When you choose a revocable trust, you have the power to change or amend the terms of your trust during your lifetime. An irrevocable living trust, meanwhile, is considered to be permanent; you may not modify its terms. (Note that, if you create a revocable living trust, it will become an irrevocable trust upon your death.)
Additional Considerations for Your Living Trust in California
None of this is meant to suggest that a revocable living trust is always the right answer. There are actually a number of factors to consider, and the appropriateness of a revocable trust depends on your situation as well as your estate planning goals.
A few additional points to keep in mind include:
- A revocable living trust is not a tax loophole and won’t necessarily shield you from estate taxes. To formulate the best tax strategy, it’s best to meet with an estate planning lawyer.
- An irrevocable living trust may offer greater asset protection. The catch is that, with an irrevocable trust, you cannot serve as both grantor and trustee. You will need to find someone else willing to serve as trustee. With a revocable trust, you typically can serve as trustee, though you may still choose to find a third party.
- As the grantor, you are obliged to pay any taxes earned on the income of your revocable living trust while you are alive.
Speak with an Estate Planning Attorney
To find out more about the benefits of different trusts, we’d recommend talking things over with an estate planning attorney. We’re here to help whenever you need us. Reach out to Singh Law Firm at your next convenience.