Estate Planning

5 Things Considered: Protecting and Planning For Your Future



In these uncertain times, you want to plan today for your future. After working hard throughout your life, you want to be able to secure what you’ve earned and pass it on to your children or next of kin. Creating an estate plan, which can include a revocable living trust, a power of attorney and a health care directive, among other documents, is a viable option to protect yourself, your family, and your assets. Here are five things to consider with respect to a living trust.

1. What is a Living Trust?

A living trust is created when the person who creates the trust, also called the trustor or settlor, designates property to be held in trust for ascertainable beneficiaries, the persons who will inherit the assets of the trust. An inter-vivos trust, or living trust, is a document that is created during the trustor’s lifetime and can be either revocable or irrevocable. The advantage of a revocable trust is the ability to alter and amend the trust as the trustor sees fit. In most cases, the trustor serves as the trustee of his own revocable living trust, managing the property placed within it during his lifetime. A revocable living trust gives the trustor greater control of their assets and the ability to choose how their estate is distributed, to designate how the assets are cared for in the case of the trustor’s incapacity, and to name several trustees to step in and manage the estate for the benefit of the beneficiaries. Furthermore, a living trust can shelter the trustor’s financial affairs from public record and can help avoid costly probate.

2. What is Probate?

Probate is the court-supervised process by which a person’s assets are transferred upon their death to their beneficiaries. Having assets tied up in probate means it can take a court several years to determine the value of the assets, who gets what, and accordingly distribute property. Having a well-crafted trust can avoid the probate process altogether.

Probate is required when a person dies intestate (without a will) or even if they die having a will. In probate, legal title to the property and possessions of the decedent (the person that died) is transferred to the named beneficiaries in the will or through intestate succession laws if the decedent dies without a will. The process of probate can be time consuming, complicated, and costly. This also means more burdens and expenses for loved ones, since probate fees (including the executor’s fees and attorney’s fees) are statutory and determined by the California Probate Code. Probate proceedings are also a matter of public record, meaning anyone can view the documents and details of what the decedent owned and who the beneficiaries are.

3. What may be the potential benefits of having a revocable living trust?

A revocable living trust doesn’t require probate when the trustor dies. This is because the trust itself owns the assets. The successor trustee, designated by the trustor, can step in and take over the management of the trust when the settlor dies, settling the trust assets and distributing its property to the beneficiaries named in the trust documents. In essence, having a revocable living trust helps avoid probate and the associated fees and costs, in addition to maintaining privacy. Furthermore, a revocable living trust may have certain tax benefits for its beneficiaries, such as possibly reducing any burdens of estate, gift and/or inheritance taxes. However, a revocable living trust does not carry any income tax advantages. It is also important to note that when title to real property is transferred into a living trust, it is exempt from property tax reassessment at the time of such transfer. The attorneys at Bezdik Kassab can assist you with evaluating what type of trust would be the right fit for your estate plan.

4. If I have a living trust, do I still need a will?

Yes, you need a “pour-over” will which acts as a safety net if you forget to transfer an asset to your trust. A trust is an empty vessel when it is formed, meaning it doesn’t own anything until you properly fund the trust by transferring your property into it. Examples of assets that can be transferred into a trust include a home, investment property, cash accounts, investment and brokerage accounts, among many others. Property that is left out of the trust will still require probate. The “pour-over” will catches the omitted asset and sends it into your trust, for it to in turn be distributed as part of your living trust. The beneficiary of your “pour-over” will is, in fact, your living trust.

5. Do I lose control over the assets in my revocable living trust?

No, you keep full control over your assets. Even though when you set up a revocable living trust, you transfer assets out of your name and into the name of your trust, effectively changing title and ownership to that of the trust, you keep full control as the trustee of the trust. Legally, everything belongs to your trust, however, you control the trust and you continue to have the ability to buy and sell assets, as well as changing the terms of your trusts such as the names of any successor trustees or beneficiaries and you can even cancel or revoke the trust in its entirety. Contact Bezdik Kassab to identify your estate planning needs and to help you better plan your future.

“5 Things Considered” is Bezdik Kassab Law Group’s regular publication of legal material and analysis to assist the reader in considering various legal issue and topics. For additional information, please contact Bezdik Kassab Law Group for a no-cost consultation.

Bezdik Kassab Law Group is a boutique law firm specializing in Consumer & Mortgage Litigation as well as Business Litigation & Transactions (BLT). To learn more about the Bezdik Kassab difference, visit the firm’s website www.Bezdikkassab.com and social media pages on Bezdik Kassab’s LinkedIn; Facebook; and Instagram.

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