OC Wills & Trust Attorneys advise clients in and around Orange County, California, about revocable living trusts. A common misconception is that only the wealthy need trusts; however, many estate planners create living trusts to protect their assets and achieve their goals.
When you meet with us, we will take the time to understand your circumstances and explain the benefit of creating a revocable trust. Our legal team is well-informed, professional, and responsive. Contact our office today to get started with an experienced California trust attorney.
Why Your Estate Plan Should Include A Revocable Living Trust
A well-conceived revocable living trust will protect your assets and help to avoid probate. The trust takes ownership of your property, but you continue managing it during your life. Upon your death, the trust becomes irrevocable.
Because a living trust is revocable, it can be changed or modified at any time. This flexibility allows you, as the settlor, to:
- Change the provisions of the trust
- Remove or add a property
- Change the beneficiary designations
You must complete an amendment to modify a trust or change or revoke it through a trust amendment and restatement.
How Does A Revocable Trust Work?
The trust agreement lists the property the trust will own, designates a successor trustee, names beneficiaries, and specifies the transfer of assets to the beneficiaries.
Once the trust document is in place, the settlor must transfer property into the trust, referred to as “funding the trust.” Titled property, such as real estate, bank accounts, stocks, and motor vehicles, must be “retitled” in the name of the trust. Other assets, such as furnishings, jewelry, and artwork, are transferred through an “assignment of personal property” or simply listed on an attached schedule.
For example, suppose you are transferring your house into your revocable living trust. You must prepare and sign a general or special warranty deed and record it with the county clerk. California law provides for both an automatic and declared homestead for purposes of living trusts. The benefits of an automatic homestead are available to all state residents who meet homestead property quality qualifications. A declared homestead provides additional benefits, including protection of sale proceeds from creditors.
There are additional requirements if the settlor chooses to declare a homestead. The deed must specify the homestead nature of the property, and the trust agreement must contain language preserving the settlor’s homestead protections and any applicable tax exemptions. Our experienced trust attorneys can help determine the best option for your situation.
Notably, it is not necessary to transfer assets that pass outside of probate, including:
- Assets with beneficiary designations, such as a life insurance policy
- Retirement accounts such as IRAs, Keoghs, and 401(k)s
- Bank accounts deemed payable on death (POD)
Finally, property the settlor neglects to transfer into the trust might be subject to probate.
For this reason, a “pour-over” will must be created to ensure assets intended to be in the trust pass through the settlor’s will and are “poured” into the trust. This document will help to transfer assets acquired after the trust is created.
As you can see, creating and funding a trust is complicated. Moreover, disputes among the beneficiaries can arise if the trust is improperly structured. Let our capable trust attorneys handle all the details and legal paperwork of creating a revocable living trust.
The Benefits of Creating A California Revocable Living Trust
The main benefit of creating a revocable living trust is that it avoids probate because you no longer own the trust property. Also, this legal arrangement can help with planning for incapacity because the successor trustee is permitted to take over managing your assets if you suffer an incapacitating illness or injury.
Moreover, a revocable living trust is very effective in situations where probate may become complicated, such as when the settlor owns a second home or properties in multiple states. Finally, this estate planning tool can help divorced individuals protect the inheritance rights of children from previous marriages or establish those rights for new spouses and blended family members.
A well-designed revocable trust avoids the lengthy probate process and allows the successor trustee to privately and efficiently administer your estate. However, all California trusts require an administrative process to honor their terms.
Contact Our Experienced California Trust Attorneys
There are several benefits to establishing a revocable living trust, but this is a more complex legal document than a will. Working with an experienced trust attorney will ensure the trust is properly structured and funded. That’s where OC Wills & Trust Attorneys can help. Contact our office today for a consultation.
