Estate planning is an exercise every adult should consider. However, two out of three Americans have no estate planning documents in place. Most people procrastinate. Others don’t think they own enough assets to merit one. A growing number of adults say they don’t know how to create a will or living trust.
Estate plans are vital to ensuring that your legacy is protected. Even someone with few assets can pass on something to their loved ones through a living trust.
There is no one-size-fits-all estate plan. Everyone has different wishes, assets, and beneficiaries. That is why our team at Davidson Estate Law crafts living trusts and other estate planning documents that are tailored to the unique needs of every single client we serve. If you live in Oakland, Walnut Creek, Berkeley, San Francisco, El Cerrito, Alameda, or anywhere in the Bay Area of California, we can help you craft an estate plan that best serves you and your loved ones.
Trusts establish a fiduciary relationship between the owner of assets and the people who manage them for the benefit of the beneficiaries of the trust. The person who creates the trust is the “settlor” who names a trustee to manage the trust. The settlor transfers ownership of personal assets, such as real estate, investments, equipment, bank accounts, and personal valuables, to the trust.
Trusts may be beneficial to you for a few reasons:
They can provide retirement income for a settlor while they are alive or income for living expenses should they become incapacitated.
They specify how the assets of the trust are to be distributed upon the settlor’s death.
Trusts are not subject to probate like wills are, which means their assets and distribution remain confidential.
Trusts can avoid, reduce, or postpone payment of federal estate taxes.
A living trust simply means that the trust goes into effect while you are still alive, unlike a testamentary trust which goes into effect immediately upon your death.
There are two types of living trusts — revocable and irrevocable. The terms of a revocable trust can be changed or canceled during the settlor’s lifetime. The terms of an irrevocable trust cannot be revised or canceled once the trust goes into effect.
A living trust is not to be confused with a living will. A living will is an advance healthcare directive in which you direct who you want to make healthcare decisions for you and what kind of medical intervention you do and do not want for end-of-life care when you are unable to speak for yourself.
The most obvious benefit of a revocable living trust over an irrevocable living trust is your ability to change it or cancel it altogether. You can add or remove beneficiaries and assets and revise your wishes regarding the distribution of those assets after you die.
Control is another advantage to a revocable living trust. While you are alive and have mental capacity, you retain the right to make all decisions regarding the trust.
Upon your death, the trust becomes irrevocable so that your instructions will be carried out by your Successor Trustee.
There are numerous steps involved in creating a living trust. You will need to inventory your assets to determine which should be held in the trust and how. You will need to decide who you want to name as the successor trustees of the trust upon your incapacity or death. Furthermore, you will need to determine who will be the beneficiaries of the trust assets and how the assets will be distributed.
Once the trust is created, your assets need to be transferred into the name of the trust. This is called "funding" the trust. This may sound easy, but depending on the number and type of assets you have, it can be complicated. Generally, you will transfer all real estate deeds, checking and savings accounts, investment accounts, stocks, business interests, etc. from your name into the trust's name. Certain assets, such as retirement accounts, will not be transferred into the trust.
As with most legal documents, the devil is in the details when creating and funding a living trust. It is wise to work with an experienced estate planning attorney to ensure that the trust is complete, fully and properly executed, and properly funded with your assets. Furthermore, working with an attorney will ensure that your living trust integrates cohesively with the rest of your estate planning documents, such as your pour-over will, durable power of attorney, advance healthcare directive, and others.
At Davidson Estate Law, we understand the importance of planning thoroughly and carefully to protect your loved ones when you are gone. More importantly, as a family-owned and operated law firm, we understand that all individuals and families are unique, needing time and care in the creation of customized estate plans that meet their specifics goals.
If you live in Oakland, California, or in Walnut Creek, Berkeley, San Francisco, El Cerrito, Alameda, or anywhere in the Bay Area, and you are ready to get started, call us today to schedule a time to discuss living trusts and other estate planning tools at your disposal. We are ready to help you. Reach out to our team today.