Estate planning can be a taboo topic for many. Post-mortem planning can be uncomfortable to discuss, and some even consider it tempting fate. It is, however, essential. This is especially true for those with family and young children. One of the most potent tools in estate planning today is the Living Trust. A Living Trust is a legal document that gives the trustee control of whatever assets you transfer into the trust. The trust will be administered for your benefit during your lifetime, then dispersed as you instructed. Most people who create a living trust will make it revocable, and also serve as initial trustee (thereby allowing them to retain control over assets transferred into the trust).
A Living Trust has several benefits. Traditionally, trusts served as a way to avoid estate taxes, also known as the death tax. However, as of the date of this writing, the estate tax exemption is $11,180,000 per person, and is doubled for a married couple. Meaning, only the truly wealthy need use a trust to avoid estate taxes. However, there are still many benefits to a Living Trust.
First, a Living Trust avoids probate. Those who pass away with only a Last Will and Testament will force their loved ones to go through the probate process. This is done through the Courts, and aside from high fees and costs, will also cause delays. Even the fastest probate Courts usually take at least 6 months to finish a fairly simple estate. This is 6 months before loved ones can take control of assets.
Secondly, the probate process is public. This means that anyone, literally anyone, can go to the courthouse and see what your assets were, and how much you decided to leave everyone. A Living Trust is a private document. Only beneficiaries will ever get to see the instrument. For those that wish to protect their family’s privacy, a Living Trust is vital.
Finally, a living trust allows post-mortem control over assets, at least for a certain period of time. With a Last Will and Testament, any money left to minor children will first be placed in the hands of a guardian, then distributed to the minor upon reaching adulthood. Imagine what your children might do if they suddenly inherited $500,000 on their 18th birthday. A Living Trust allows you to control distribution to your children over their lifetimes, ensuring that they will always have money for their health, education, maintenance and basic support.
These are just a few of the benefits of having a Living Trust in California. Please consult an experienced estate planning attorney to discuss your options fully.