Living Trusts

A REVOCABLE LIVING TRUST, also known as a LIVING TRUST, is a modern substitute for a traditional Will. Like a Will, the purpose of a Living Trust is to distribute your estate at death. Wills are no longer desirable, because a traditional Will puts your estate into court at death, a process called Probate. Probate is costly (3-10% of the gross value of the estate), and time-consuming (1-2 years on average), as well as frustrating for your heirs. For more information about a Revocable Living Trust, be sure to visit our Revocable Living Trust page.

A Living Trust, properly funded, will AVOID THE PROBATE process, its time consumption, and its cost. With a Living Trust, your estate will be distributed to your heirs with minimal expense , and, usually, in less than six months!

In a Living Trust, you name yourself as the Trustor (person who sets up the Trust), the Trustee (person who manages the Trust), and Beneficiary (person who gets the assets from the Trust). As Trustor, you, and only you, can make changes to the Trust, via Amendment, or cancel the Trust, by revoking it. As the Trustor, you have complete control over the terms of the Trust.

As the Trustee, you manage your estate, much as you do now. You can buy, sell, invest, bank, and give assets out of the trust, as you wish. In the Trust, we will name Successor Trustees, who will take over management of the Trust whe you are deceased, or incapacitated.

FINANCIAL DURABLE POWER OF ATTORNEY (DPA) FOR PROPERTY MANAGEMENT AND PERSONAL AFFAIRS:

This document names someone you can count on to be your Attorney in Fact, who will make decisions concerning your ASSETS for you when you are unable. Your Attorney in Fact can pay your bills, file your tax returns, help you with your banking, and other financial matters. This prevents a conservatorship over your estate which means the courts and lawyers will not be controlling your finances. your family keeps control over things, under your terms.

A DPA can be either SPRINGING, which means it does not take effect until you are incapacitated or incompetent, or IMMEDIATE, which means your Attorney in Fact can start making financial decisions for you as soon as the document is signed.

ADVANCE HEALTH CARE DIRECTIVE & DURABLE POWER OF ATTORNEY (DPA):

This document names someone you can count on to be your Attorney in Fact, who will make decisions concerning your HEALTH CARE for you when you are unable. This prevents a conservatorship over your person, which means the courts and lawyers will not be controlling your health care needs. Also, this document contains an Advance Directive, also known as a Living Will, which states whether or not you wish to "have the plug pulled" or "die naturally". Your family keeps control over things, under the terms of this document.

This DPA can be either SPRINGING, which means it does not take effect until you are incapacitated or incompetent, or IMMEDIATE, which means your Attorney in Fact can start making health care decisions for you as soon as the document is signed.

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For more information about Revocable Living Trusts or if you need to contact a California attorney for living trusts, be sure to visit our Contact Page.

FAQs:

WHAT IS A LIVING TRUST?

A living trust, also known as a Revocable Living Trust, is a legal, written document that acts as a substitute for a Last Will and Testament.   Assets put into the Living Trust will avoid Probate when you (and your spouse) are deceased, saving your heirs thousands of dollars and up to two years in court, or more!

WHY SHOULD I HAVE A LIVING TRUST?

A living trust protects the assets in the trust from PROBATE, which is a lengthy, expensive court process which occurs when someone dies, or becomes incapacitated.  A typical living trust in California can save your loved ones as much as 4% of the value of the estate or more, and up to two years in court or more.  If you have a house worth $500,000, the probate costs and fees are usually between $14,000 and $27,000, or more.

HOW DOES A LIVING TRUST WORK?

In a living trust, you are the Trustor, also known as a Grantor or Settlor.  The Trustor creates the living trust by signing the document.  Only the Trustor may amend (change) the living trust, or revoke (cancel) it.  You will also name yourself as Trustee.  The Trustee of a living trust is the person who handles the assets in the trust.  Once you put assets into the name of the living trust, a process called FUNDING, you will manage them for your own benefit, to use as you please.

You will also name successor Trustees, who will take over for you when you are deceased or incapacitated.  The successor Trustee will pass your asssets to your beneficiaries when you die, under the terms and restrictions written in the living trust document.  Your heirs inherit under the circumstances you choose, and the assets are managed by the Successor Trustee pursuant to your trust.

CAN I USE MY ASSETS WHEN I HAVE A LIVING TRUST?

Yes!  Since it is your trust, you will use your assets just like you do now.  You are totally in control of your estate.

WILL A LIVING TRUST PROTECT ME FROM CREDITOR LAWSUITS?

No, a living trust is not a creditor protection device.  Since you handle your assets yourself for your own benefit, your creditors can attach those assets in a lawsuit.

CAN A LIVING TRUST PROTECT ME FROM CATASTROPHIC ILLNESS EXPENSES?

No, because the assets in the living trust are yours, any creditor, including medical expense creditors, may take payment for these expenses from your estate.  Consulting an insurance agent who sells long-term care insurance may reduce or avoid these expenses.

DO I NEED OTHER DOCUMENTS IF I HAVE A LIVING TRUST?

When you have a Living Trust, you should also have a Durable Power of Attorney for Property Management, which will name someone to handle your assets and day-to-day financial affairs in case you are incapacitated.  You should also have an Advance Health Care Directive (Living Will) and Durable Power of Attorney for Health Care, which allows someone you name to make health care decisions for you when you can’t, and, if necessary, to “Pull the plug”.

DO I NEED A SEPARATE TAX RETURN FOR THE LIVING TRUST?

No, you file your income tax returns just as you do now.

CAN I MOVE ASSETS IN AND OUT OF THE TRUST?

Yes, because it is revocable, and because you are the Trustee of your trust, you can sell or spend assets, change where your assets are, and add new assets to your trust, without consulting an attorney.

WILL A LIVING TRUST AVOID OR REDUCE INHERITANCE TAXES?

Inheritance taxes, which are technically called “Estate Taxes”, can be avoided or reduced by the use of an A-B TRUST.  Under current law, an A-B TRUST can shelter 4 million dollars or more from estate taxes.

DO I STILL NEED A WILL IF I HAVE A LIVING TRUST?

Yes, you will need a Last Will and Testament, called a POUROVER WILL.  It will do two things:  1) It will put assets which are not in the living trust at your death into your Living Trust when you die, and 2) If you have children under age 18, it names the Guardian for your children.  The Guardian will raise the children, and act as their parent, if the children are under 18 when you pass away.