Trusts Attorneys in Bakersfield, California
A will is perhaps the most basic estate planning tool you can use. Trusts, on the other hand, offer unique advantages to you while you are alive and to the beneficiaries of the trust when you are gone. Among those advantages is the ability to make highly-specific designations concerning which beneficiaries will receive which assets of the trust.
Such specificity can help reduce the familial infighting that sometimes occurs when someone passes away. Some 35% of adults say they have quarreled with family members when a family member died without an estate plan. A trust can make such arguments moot which, in itself, is a thoughtful gift to leave behind. If you have not started an estate plan, don’t know where to begin, or have not reviewed yours for a time, Underwood Law Firm can help. As things change in your life, we will help you keep your plan updated. When the time comes, you can rest assured that each component of your estate plan will comply fully with California law. Call us to start your estate plan if you live in or around Bakersfield, Lamont, or anywhere in Kern County, California.
Are Trusts Complicated?
Trusts are more complicated than most wills, but their value makes them worth the effort. Work with an experienced estate planning attorney when creating a trust to ensure it is thorough, executed correctly, and synchronized with the rest of your estate plan.
A living trust is a legal agreement. As the creator of a trust, you transfer ownership of your assets to the trust and those assets are managed by a trustee. Most trust creators serve as trustees during their lives. Upon their death, the successor trustee, named by the creator of the trust, assumes the responsibility of managing the trust’s assets and distributing them to beneficiaries according to the terms of the trust.
There are three parties to the legal agreement that establishes a living trust. The first party is you, as the creator of the trust. The second party is the trustee and successor trustee. The third party comprises the beneficiaries of the trust.
There are two major types of trusts: revocable and irrevocable. As their titles suggest, a revocable trust can be changed by the creator until death. An irrevocable trust cannot be revised once you execute it. Although you can add property to the trust, you cannot change its beneficiaries or remove property from the trust.
At first glance, you may think revocable trusts are better than irrevocable ones; however, the irreversible nature of an irrevocable trust provides significant tax advantages during your lifetime in addition to other benefits for beneficiaries once you are gone.
Why Create a Trust?
One of the major benefits of a trust is that it is not subject to probate. That means the trustee can immediately administer the trust and distribute its assets upon the death of the trust’s creator.
Because the assets of the trust are owned by the trust and not the creator of the trust, those assets are protected from creditors who would normally attempt to collect debts owed via the probate process. Moreover, because trusts avoid probate court, which is a matter of public record, the terms, assets, and beneficiaries of the trust remain private.
Trusts also provide the opportunity to hold assets and have them managed by the trustee until a certain date after the creator’s death. For example, if you have minor children and don’t want them to receive the proceeds of the trust until they reach a certain age, the trust can hold them in that interim.
Finally, a trust can protect your assets should you become incapacitated and unable to manage them. If drafted in the proper way, management of the trust can be transferred automatically to the successor trustee upon your incapacitation and the assets can be used to ensure your care until you die.
Trusts are not just for the wealthy. If your assets benefit from a living trust, you should consider one as the centerpiece of your estate plan. If you want to maintain privacy from probate or protect assets from creditors, a trust is certainly worth considering.
Who Should I Name as Trustee and Beneficiaries?
It is typical for the creator of the trust to serve as the trustee until they either become incapable of managing the trust or pass away. A successor trustee is always named by the creator in the trust. Because the trustee has full control of managing the assets of the trust, it is important that you name someone you trust implicitly to serve in this role when you no longer can.
Your estate planning attorney understands the role of the trustee in a living trust and can provide you with guidance regarding your selection for the successor trustee designation.
The beneficiaries of a trust can be any person or entity you choose. Some people use trusts as an effective way to not only distribute their assets to their children or other loved ones, but also to ensure the exclusion of those they specifically do not want to reap the benefits of the trust.
Some choose to name certain nonprofit organizations or charities as beneficiaries of the trust. A trust can be a way to leave a significant gift of money or other assets to a cause you believe in.