In basic terms, trusts are legal arrangements in which a person's assets ("the trustor") are assigned to a custodian ("the trustee"), who manages the assets for the benefit of a third party ("the beneficiary"). Living trusts are unique in that living trusts allows estate owners to name themselves as the trustee of the estate.
Here's why that matters:
Revocable living trusts allow far more flexibility for estate owners. The power to revoke allows trustors to make changes as they see fit, or to terminate the trust outright and place the assets under their name. Living trusts also benefit from highly reduced estate taxes, as a trustor's property "belongs" to the trust.
While the living trust does make sense for some, it is not necessarily right for everyone. If you are planning your estate, it is important to consult with an experienced estate planning attorney about your specific goals prior to selecting the estate planning tools for you.
Often, a simple will is the best solution for estate planning purposes; however, there are situations where a living trust is a powerful tool. A living trust can be used to manage your property before and after your death, as well as clarify your wishes for how these assets should be distributed after your death. If you become unable to handle your own affairs, the trust is in place to manage your financial affairs, usually by a trustee that you name.
Due to their usefulness and tax benefits, revocable living trusts have become one of the most popular tools for estate planning.
Assets held by the trust are exempt from probate. As a result, trusts are far more cost-effective in the long run. Legal fees for probating an estate are usually much higher than the fees for administering the trust. Probate can take a year or longer to complete, while a trust administration can be completed in a much shorter time.
Trusts are also easier to manage for families and better for the longevity of an estate's assets—trustees can name successor trustees, ensuring that the estate passes largely intact from administrator to administrator.
Please note that preparation of a living trust does cost more than preparation of a simple will. A living trust can be the correct choice for many when considering options for estate planning. If you have questions regarding your estate planning, contact our experienced and highly-qualified estate planning lawyers.
Contact the offices of Holstrom, Block & Parke, APLC. We will help you decide what is best for you and your family. Visit us at one of our offices located throughout Southern California.