Establishing a trust may benefit California residents for a couple of different reasons. First, the trust document takes effect the moment it is executed, which means that someone is immediately available to manage your affairs if you become incapacitated. Assets held in a trust are generally not subject to probate, which means that they are not a matter of public record. Revocable living trusts may be altered during your lifetime, which may provide greater flexibility if your needs change.
Revocable living trusts
A revocable trust allows you to be the trustee and the beneficiary. Therefore, you have the right to change its terms at any time, and it also ensures that you exercise a significant level of control over assets titled in the trust’s name. When you pass, the trust transitions to an irrevocable trust overseen by a successor trustee. Ideally, you will review this document as part of your routine estate planning process to ensure that the document reflects your final wishes.
Irrevocable trusts
As the name suggests, you generally can’t change the terms of an irrevocable trust after it is executed. Furthermore, you may not be able to serve as both trustee and beneficiary. However, this lack of control over trust assets may allow you to shield them from creditors or from being taken as part of a divorce settlement. They may also be safe from seizure by the government.
The use of a trust may enable you to reduce the value of your estate for tax purposes. It may also make it easier to transfer assets without causing conflicts between family members. As with any other estate plan document, a trust must conform with state law and be created while you are of sound mind to be considered valid.