11th Jun 2012
living trust is a legal, written document that acts as a substitute for a Last Will and Testament. More complex than a will, it should be prepared with the help of qualified California living trust attorney. When you have your estate plan prepared by an attorney, you obtain more than just a legal document, you receive legal advice from your own, trusted attorney.
Assets put into the living trust will avoid probate when you (and your spouse) are deceased, saving your heirs thousands of dollars and up to two years (or more) in court. A typical living trust in California can save your loved ones as much as 6%-8% of the value of the estate or more. If your estate is worth $500,000, the probate costs and fees are usually between $12,000 and $15,000– or more.
In a living trust, you are the Settlor, also known as the Trustor. The Trustor creates the living trust by signing the document. Only the Trustor may amend the living trust, or revoke it. You will also name yourself as Trustee. The Trustee of a living trust is the person who handles the assets in the trust. Once you put assets into the name of the living trust in a process called funding, you will manage them for your own use as you please.
You will also name a Successor Trustee, who will take over for you when you are deceased or incapacitated. The Trustee will pass your assets to your beneficiaries when you die, under the terms and restrictions written in the document. Your heirs inherit under the terms you stipulate, and the assets are managed by the Successor Trustee pursuant to your trust.
When you have a Living Trust, you should also have a Durable Power of Attorney for Property Management, which will name someone to handle your assets and daily financial affairs in case you are incapacitated. You should also have an Advance Health Care Directive or Living Will and Durable Power of Attorney for Health Care, which allows someone you designateto make health care decisions for you when you can’t and, if necessary, to “pull the plug”.
As mentioned above, living trust can result in significant tax savings if they are structured in the right way. There are methods to reduce estate and even income taxes with use of living trusts. Unlike in the probate procedure (where your testament will become public) with a living trust your estate planning remains private even when you pass away.) There is no need to disclose any of your last wishes if you have used a living trust. Finally someone you trust will manage your living trust, because you designate the trustee yourself.
If you have questions you can’t resolve on your own, if your estate will face a significant tax burden, or if you think your spouse or children will challenge your trust, then you should consult your living trust lawyer in California.