Proper estate planning today is crucial to having peace of mind down the road. Trusts are a popular means for ensuring that your financial intentions will be carried out after you’re gone.
Knowing that loved ones will be taken care of after we’re no longer here is of utmost concern to many people. The unfortunate reality is that, too often, people become incapacitated before they have a chance to make arrangements for their assets, leaving the distribution of their property in the hands of someone who is unfamiliar with their wishes.
How Trusts Work
A trust is a fiduciary arrangement that you set up while you’re alive to govern the future distribution of your assets or property. The person creating the trust, called the grantor, designates a third party, or trustee, to hold and manage the grantor’s assets on behalf of those who will ultimately inherit them, known as beneficiaries. The grantor dictates the rules for how and when the trustee is to transfer the assets to the beneficiaries.
Trusts can be revocable, meaning that you can change the rules on how the assets are distributed at any time; they can also be irrevocable, meaning you can’t make changes. Each type of trust has different advantages and disadvantages, including tax consequences.
Another key distinction in California is whether a trust is living or testamentary. A living trust is created while the grantor is alive. A testamentary trust, on the other hand, is created according to terms set forth in your will when you pass away. The terms of a testamentary trust cannot be changed after death.
Within these general categories, there are numerous different types of trusts that can be created, each designed to achieve certain purposes or provide for certain kinds of beneficiaries. With all the different options available, it’s important to consult a knowledgeable estate lawyer to determine what arrangement is best for you.
The Benefits of Trusts
Trusts can have many advantages over wills and other estate planning tools. While the exact consequences of creating a trust will depend on the type of trust ultimately created, some of the most widely recognized benefits of trusts include:
- Avoiding probate – Most trusts allow you to transfer assets outside of probate court, which typically adds time and costs to the inheritance process.
- Control of Assets – In a trust, you get to specify the precise terms of how, when, and to whom your property is transferred. This allows you to provide for complex family situations or complicated beneficiary arrangements. Revocable trusts also allow you to retain access to your assets during your lifetime and make modifications for changing circumstances.
- Privacy – Because trusts typically avoid probate court, your private information and affairs will not become part of the public court record.
How an Experienced Estate Planning Attorney Can Help
Estate planning is crucial to seeing that your assets are transferred to your loved ones according to your wishes. If you’re considering creating a trust or are wondering what type of trust might best carry out your wishes, we’re here to help. Contact us today to discuss any questions you may have about trusts or other estate planning needs.