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Horizon Elder Law & Estate Planning Blog

Friday, February 16, 2018

California Trusts - What You Need to Know

You are doing the adult thing and looking out for your loved ones. You bought life insurance and checked the beneficiaries on your retirement account, and now you are debating whether you should update that simple form will you made years ago or get a living trust.  You are comfortable with your understanding of a will, but not so much about trusts. Since the laws are different in every state, reading some generic online article will not tell you about California trusts – what you need to know.

How a Trust Works in California

A trust has to be in writing. You will set up a trustee who manages the assets in the trust. You can keep this control during your lifetime, if you so choose. You should always name someone to serve as your successor trustee. The successor trustee can be a person, but you are also allowed to select an entity like a bank to manage the assets if you do not want to or cannot take care of the job yourself.

As long as your trust is not irrevocable, you can change or revoke (cancel) your living trust whenever you want, as long as you still have legal capacity. Once you put your assets (house, car, investments, and other things) into the trust, you can go on auto-pilot, knowing the trustee will follow your instructions.

What a Living Trust Agreement Contains

There are four primary components to a living trust:

  1. You designate your beneficiaries who will receive the assets of the trust when you die.
  2. You tell the trustee to manage the trust assets for you while you are alive.
  3. You empower the trustee with the legal authority to follow your instructions.
  4. You provide guidance and details on how you want to trustee to do the job of managing the assets during your lifetime and distributing the assets when you die.

Reasons to Consider Getting a Trust

A trust can provide:

  • Peace of mind that, even if you become unable to take care of your financial affairs, someone will manage them in the way that you set up in your trust.
  • Freedom, if you decide to have the trustee handle your financial affairs while you are living and competent.
  • Privacy, since a trust does not go through the courts.

However, a trust is not the right choice for everyone. If you have a small and very simple estate with few assets and you do not have children, you might not need a trust, but you should still have a will. If you have significant or complicated assets, you have children, or you have a loved one with special needs, you might consider getting a trust.

A Trust Does Not Entirely Replace a Will

A common misconception is that if you have a trust, you do not need a will. Actually, you still need a will as a sort of safety net. The trust can only distribute the property that you transferred to the trust, so if you forgot to title anything over to the trust, your will can distribute it. You should have your California wills and trusts lawyer write both documents to make sure they work properly together. It’s always a good idea to request a consult with the professional will and trust attorneys at Horizon Law today to learn about your estate planning options.

 


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