What is a California Living Trust and Do I Need One for California Estate Planning?

What is a California Living Trust and Do I Need One for California Estate Planning?

A California Living Trust is an invaluable California estate planning tool that should be part of your estate plans. This is particularly true for high-income or high-net-worth individuals and couples (net worth above $1.5 million). Living Trusts allow a decedent to avoid probate proceedings, avoid certain tax consequences, and avoid unwanted publicity.

A Trust is a legal entity created through the careful drafting and execution of trust documents. Think of a Trust as a type of corporate entity because a Trust exists legally and has legal rights (like the ability to open financial accounts, file and defend a lawsuit, etc.).

A Trust generally has three components: what is in the Trust (the corpus), the Trustee(s), and the beneficiaries. Generally, BOTH the Trustees and the beneficiaries of a Living Trust are the persons who created it. The corpus of a Living Trust is the property and assets that are transferred into it by the Trustees. Thus, real property, personal property, and financial accounts can be transferred into the Living Trust. This is an ongoing process during a person’s lifetime. Assets can be transferred into and out of the Living Trust. These transfers must, of course, be done correctly and legally. Thus, for example, with real property, this entails preparing and recording a deed that transfers the property from the Trustee to the Living Trust (or, conversely, preparing and recording a deed that transfers the property out of the Living Trust).

The Trustees of a Trust have the legal authority to decide what is done with property and assets that are in the Trust. As noted, with a Living Trust, the Trustees are generally the same persons as the beneficiaries (at least until a beneficiary dies). Thus, the Trustees handle the Trust property for their own benefit.

How Does a Living Trust Help with Estate Planning?

When a natural person dies, his or her property is subject to California probate laws. However, if done correctly, a natural person with a Living Trust has NO property at the time of death. All of that person’s property is legally owned by the Living Trust. Since the person owns no property, there is nothing to probate. Post-death, the distribution of property is done according to the terms and conditions of the Living Trust.

This has the advantage of saving substantial amounts of money since probate proceedings can be very expensive. Another advantage is that “Will contests” among bickering family members are avoided. Since there is no probate proceeding, there is no convenient forum for presenting arguments to a probate judge. To “challenge” the “Will,” a disgruntled heir must file a lawsuit challenging the Living Will itself. That is very difficult. For the same reasons, with a Living Trust, matters remain private. California probate proceedings are filed in California courts. Copies of court filings can be obtained by the media, which will disclose inventories of assets and how those assets were designated to be distributed. There can also be some limited tax advantages to creating a Living Will.

Contact Our Experienced Irvine, CA, Estate Planning Attorneys

For more information, contact the Irvine, California Estate Planning attorneys at Guardian Litigation Group. Our mission is to provide unparalleled Estate Planning legal services for our clients. We can be reached via our contact page or by phone at (949) 444-5474. We are located in Irvine, California.