What is a Living Trust?
A Living Trust is an important part of a comprehensive estate plan that can be utilized by individuals
and married couples to legally pass title to their estate's assets. A trust generally gives individuals the
ability to pass title to their assets free of probate administration and gives your loved ones the ability to
manage your assets when you are no longer able.
A trust will describe in detail who receives assets after you pass away and when they receive them.
For example, this allows you to decide if your children are better off receiving their inheritance when
they turn 25 or when they graduate from college.
It is essential that an experienced estate planning lawyer draft your Living Trust as they will be able to
tailor the trust agreement for each client to avoid unintended consequences.
Why set up a Living Trust?
A properly drafted Living Trust accomplishes many estate planning objectives.
One of the most important benefits of a living trust is that your estate will be able to avoid going
through probate. Many assets that could be put into a trust will require the oversight of a probate
court to distribute those assets. This process is costly and involves a significant amount of time. A
typical probate can take 9-15 months. During this time, your children are limited in their ability to
manage the assets as the court will need to authorize major decisions. A Living Trust will lawfully
pass title of your most valuable assets to your intended beneficiaries without the need of a probate
court.
Another significant advantage of a trust is that your estate will not be made public. A Living Trust can
keep all or most of your financial matters out of the public record.
What can happen if I become incapacitated and I don't have a proper estate plan in place?
If you become incapacitated and you do not have a living trust or any powers of attorney that allow for
management of your assets, a conservatorship of the estate or person may be required. Much like
probate, this proceeding requires significant court costs and attorney fees and a judge would name
someone to handle your affairs.
With a well-drafted living trust and proper powers of attorney in place, all the assets that would
otherwise require the court's supervision, would simply be managed by the trustee of your trust. This
means that there would be no court intervention and the assets that you value most would be readily
available to your children.
What assets require probate?
A probate is not necessary for every asset that one owns. But in general, the following assets will
need to be probated:
>>> Assets that were held in only the deceased's name.
>>> Half of each asset that was registered with his or her spouse/domestic partner as
community property.
>>> That portion of any asset that belonged to the deceased that he or she held as a registered
tenant in common with other people.
>>> Any assets, such as jewelry, art, and furniture that are not registered.
What if a financial institution requires that I get "letters testamentary" to transfer assets from a deceased loved one?
Large or national financial institutions may not be aware of the small estate procedures that are
available in California. Many times, clients will be able to transfer assets less than $150,000 in value
through one of these procedures without having to utilize the court's probate process to pass title
legally.
An experienced estate planning attorney will be able to analyze whether it would be easier to use one
of these small estate procedures to transfer assets or if the probate process would be more
appropriate given the estate's debt burden and the characterization of property that needs to be
transferred.
How can I provide for a person in my family with a physical or mental disability?
A Special Needs Trust can help with the care of a special needs adult in your family. Unlike a living
trust, a special needs trust preserves government benefit eligibility and does not distribute assets
directly to the beneficiary but instead the assets are disbursed to third parties who provide goods and
services for the use and enjoyment of the disabled beneficiary.
Assets from a special needs trust can be used for a variety of expenditures such as:
>>> Out-of-pocket medical and dental expenses
>>> Transportation
>>> Purchasing materials for a hobby or recreation activity
>>> Supplemental education and tutoring
>>> Check-ups at an independent medical facility
>>> A personal care attendant
A Living Trust is an important part of a comprehensive estate plan that can be utilized by individuals
and married couples to legally pass title to their estate's assets. A trust generally gives individuals the
ability to pass title to their assets free of probate administration and gives your loved ones the ability to
manage your assets when you are no longer able.
A trust will describe in detail who receives assets after you pass away and when they receive them.
For example, this allows you to decide if your children are better off receiving their inheritance when
they turn 25 or when they graduate from college.
It is essential that an experienced estate planning lawyer draft your Living Trust as they will be able to
tailor the trust agreement for each client to avoid unintended consequences.
Why set up a Living Trust?
A properly drafted Living Trust accomplishes many estate planning objectives.
One of the most important benefits of a living trust is that your estate will be able to avoid going
through probate. Many assets that could be put into a trust will require the oversight of a probate
court to distribute those assets. This process is costly and involves a significant amount of time. A
typical probate can take 9-15 months. During this time, your children are limited in their ability to
manage the assets as the court will need to authorize major decisions. A Living Trust will lawfully
pass title of your most valuable assets to your intended beneficiaries without the need of a probate
court.
Another significant advantage of a trust is that your estate will not be made public. A Living Trust can
keep all or most of your financial matters out of the public record.
What can happen if I become incapacitated and I don't have a proper estate plan in place?
If you become incapacitated and you do not have a living trust or any powers of attorney that allow for
management of your assets, a conservatorship of the estate or person may be required. Much like
probate, this proceeding requires significant court costs and attorney fees and a judge would name
someone to handle your affairs.
With a well-drafted living trust and proper powers of attorney in place, all the assets that would
otherwise require the court's supervision, would simply be managed by the trustee of your trust. This
means that there would be no court intervention and the assets that you value most would be readily
available to your children.
What assets require probate?
A probate is not necessary for every asset that one owns. But in general, the following assets will
need to be probated:
>>> Assets that were held in only the deceased's name.
>>> Half of each asset that was registered with his or her spouse/domestic partner as
community property.
>>> That portion of any asset that belonged to the deceased that he or she held as a registered
tenant in common with other people.
>>> Any assets, such as jewelry, art, and furniture that are not registered.
What if a financial institution requires that I get "letters testamentary" to transfer assets from a deceased loved one?
Large or national financial institutions may not be aware of the small estate procedures that are
available in California. Many times, clients will be able to transfer assets less than $150,000 in value
through one of these procedures without having to utilize the court's probate process to pass title
legally.
An experienced estate planning attorney will be able to analyze whether it would be easier to use one
of these small estate procedures to transfer assets or if the probate process would be more
appropriate given the estate's debt burden and the characterization of property that needs to be
transferred.
How can I provide for a person in my family with a physical or mental disability?
A Special Needs Trust can help with the care of a special needs adult in your family. Unlike a living
trust, a special needs trust preserves government benefit eligibility and does not distribute assets
directly to the beneficiary but instead the assets are disbursed to third parties who provide goods and
services for the use and enjoyment of the disabled beneficiary.
Assets from a special needs trust can be used for a variety of expenditures such as:
>>> Out-of-pocket medical and dental expenses
>>> Transportation
>>> Purchasing materials for a hobby or recreation activity
>>> Supplemental education and tutoring
>>> Check-ups at an independent medical facility
>>> A personal care attendant
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This information has been prepared by The Law Office of Mark Rodiles-Peterson, Esq. ("MRP") for general informational purposes only. It does not constitute legal advice, and is presented without any representation or warranty whatsoever as to the accuracy or completeness of the information or whether it reflects the most current legal developments. Links to information on sites other than those operated by MRP are for your convenience only and do not constitute an endorsement or recommendation of those sites. MRP does not take any responsibility for information at those sites, nor does MRP make any representation or warranty whatsoever with respect to those sites or their information. Transmission of this information is not intended to create, and its receipt does not constitute, an attorney-client relationship between MRP and you or anyone else.
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