Living Trusts

Why Should You Create a Trust?

Probate: What Is It?

In probate, the court:

• Inheriting or transferring property in California
• Validating wills
• Resolving a deceased's debts

Anything with monetary value is property, like your house, bank account, car, etc. In California, this happens in the Superior Courts. The court's job is to oversee the payment of your debts and the transfer of your property.

In the event that you become incapacitated, a probate court will also be involved in your finances. In the event that you are no longer able to manage your finances, the probate court will appoint someone (a "conservator") to manage your property, and you will be required to pay for the conservator's services and court fees.

Probate Court: Why Should You Avoid It?

Your family will be better off if you avoid probate if you have substantial assets upon your death. It takes from 9 months to 3 years for the probate process to be completed in court. The process of passing on assets takes much longer than if you used another estate planning tool.

Probate also costs thousands of dollars in fees, so it is not a cheap process. By using estate planning tools, you can significantly reduce these fees. Probate court fees, in addition to estate taxes imposed on property transferred through probate, can be as high as 30%-50% of the property's value. When estate planning tools are used correctly, estate taxes are only imposed on assets over a certain amount.

As a result of the public nature of probate court, filings are public records and your family won't be able to exercise any privacy. With estate planning tools, you can keep information about your assets and their transfer private.

Probate Court: When Does It Take Place?

Most people believe that if they have a will, their assets will not go into probate. Living trust attorneys in California will advise you that even with a will, most assets will go through probate in most cases. If you become incapacitated, your assets can end up in probate court even before you pass away.

Probate: How Can You Avoid It?

Setting up a California living trust is the best way to avoid probate in California. By setting up a living trust before you die, you can avoid the costly and time-consuming process of probate. If you become incapacitated, but have a living will that names a trustee to replace you, you can avoid going to probate court, where the court will appoint a trustee to manage your assets. Rather, you select a successor trustee as part of the living trust.

Living trusts: What Are They?

A living trust is a legal document that places your assets in a trust during your lifetime and appoints a trustee to manage the trust's assets. For the duration of their lives, most people name themselves as trustees. If you lack the organizational skills or financial knowledge to manage the assets well, you can still appoint someone else.

If you appoint yourself as trustee, you should also name another person in case you are unable to do so yourself, or in case you die. Trusts can be handled by family members, friends, or a professional who specializes in handling them. You should be confident that whoever manages the trust is reliable and honest so that you can reduce the risk that the funds may not be handled properly.

Upon your death, a living trust transfers your assets to the people or organizations you choose. They are called "beneficiaries." The trustee you appointed will handle debts and taxes on their behalf. The trustee will also distribute the trust's assets to the beneficiaries.

Will I Lose Control of My Assets While They Are in a Living Trust?

No. You can control your assets with a living trust until you pass away. While you are still competent, you are still able to change or terminate a living trust.

How Do I Create a Living Trust?

A properly drafted living trust is essential. In addition, transferring assets into the living trust should be done correctly. Even if you involve other financial professionals in helping you set up your estate or reduce taxes, it is important to make sure the person who helps in the creation of the trust knows what they are doing.

This document states what property is part of the trust, who will inherit that trust property, and names you as a trustee. Then, we will help you or guide you on how to transfer your assets listed in the living trust to the trustee. Even if you appointed yourself as trustee, you will still have to transfer the trust property to yourself, in your capacity as trustee.

This transfer of property includes, for example, preparing and recording deeds to real estate, changing the beneficiary on life insurance or your 401k, and transferring bank accounts and stocks.