A living trust is an estate planning tool used by many people to dispose of their estates while at the same time avoiding probate to the extent possible. The trust is a fiduciary entity created specifically to hold legal title to your property for your benefit, while you retain what is called “equitable” title.
In most cases, the person who creates the living trust (called the settlor) is also named trustee. This means that you can create a trust for your own benefit, that will hold title to your property, while you continue to manage and control that property for the remainder of your lifetime. You also designate a successor trustee who becomes responsible for carrying out the purpose and instructions in the trust after your death. Living trusts can be both revocable and irrevocable.
Similar to a will, a living trust will identify your assets (although the trust will also hold title to those assets) and the people to whom you want those assets distributed at your death. However, a trust is a non-probate instrument. All of the assets held by the trust will be distributed according to the trust’s own terms, but will not have to pass through the probate court first. This can save time, money, red tape and plenty of headaches down the road. Even if you create a living trust, you will still also want to have a “pour-over” will, which will dispose of any outside assets you acquire after creating the trust or to which the trust does not have title. A pour-over will bequeaths those outside assets to the trust, and they are then also distributed according to the terms of the trust.
Not every asset is appropriate for a trust, nor is every estate. It is important to consult with an experienced estate planning attorney who can guide you through the pros and cons, and help you create the plan that is right for you and your family. For example, some families prefer to keep their regular bank accounts out of their trusts, and instead designate them as “payable on death” accounts.
In addition to living trusts, there are a number of special trusts that can become part of an estate plan. For example, you may want to establish a charitable trust for the benefit of your favorite non-profit organization. Or, you may want to create a spendthrift trust in order to gift a large sum of cash to your beloved niece or nephew but include strict provisions on how that cash is distributed to protect that person from creditors and his or her own inability to control spending. We can discuss various options with you so you can decide which instrument best serves your needs. We will also provide you with a durable power of attorney and a California advance health care directive.
Contact us or call (925) 465-2500 or (707) 398-6008 for more information or to schedule an initial consultation at Sparks Family Law, Inc. with attorney Gary D. Sparks.