Many people limit their estate planning considerations to making a will. While a will may allow your estate to avoid probate, a trust may be a better estate planning tool depending on your circumstances. A living trust may provide additional flexibility for estate planning that a will does not offer.
If you are young or have a small estate, a will may be enough to offer some protection for your family and beneficiaries. However, if you have a significant estate, business assets or have specific plans for your estate after you are gone, a trust may be necessary for you to accomplish your goals.
The most common trust is a revocable living trust. This is a legal document that puts your property and financial assets into a trust which are administered for your benefit during your lifetime. Upon death, the assets in the trust are transferred to your beneficiaries according to the provisions of your trust.
One of the primary benefits of a trust is flexibility. Your assets are still available for your benefit during your lifetime. You maintain the right to manage and control the assets in your trust. However, you can also provide directions and guidance for how the property is used and distributed. You can also revoke the trust at any time, or make changes to the trust during your lifetime.
Individuals often name themselves as trustees (sometimes with a spouse as a co-trustee), as well as designate a successor trustee. Upon death, the successor trustee will act as trustee of the trust and will have the power to manage trust property, including transferring assets to your beneficiaries according to the provisions of the trust. Another benefit of a trust is that if the individual settlor becomes incapacitated due to an accident or sudden illness, the successor trustee can manage the trust.
As we reported in an earlier blog post, a trust will also allow you to provide for beloved pets. Pets are still considered property under California estate law and cannot inherit through a will. A pet trust provides for the care of a pet after their owner passes away.
Avoiding probate is a primary goal of proper estate planning. Probate can be expensive and time-consuming. A living trust can transfer assets to beneficiaries without having to go through court supervision. This may also allow the transfer of trust property to beneficiaries without the value of the property or the identity of beneficiaries to become part of the public record in the probate court.
Despite the benefits of a trust, it may not be right for everyone. A trust is usually more expensive to prepare than a simple will and requires more time to set up. You may also still need a will even if you have a living trust to cover any assets that were not placed in the trust. Talk to your estate planning attorney about whether creating a living trust may be right for you.
If you have any questions about estate planning or creating a trust, the law firm of Butterfield Schechter LLP is here to help. We will answer all your questions and make sure your estate plan will provide for your loved ones and keep your best interests at heart. Contact our office today with any questions on how we can help you succeed.