Sometimes clients find the words and terminology used in their estate documents to be a little confusing. This blog article covers common terms used in wills and trust and will help you understand the meanings of words you may see in estate planning documents. We also have many other articles on our website covering living trusts, including this convenient California living trust checklist. To download a booklet published by the California State Bar on Trusts, click here.
Should I Make a California Living Trust?
Many individuals choose to create a living trust so their estate can avoid probate upon their death. Oftentimes, probate is an expensive and complicated process that your family has to take care of after you pass. Plus, if you create a living trust, you can make it revocable. In other words, you have the option to change or terminate it at any time before you die.
That said, some people need a living trust more than others. For example, if a married couple without children wishes to be each other’s sole heirs, they will probably not require a living trust. However, if a couple has children, they should have a living trust. This document will allow them to pass on their estate to their children in a simpler manner.
Keep in mind that in California, if your estate is worth $166,250 or less, you will not need a living trust to save on probate. Instead, state law allows for a simplified probate for smaller estates. On the other hand, you may choose to create a will even if you have a valid living trust. Within your will, you can write a provision that allows for any property not identified in the trust to be transferred to it upon your death. Ultimately, you should take all steps possible to simplify your estate planning.
Reasons to Have a Living Trust
There are many reasons to have a living trust. The following are our top four benefits and reasons to have a trust:
1. Trusts Save Money
One of the number one reasons to have a trust is to save the estate money. While setting up a trust may seem more expensive than creating a will, overall, the trust will cost your estate much less when it comes to distributing assets upon your death. Wills must go through probate which can be a costly and lengthy process. If you plan to leave significant assets to your family or friends, you should considee creating a trust.
2. Trusts Save Time
There are many reasons people set up a trust. Not only is the probate of a will costly, it also takes time. It can easily take months and sometimes years to fully settle an estate through probate. One important reason people set up a trust is that if a person becomes incapacitated or pass away, whoever they designate as their successor trustee will take control of their estate with little to no court oversight. Trusts are usually administered within just a few months from the time of death.
3. Trusts Maintain Control
You do not lose control of your assets when you put them into a trust. In fact, with a trust, you can easily keep control of your assets even after death. To do so, you must specifically state what you want to have happen with your assets upon death and appoint a family member or friend to administer your trust assets as instructed.
4. Trusts Protect Against Creditors
With a will, you need to file a public notice of death to allow creditors the opportunity to file a claim for monies owed against your estate. However, the administration of a trust does not require public notice. Certain trusts offer protection against creditors and limit their reach in regards to trust assets.
When an asset within a trust is transferred to a beneficiary, the beneficiary may also get protection against creditors so long as the assets stay in the trust.
Contact A People’s Choice for more information on how to prepare a trust. There are a multitude of reasons to have a trust – from saving money to avoiding probate. Call us at 800-747-2780 for further information.