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REVOCABLE LIVING TRUST
A People’s Choice can save you hundreds of dollars by preparing your
revocable living trust and other estate planning documents instead of an expensive attorney!
Estate Planning Learning Center
Our online learning center provides quick access to valuable information contained in our web
site, California and Federal Codes, Court web sites and other legal sources of information.
Living Trust:
A living trust is a legal document established during a person’s lifetime which specifies how their property
will be managed before and after their death, as well as provides how those assets, and the income earned by the trust,
are distributed after their death. Once the trust is established, all of the assets of the person who created the trust should
be transferred into the trust. Joint living trusts are also possible. They simply combine the assets of a husband and wife into a single trust, governed by a single trust document.
Trusts are usually revocable, which means that the person establishing the trust can make changes to the trust at any time
as long as they are competent to do so. In most situations, the person establishing the trust is the Trustee – the person who
manages the trust. The trust also names a successor trustee. If the person establishing the trust should become
incapacitated or disabled, the trust is in place to manage their financial affairs and the successor trustee can then take over
the management of the trust. A living trust is not subject to probate.
Why have a trust?
The biggest benefit of having a trust is that it avoids probate. In California, estates valued of $100,000
usually have to be settled through a formal court probate process. This process is very costly and can take from 5 to 7
months to finalize. With a trust, administration of a trust after the death of the trustee is relatively simple and inexpensive.
Another reason is to manage property if a person becomes incapacitated. A revocable living trust allows your successor
trustee to take over whenever you become incapacitated. There is generally no interruption in the management of your property, and there is no requirement for a court appointed conservator.
The three basic types of revocable living trusts include:
- A probate-avoidance trust for an individual,
- A probate-avoidance trust for a couple who own property together and
- A probate-avoidance and estate tax-saving AB trust for prosperous couples, typically couples with a net combined estate worth over $1.5 million.
No law specifies the form a living trust must take. Some attorney-created forms contain vast amounts of verbiage, which
serve little real-world purpose except to generate attorney’s fees.
Special Needs trust:
Special Needs trusts are set up to leave money or property to a loved one with a disability, without
jeopardizing their loved one’s ability to receive Supplemental Security Income (SSI) and Medicaid benefits. Instead of leaving
property directly to your loved one, you leave it to the special needs trust. The trustee named in the trust will have complete
discretion over the trust property and will be in charge of spending money on your loved one’s behalf. Because your loved
one will have no control over the money, SSI and Medicaid administrators will ignore the trust property for program eligibility
purposes. The trustee can’t give money directly to your loved one, but can spend trust assets to buy a wide variety of
goods and services for your loved one such as personal care attendants, out-of-pocket medical and dental expenses,
physical rehabilitation, home furnishings, vacations, home furnishings, education, recreation, vehicles, and other purposes.
A living trust can be an important part – in many cases, the most important part – of an person’s estate plan. Not everyone,
however, may need a living trust. The greater the risk of incapacity or death, the greater the need for a living trust. The
greater the value of your assets, particularly if they include real estate, the greater the need for a living trust. A young,
healthy individual with few assets probably does not need a living trust right now. Nor does the real estate developer who
is frequently buying, selling or refinancing his or her real estate holdings want a living trust to hold those assets. On the
other hand, many people recognize that a living trust will be helpful in the future, and set up a living trust now to have it in place in the event of an accident or sudden illness.
To download a booklet published by the California State Bar on Trusts, click here.
A People’s Choice can save you hundreds of dollars by preparing your
revocable living trust and other estate planning documents instead of an expensive attorney!
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