A living trust in California is an estate planning measure that takes the assets of the person setting it up and holds it while that person is still alive. During this person’s lifetime, they can be the beneficiary or the trust. A beneficiary(or beneficiaries) are named who will receive the ability to access or use the assets within the trust when the person who set-up the trust passes away. A Trustee administers the assets of the living trust. This person is usually the same one who set up the living trust. Upon their death, another person is named as Trustee.
Advantages of a California Living Trust
There are several distinct advantages of a living trust if you live in California. However, it’s important to mention that just how these advantages may affect you depends on exactly what assets you place inside of the living trust as well as the overall size of the estate.
Probate may be avoided because of the living trust. California probate can be a lengthy, expensive process. It’s often hard on families especially if they need access to property right away to continue to support themselves. If all of your assets are placed into a living trust before you die, you may be able to avoid probate because you don’t hold any assets in your name. While not all assets are required to go through probate, an inventory of assets is created during the probate process, and certain assets may need to be valued.
A living trust in California can help protect your assets from creditors. When you die, creditors are given a certain amount of time to file their claims against the estate.The states that are valid must be paid before any assets are distributed to the heirs. However, the key here is to recognize that the assets would be protected from creditors of the beneficiaries and not necessarily those of the estate. A good estate planning lawyer can help you properly protect your assets by using a living trust and other estate planning strategies.
Helps large estates minimize taxes. Although California doesn’t have an inheritance tax or an estate tax, there are other taxes that can seriously impact large estates (and the recipients of property). The federal estate tax,capital gains tax, gift tax, and income tax can all take more of an estate that what most people recognize. Using a living trust in California can help you minimize the size of your estate and lower, if not avoid, some of the burdensome taxes mentioned. An estate planning lawyer can also help you decide what other actions you can take to protect and maintain the bulk of your estate for your heirs. There several other distinct advantages for California living trusts as well. To learn more, make an appointment with an estate planning lawyer.
Disadvantages of a California Living Trust
There are also some disadvantages of creating and using a California living trust. Of course, the disadvantages may not seriously affect your estate for several factors. However, it is important that you understand the disadvantages so that you can make an informed decision.
California living trusts can be expensive to maintain and administer. Expense is usually the biggest disadvantage of living trusts. They can be expensive to set-up. A living trust should have a pour over that will deposit any remaining assets that weren’t already part of the trust into it. Doing this, as well as setting up other necessary estate documents, is best done with a lawyer so that you can rest assured that they’re done correctly. Living trusts may be administered by a bank or another financial institution. That comes with additional fees.Trustees may also need to be paid for their time. When thinking about the expenses associated with setting up, maintaining, and administering a living trust, also think about how much probate might cost your family (financially as well as emotionally).
They are complex and require a lot of information. Living trusts are complex. To create one, you’ll need a lot of information. They are generally much more difficult to create than a Last Will and Testament. You have to decide when assets will be available. You may need to set-up a separate checking account. You must make sure that all of the assets are properly titled to the trust. If assets aren’t properly titled to the trust, those assets will follow the intestacy laws if they’re not mentioned in a will or if no will exists.
A living trust can make financial life a little bit more difficult. If you make a contract related to any of the assets within the trust, you must also disclose that the asset is the property of the trust. Financial institutions could make you jump through additional hoops if you’re seeking a loan and listing trust assets as your own. Beneficiaries may also struggle if they feel like they constantly have to talk with the Trustee to ask for things. If there are personal issues between the Trustee and the beneficiaries after you die, it can make the process extremely difficult.
Think carefully before you decide to create a California living trust and talk with a lawyer to learn how creating one would actually affect your estate and those who you’ll leave behind.