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What is a Trust?
A trust is an entity that is a legally capable of owning property. A trust exists only on paper. It is crested by preparing and signing a document called a "Declaration of Trust" Once a trust is created, you can transfer your property to it and the trust then becomes the legal owner.
What is a "Revocable Living Trust?"
A revocable living trust is designed to reduce or eliminate the need for probate court proceedings. A trust is made "revocable" so you can cancel it at any time. It's created while you are alive and is therefore called a "living trust"
Why Create a Trust?
A revocable living trust allows your family to inherit your property without court probate proceedings that can be slow, costly, and expose your property to public view.
How Does it Work?
You transfer ownership of some or all of your property to the trust. Your appoint yourself as the "trustee" of the trust, but keep full power to manage and control trust property. After you die, the person named in your trust document to be the "successor trustee" takes charge, transferring the property to those named the trust "beneficiaries" The trust ends when the trust property has been transferred. No probate court proceedings are required!
What do the legal Terms Mean?
The person who sets up the trust and places their property in it is the "grantor" The property that is transferred to the trust is the "trustee property" or the "trust estate." The person in charge of the trust property is called the "trustee." The grantor is also the first trustee of the living trust. The person named as the trustee after the death of the original trustee is called the "successor trustee." Their function is to the beneficiaries according to the trust instructions. "Beneficiaries" are the people or organizations who receive the trust property when the grantor dies.
Benefits of a Revocable Living Trust
A trust is the most flexible way to avoid probate proceedings which can be lengthy.
Probate court proceedings can cost money in appraisal and attorney fees which reduce the estate.
Probate court proceedings are public. However, trust transfers to you beneficiaries are privet.
You can appoint someone to handle property for a young beneficiary until he or she gets older.
During your life, you can make changes at any time since you maintain complete control of the property transferred to the trust. Example: You can sell or give away the property or add it to it.
You can revoke the trust at any time.
A trust can reduce or eliminate estate taxes.
A trust can protect dependents with special needs.
A trust is inexpensive and easy to set up and maintain.
The Advantage of a Living Trust to business Owners
The business owner should consider a revocable living trust to provide fir the continued operation of a business in the event of the owner's death or illness. The owner's death can severely limit or prevent the family from operating the business unless a court order is first obtained. Also, a court appointed conservator may become necessary if the business owner is incapacitated. The use of a living trust, along with a durable power of attorney, can eliminate the need for court procedures and can minimize business interruption upon the owner's death or incapacity.
What About Estates Taxes?
California has no "death" or estate taxes. There is a special form of living trust called a "marital life estate trust," which is designed to save on federal estate taxes for married couples who have a large combined estate.
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