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What can you do with a Trust?

A revocable living trust may be a smart part of your estate plan

More often than not, an important part of any estate plan for people with significant assets is the revocable trust.  This trust is a legal vehicle that provides for the management of your legacy.  You are allowed to direct the disbursement of your assets for your own benefit during your lifetime and for the benefit of your loved ones later.   It avoids the probate process in state court.  This allows the  assets that you transferred to the trust tobe given by the trustee to your named beneficiaries upon your death or later.

Probate is the State process that changes the legal title to property.  Your trust does not die, so the property in your trust avoids the probate process.  Without a revocable trust, either a will or the intestate rules are used to change the title to assets.  Your property held in your name will be dealt with in a probate proceeding.   Probate is very expensive.  Generally 10 times the cost of a trust.  There was an old commercial that said, “Pay me now or pay me later.”  Estate planning is much like that commercial.  You can either pay a low amount up front for planning or, as it is with most things in life, you can pay a much higher price later for not planning.  If you learn nothing else from this website, learn this: probate is a nightmare!  It is public, it takes an extraordinary amount of time and it is very expensive.

There are alternatives to probate in California; only in situations where estates are relatively small.  If the total gross value of your assets is less than $150,000.00 and you own no real property, you can side-step the normal probate process.

A revocable living trust has other benefits. For example, it provides privacy to the grantor and their family, loved ones and beneficiaries because the details of their estate will not be part of a court proceeding at their death.

Furthermore, the estate planning that comes with the revocable trust includes the Power of Attorney.  If you become incapacitated, the power of attorney will allow your chosen attorney in fact to take care of your affairs.  Otherwise, if legal arrangements have not been made, it may be necessary for family or friends to petition the court to appoint a conservator to manage your interests and assets.

The person who creates a revocable trust is called the grantor, trustor or settler, and the revocable trust may also be referred to as a living trust, revocable living trust, revocable inter vivos trust or grantor trust.  You can find this information in an informational pamphlet put out by the State Bar of California.  This is the person who makes the rules.  Like much of the information that is free on the internet, this information does you little good unless you understand the rules and how they are executed in a court of law.

The grantor of a revocable living trust often names him or herself as trustee, which allows him or her to manage his or her property in the trust for his or her own benefit. A successor trustee is normally named in the trust to take the reins when the grantor no longer wishes to serve, becomes unable to do so (because of incapacity or death), at which time the successor trustee would distribute the trust assets to the grantor’s named beneficiaries.   Like much of the information that is free on the internet, this information does you little good unless you understand the rules and how they are executed in a court of law.

Choice of trustee (if the grantor does not serve) or successor trustee is a major decision and could be a relative, friend, professional trustee or institutional trustee such as a bank.   Like much of the information that is free on the internet, this information does you little good unless you understand the rules and how they are executed in a court of law.

Despite the substantial benefits of revocable and irrevocable trusts, they are not appropriate for everyone. It is important to consult an experienced California estate planning lawyer for complete analysis of your assets and goals. Legal counsel will provide advice about whether a revocable trust or other vehicles are advisable to manage your property during your lifetime and distribute it at death in your particular circumstances.  This is information from the State Bar.

The real reason you need a will (or is trust better?)

You have probably heard this before: everyone needs a will. And you have probably heard the many legal reasons for obtaining a will and proper estate plan. One of these may be that you don’t want to die intestate and have the state decide how your assets will be distributed to surviving family members under intestate laws. Another commonly stated reason is that you do not want to burden your loved ones after you are gone in trying to guess what you would have wanted.

These are all very good and sensible reasons for getting a will. Almost any good estate planning lawyer would urge you to get one drafted if you don’t already have one. They may also advise you to consider revisiting an existing will and making sure it is up to date with any changes that could have occurred since its original creation.

Yet even with all of these valid reasons, many adults (even those with significant assets) are without a will. According to a survey by PNC Wealth Management, thirty percent of adults surveyed with over half a million dollar in assets said they did not have a will. That’s a half a million dollars in assets that is not protected by a will, trust or other estate planning tool.

Now Consider This

Assuming the above reasons are still not enough to convince you to get a will, then consider the real reason you need a will: it is your personal right.  While this may not be a statutory right or a right stated out under law, you have the personal freedom to get a will designed to address your own special circumstances. There is really no better time than now to start putting the wheels into motion for getting a will.

THE TRUST:  You clearly need some kind of estate plan or you would not be on this site.  The personal Will is for the those estates that have very few assets.  The real magic is found in the Trust.  In the old days, attorneys would write the will for very little money and then capitalize on administrating the estate.  The administration is where the real money was in the past.  Then the successful people started using the Trust instead of the Will.  Why shouldn’t you use what the wealthy people use?  Ask us about the Trust that is best for you.

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Law Office of Richard A. Lewis

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