Estate planning documents are some of the most important documents that you will have within your lifetime. While you may feel like estate planning is only reserved for the elderly, estate planning can be beneficial at many different stages in a person’s life. These documents allow you to protect and provide for your loved ones, as well as ensure your assets go where you would like. In California, many estate planning experts recommend creating a living trust. Below, you will find more information on living trusts in California, as well as their potential benefits.
What is a Living Trust?
A living trust is an entity that is utilized to distribute your property after you have passed away. This could be to members of your family, friends, or organizations. Many different types of assets can be included within a living trust. Assets might include property, investments, or other financial accounts. Anything that is deemed to be of value can be added to a living trust.
There are two types of living trusts:
Revocable Trusts. With revocable trusts, the person that created the trust has the power to change or revoke the trust at any point during their lifetime. This makes them a more flexible trust option.
Irrevocable Trusts. These trusts can be more challenging to make changes to once they are created.
The largest potential benefit of a living trust is that any assets that an individual has in their living trust at the time of their passing does not have to go through the California probate process. In California, going through probate can be time-consuming and stressful for loved ones. Having a living trust in place can allow you to help your beneficiaries get their inheritance more quickly, as well as save other loved ones time and money. However, creating and maintaining a living trust is not always a walk in the park. Living trusts can dedication for ongoing management throughout the course of an individual’s life.
How is having a living trust in California beneficial?
California is known for having a very long and extensive probate process. Experiencing probate can not only cause tensions to rise between loved ones, but can also be costly.
High Probate Fees. Individuals in the state of California that only have a last will and testament will be subjected to probate fees on their estate. The fees will be taken out of the estate before the distribution of the assets begins.
Long Probate Process. In California, the probate process can potentially take a long time. In general, probate can take anywhere from 8 months to years to complete.
Utilizing a living trust allows individuals to not have to worry about the probate process, as assets within a living trust do not have to go through probate.
How to Create a Living Trust in California
Take Note of Your Assets
You will want to ensure that all of your assets are accounted for. This includes physical and financial property. Consider including real estate, financial accounts, or even expensive jewelry as part of your assets. However, not everything you own should be included in your living trust. For instance, you may not want to add in your vehicle, as vehicles depreciate quickly over time.
Choose a Trustee
A trustee is an individual that will assist in managing the assets in a trust. Choosing a trustee is not always as cut and dry as some may think. Some individuals choose to name themselves as the trustee. However, if you choose to name yourself, you may still want to name a successor trustee. It is important that if you name someone else as the trustee that this individual is someone that you can trust and you feel will act in your best interests. Consider many different factors related to this individual before you make the decision to name them as a trustee. For instance, how well does this person handle time-sensitive information and documents? Ensure that the person you choose is respectful, honest, has good time management skills, and has very minimal personal conflict with your loved ones.
Choose Your Beneficiaries
Who will receive the assets placed in your trust after you pass away are known as the beneficiaries. You will need to name your beneficiaries and they can be anyone of your choosing. Your beneficiary can also be an organization. After you pass, your trustee will distribute the assets to your beneficiaries. Then, the trust will be closed out.
Draw Up Your Declaration of Trust
To create a living trust in the state of California you will want to make sure that the trust has the proper legal language and is appropriately executed. Only then, will it be considered valid by the state of California. While living trust documents can be created online using resources, having a more complex estate or an unfamiliarity with the legal system could mean that your trust ends up not being valid. Having an estate planning attorney look over your document or draw up a plan for you can ensure that your living trust will be valid in the state of California.
Transfer Property to The Trust
Once the trust has been signed, you begin transferring ownership of property into the trust. The trustee should be listed as the new owner of the property, whether that is yourself or someone else that you have named to oversee your trust. Even when you acquire new assets throughout your lifetime, ensure that you are transferring them over to your trust.
Speak with a Professional Estate Planning Attorney
Estate planning documents are important at many different stages in life. In the state of California, there are several benefits to creating a living trust, including the ability to avoid the probate process. However, creating a valid living trust on your own can prove to be a challenge. At Galanti & Copenhaver, we understand that the estate planning process can be complex and overwhelming. Our experienced team aims to provide an individualized and client-centered experience. Schedule a consultation to speak with one of our team members today!