Hi, This is Marc Herbert from Herbert Law Office with the Question of the Week. What is a living trust in California? There’s two kinds of trusts. One is called an irrevocable trust, a trust that you cannot change over time. And the second is called a revocable trust, commonly known as a living trust, which is a trust that you can change over time as changes happened in your family, in your assets, in your goals in state law or federal law.
So these days, the only time you really want an irrevocable trust is if you have a disabled heir or child from a prior relationship, or you plan to leave $100,000 to your favorite charity or something. For most of us, a living trust is the best way to protect your assets, including real estate, bank accounts, business accounts from probate court and unnecessary taxes.
So a living trust is a way to use the law to your advantage to protect your house, protect your loved ones from probate court. And those taxes, state and federal, that can easily be avoided if you handle the tax structure the right way. So with the trust it’s created by what are called set laws, that is, the people who are funding the trust, that is usually the creator of the trust on a living trust.
Then you also act as the initial trustees. So the creators are the only ones who can change the trust, and then they have unlimited authority to manage the assets in that trust. Down the road, you’ll want to name successor trustees to make sure the distributions happen the way that you want them to. But your successors cannot change your trust and they have limited authority to the extent that they follow your directions, staying away from court, staying away from the taxman while they do that.
Finally, a living trust needs to have beneficiaries. Now the creators are usually the first beneficiaries. All those assets are still fully available. You can add assets in and sell assets out, but down the road again, you’re going to want to name beneficiaries, people to receive those assets as an inheritance down the road. So the successor trustees work with the primary beneficiaries to make sure that your assets go quick and easy without probate, without taxes.
Now, trusts are a great structure that allow you to make distributions over time. If you have young heirs that you want to give an inheritance to, a trust allows you to give them a little bit at 18 years old that say a little bit more at 21 years old and the rest at 25 years old or 30 years old, whatever ages and amounts you decide that’s how your assets are going to be distributed.
A trust also allows you to protect disabled heirs, whether that’s a child or a grandchild. These days, we do a lot of protection for parents as well with the rise of dementia, Alzheimer’s and some of those other conditions. If you have land in multiple states, a trust is a best way to avoid multiple probate in those states. And again, there’s a lot of tax advantages and tax avoidance strategies that we build right into the trust to save your family.
Thousands, tens of thousands of dollars, sometimes in unnecessary taxes or probate court costs. At Herbert Law Office, we offer a free consultation to discuss your current financial situation. Look at different options to help you and then create a personalized estate plan After we answer all your questions along the way. If you’re interested in setting your free consultation, just give us a call at 6612739007.
We’ll talk to you soon.
