Deciding what happens to your assets upon your death is an essential part of estate planning. You’ve worked hard to grow your property, and securing its transference will help preserve your legacy and pass it on to your loved ones. A living trust is created and maintained while you are alive. So, what is a living trust and why might you want to set one up?
Types of Living Trusts
There are two types of living trusts: revocable and irrevocable. Revocable living trusts are the most common as they can be modified at any point in your lifetime by either yourself or a co-trustee (such as a spouse). Property placed in irrevocable living trusts is, as the name implies, unable to be modified or removed after it is put in the trust. In this post, we will only address revocable living trusts.
How It Works
Before you decide to create a living trust, it is vital to understand what will happen to your assets once they are part of the trust. When you place an asset within your trust, it becomes the property of the trust. Deeds and other documents will no longer be under your name, but rather be under the name of the trust. When you set up a trust, you name yourself the trustee, and have the authority to move your assets into and out of the trust should you ever want to sell or modify the assets in any way. You also name a successor trustee, who will take over the trustee role after your death or incapacity and be able to take control of your assets without having to go through the court.
Differences Between Trusts and Wills
Living trusts, like wills, are designed to ensure your assets are divided and distributed as you intend. Though the end goal of trusts and wills is essentially the same, there are several differences to consider in order to decide which option is best for you.
Unlike wills, living trusts do not have to go through the probate process in order for your assets to be passed down to your heirs. Probate can be a long and often costly process that requires involvement with the court to calculate the value of your estate and involves making sure all of your debts and taxes are paid before your assets can be distributed. The length of time probate takes varies depending on the size of your estate and the state you live in. In California, the average probate process takes between 9 months to a year and a half, but each case is unique so the length of probate varies. Probate costs are proportional to the size of your estate, meaning that the larger it is, the more expensive the probate process.
The other main differentiating factor between wills and trusts is your privacy. A will is a public document that can be viewed by anyone after your death, whereas a trust remains private at all times unless you or the trustee you choose as successor gives out your information.
Where to Start
Creating a living trust that protects your assets and interests is a responsibility that should be left to the expertise of an estate planning attorney who will work with you to make sure everything is prepared correctly. You may do an online search and discover that you can make your own living trust and save the cost of legal fees, but if you truly want your assets and loved ones to be taken care of, an estate planning attorney will provide you with confidence and knowledge that your trust is set up according to your wishes.
If you’re ready to begin crafting your living trust and live in the Santa Clara, CA area, or if you still are unsure what a living trust is, our experienced estate planning attorneys are here to help you. You can learn more about our living trust services here. We offer a complimentary 30-minute consultation to learn about you, provide information to make the decision that’s right for you, and answer any questions you may have. Simply fill out our contact form or call us directly at (408) 553-0801 to get started.