Trusts can be a useful tool for comprehensive estate planning. Typically, if you opt to use just a will for your estate planning, the will must pass through probate before distributions can be made to beneficiaries. Probate involves court proceedings and can be lengthy and expensive. Creating a family trust can help avoid having the estate go through probate, along with other benefits.
California Estate Planning Attorneys
If you are thinking of beginning the estate planning process, the attorneys at Galanti & Copenhaver, Inc. can help. Our attorneys have many years of experience handling different aspects of estate planning. Contact our office today to learn more about how we can help you prepare estate plans that best suit your needs.
What Roles are Involved in a Family Trust?
There are three important roles to understand when it comes to family trusts. It is helpful to have a basic understanding of what these roles entail before getting started with creating a family trust.
The person who creates the trust and then transfers their property or assets to the trust is known as the grantor. This individual also has the responsibility of naming the trustee and any beneficiaries they choose.
The trustee is the party entrusted with the responsibility of managing the property and assets within the trust on behalf of the beneficiaries. The grantor names the trustee, and they can choose a single individual or two or more people to serve as joint trustees.
Additionally, the grantor can choose to have a bank or a trust management organization to serve as the trustee. When the trust is a revocable living trust, the grantor can also take on the role of trustee.
The beneficiaries of a trust receive some form of financial benefit from the trust. When it comes to family trusts, the beneficiaries will be family members of the grantor. There can be just one beneficiary or many different beneficiaries.
What is a Family Trust?
Choosing to create a family trust gives you the ability to transfer the management of your property or assets to a third party. The third party then has the responsibility of managing this property for the benefit of other people.
A family trust is a type of living trust, meaning that the grantor will create the trust during their lifetime. There are two main types of living trusts—revocable trusts and irrevocable trusts.
If you opt for a revocable family trust, then you have the option of being your own trustee. However, you will also need to name a successor trustee to take over the role in the event that you pass away or become incapacitated and can no longer manage the trust. If you decide to go with an irrevocable trust, you will need to choose someone (or some entity) to serve as the trustee when you create the trust.
Revocable Trusts vs. Irrevocable Trusts
A revocable trust gives the grantor the option to amend or revoke the trust. A revocable trust can be amended, changed, or revoked at any time during the grantor’s lifetime. If the grantor does revoke the trust, then all of the property and assets within the trust will be returned to the grantor.
An irrevocable trust is a permanent legal document. If a grantor chooses this type of trust, then he or she does not have access to the property within the trust, unless special permission by the trustee (or the beneficiaries) is given to the grantor.
While an irrevocable trust may not seem like the optimal choice, there are certain benefits for the grantor of an irrevocable trust. For example, if there are creditors seeking money from the grantor, the creditors cannot touch any property or assets held in the grantor’s irrevocable trust, since the grantor no longer owns the property—it is legally owned by the trust.
The Benefits of Creating a Family Trust
There are multiple benefits of using a family trust in your estate plans. With a family trust, your beneficiaries can avoid going through the probate process.
Avoiding probate also allows you to maintain some level of privacy with your assets and financial information since this information will not become public record like it would in probate. Another benefit of a family trust is that it can preserve assets for beneficiaries that are unable to manage assets themselves.
With an irrevocable trust, there are some additional benefits. These benefits include protecting the assets from creditors, and with large estates—avoiding estate taxes. Contact us today at (707) 867-0787 or fill out our online contact form to see how we can help you today.