People are often unsure about using a California living trust, especially if they don't own a lot of property. This estate planning strategy is a good way to keep assets out of probate and can also minimize or remove federal estate taxes.
As with all estate planning methods a living trust offers benefits, but can also create unwanted problems. It is always a good idea to talk with a law firm that specializes in California probate law.
A primary benefit of setting up a revocable living trust is to bypass the probate process and reduce estate tax. In order to protect assets, individuals must transfer ownership of property to the trust. This is known as the funding process and involves obtaining new property titles made out to the trust.
The probate process can be quite complicated and often takes many months to complete. People can initiate litigation against the estate which prolongs the process. When a decedent's last Will is contested the estate has to pay legal defense fees. This can easily bankrupt small estates or force estate administrators to sell inheritance property instead of transferring it to intended heirs.
Along with being able to avoid probate, living trusts offer a preventative measure against conservatorship. This court proceeding is require anytime a person is no longer capable of handling their personal finances. This might be due to a physical, emotional, or mental issue that results in person being declared incompetent by a physician.
If tragedy strikes and persons do not have a trust their family will have to appear in court to obtain conservatorship rights. Conservators are appointed by a judge and are granted permission to take care of the Conservatee's finances and living arrangements.
People who setup revocable trusts can assign a Conservator and bypass the court hearing. The individual named in the trust can immediately take over duties and avoid delays that occur with trying to find a lawyer and arranging a court appearance.
When an individual sets up a trust they appoint a Trustee to manage the assets and reconcile their estate upon death. The individuals who establish the trust are known as the Trustor. People who manage the trust are known as the Trustee.
When a married couple establishes a joint living trust they designate a Successor Trustee to distribute assets to heirs after both individuals have passed away. A last Will and testament is included to provide directives regarding how the assets should be divided.
Once trusts are established, Trustors transfer titled property, valuable possessions, and other assets to the trust. If the trust is not properly funded then the estate will most likely have to pass through probate.
In addition to writing a Will and setting up living trusts, people ought to also create a durable power of attorney and advance healthcare directive. These documents let others take over personal finances and make medical decisions on behalf of the Trustor.
The law firm of Craton and Switzer offers a variety of estate planning methods that can be arranged to suit your needs. Regardless of the size of your estate we can help you protect assets and make use of methods to lessen estate and inheritance tax.
We invite you to spend time at our estate planning blog to find out more about living trusts, probate, family trusts, estate planning, and retirement planning. We encourage you to get in touch with us to discuss your personal needs.
Published on August 19, 2012