Meeting the Estate Planning Needs of People Throughout the East Bay Area
What is a Living Trust?
A living trust is a written legal document established during the estate holder's lifetime. A trust identifies who created the trust (the settlor) and the assets that will be held in trust (the corpus), the person responsible for managing and administering the trust assets (the trustee), the purpose of the trust and the manner and conditions under which distribution of the trust assets may be made.
Why a Living Trust?
When you establish a trust, you retain control and flexibility over the how the assets in the trust are managed and distributed. Not only does a trust provide instructions on what will happen to your assets when you die, but also includes provisions which control what will happen in the event that you become physically or mentally incapacitated while you are alive. Trusts can be established for a wide variety of beneficial purposes such as to provide for your needs or the special needs of a child or disabled family member.
Revocable or Irrevocable Living Trusts
A revocable living trust simply means that the settlor retains ownership and control of the assets placed into trust. The settlor has the right to withdraw, invest or distribute the money at any time. This can be the case even when a successor trustee has been named. As such, the government treats the property in trust as taxable assets because, in effect, the assets are still held in ownership by the settlor. In most situations, people wear three hats in a living trust estate plan. The first hat is that of the settlor, the one who creates the trust. The second hat is that of the trustee, the person who controls and administers the assets of the trust and the third hat is that of beneficiary, the one who receives distributions from the trust.
An irrevocable living trust means the settlor has voluntarily forfeited control or ownership of the assets held in trust. While California no longer has an inheritance tax, there is still a federal Estate Tax which is also linked to the gift tax. Income distributions from the trust will be taxed as income in the year of distribution. The trade-off for the tax savings, however, is that you will give up the option of changing the terms of the trust, including conditions under which the assets may be distributed. When creating an irrevocable living trust, it is critically important to draft the initial terms and conditions to take into account future generational needs. It is also critical that the trustee you name to oversee the trust is reliable and responsible and has the best interests of your family in mind.
Establishing a living trust is also an effective option for avoiding the probate process for the money or property you place into the trust. Living trusts can be established to protect liquid cash assets, as well as stocks and bonds and real estate holdings. By placing the assets into trust, you can establish the rules by which a surviving spouse, adult children and other beneficiaries receive the benefit of the assets, without requiring them to undergo the probate court process upon your death. Avoiding a probate or other court supervised administration of your estate can save thousands of dollars benefiting your heirs and loved ones.
Rule Against Perpetuities of a Living Trust
Like other states, California has a rule against establishing a trust in perpetuity. In most cases, a condition of the living trust must include a point of termination, typically upon the death of any qualifying beneficiary, plus an additional 21 years. The Mullin Law Firm understands how to make sure that your trust does not violate this rule.
The Mullin Law Firm in Concord, California, offers services for helping individuals and families protect their estate assets through living trusts. We can show you the features, advantages and benefits of a wide range of living trusts such as:
- Special Needs Trusts
- Charitable Lead Trusts and Charitable Remainder Trusts
- Educational trusts
- Qualified Personal Residence Trusts (QPRT)
- Credit Shelter Trusts for married couples with large estates
- Life Insurance Trusts
Power of Appointment Trusts
Trust Administration Attorney · Irrevocable and Revocable Living Trusts
From offices in Concord, our lawyers represent clients in communities throughout Contra Costa County, Alameda County and Solano County, California. Call us toll free at 866-477-0304 or contact us by e-mail to arrange a free consultation with one of our experienced Concord living trust attorneys today.