Attorney
There are many options in estate planning. Deciding what path to take to secure a future for you and your family can feel overwhelming without help.
This is especially true when considering setting up a trust, and you may quickly find yourself wondering, “What trust is right for my family?”
California wills and trusts attorneys help individuals and families balance wealth and family dynamics against state and federal inheritance and tax laws to find suitable trusts for their objectives. v
Why Set Up a Trust in California?
Inheritance and tax laws vary from state to state. It’s essential that you work with a licensed estate planning lawyer in your state to set up a trust that is compliant with regulatory practices and laws.
California trusts, when properly executed, can protect a family’s assets from taxation and creditors while ensuring legacy goals are being fulfilled.
What Will Influence the Type of Trust I Choose?
No two families are the same, and as such, no two estate plans will be the same either. Many factors influence the type of trusts you will select from when deciding on your estate plan.
Common factors to consider are:
- State and federal estate taxes
- Health and life expectancy
- Family dynamics and relationships
- The purpose of creating your trust
Most people establish trusts to define how their wealth will be used or transferred upon their passing.
The most common legacy objectives include:
- Preserving wealth by avoiding California probate
- Reducing estate taxes
- Governing wealth distribution to heirs
- Protecting assets from Medicaid or debt collectors
Weighing your circumstances against your long-term objectives will guide you toward specific trusts that most comprehensively meet your needs.
5 Common California Trusts for Your Family
Various California trusts exist to protect and manage your wealth in the event of your incapacitation or death. Depending on what you want to do with your assets, you may end up selecting more than one trust to incorporate into your estate plan.
Let’s examine some of the more common trusts in California:
1. Revocable Trusts
Revocable trusts allow you, the grantor, to maintain control of your assets under the umbrella of the trust during your lifetime. You may rescind or amend your trust at any time.
2. Irrevocable Trusts
As its name implies, an irrevocable trust may not be altered or revoked after it is established. Assets are transferred and held permanently in the trust, and are managed by an appointed trustee.
3. Marital Trusts
Marital trusts are activated and provide for the surviving spouse by transferring assets into the trust when the first spouse passes away. The surviving spouse uses the income generated by the assets to live. Upon the surviving spouse’s death, the trust is distributed to the surviving heirs.
4. Bypass, or Generational Wealth, Trusts
Bypass trusts allow you to place your assets into the trust and leave those assets to the trust upon your passing. Rather than your heirs receiving a direct inheritance when you die, they instead receive an interest in the trust.
5. Life Insurance Trusts
It’s important to consider how the payout amount of your life insurance policy will affect your estate value and your heirs. A life insurance trust can protect your estate against tax concerns and allow you to clearly define parameters for asset distribution to