Why Do You Need a Living Trust in California?
More Californians than ever choose to create a living trust as the basis of their state plan instead of a last will and testament. Several benefits come with creating a living trust, including protecting your privacy, saving money, and avoiding the probate process. At the Law Office of Daniel Hunt, clients often ask us whether they need a living trust in California. While creating a living trust is not required in estate planning, many California residents would benefit from having a trust-based estate plan.
Should Everyone in California Create a Living Trust?
Creating a living trust can be beneficial for many California residents. However, not everyone should have a living trust in California. For example, if you are part of a young married couple and do not have children or own a home or significant assets, you probably do not need a living trust. However, if you both pass away at the same time or soon after each other, your estate will be subject to probate without a living trust.
Additionally, California residents who have less than $150,000 including real estate in assets or who have straightforward estate plans probably do not need a living trust. Some California residents believe that subjecting their estate to the oversight of the probate court can be beneficial. In that case, you do not need a living trust. Essentially, the greater the value of your assets, especially if you own real estate, the more you will benefit from creating a living trust. In the event of a sudden illness or accident, having a living trust can make the process easier for your surviving beneficiaries.
Living Trusts are Helpful Should You Become Incapacitated
Another key benefit of creating a living trust involves the possibility that you may become incapacitated. If you already have a living trust established when you become incapacitated, the trustee you have chosen will manage the assets in the trust for you. If you have not transferred your assets into a living trust, the court will likely have to appoint someone to manage your assets unless you have already appointed someone through a durable power of attorney.
If you own separate property or you are not married or in a registered domestic partnership, and you become incapacitated, your community property could be managed by an attorney in fact or an agent. However, if you have not engaged in financial planning, the court will probably hold a hearing and appoint a conservator. Creating a living trust allows your loved ones to avoid this lengthy and expensive process. Instead of needing to go to court, your appointed trustee will be able to manage the property in the trust immediately.
Avoiding Probate by Creating a Living Trust
Without a valid will or living trust in place, your estate will need to go through the California probate process. The probate process involves a series of court proceedings in which the court distributes your assets through an appointed executor. If you do not have a will, the probate court will distribute your assets according to California intestacy laws. If you do have a will, the court will distribute your assets according to the directions outlined in your will.
When you create a living trust, the beneficiaries who will eventually receive your assets and money do not need to go through the probate process. In other words, you can create a living trust in which your beneficiaries automatically receive the assets in the trust upon your death. The beneficiaries do not need to go to court and wait for the probate court to distribute the assets, which could take months or even years, depending on your situation.
Instead, the successor trustee you have appointed will pay all of your estate’s debts and then distribute your assets according to the instructions you outlined in the trust agreement. You can also appoint a guardian for your minor children in the event of your death and ensure that your children have access to your assets immediately after you pass away through the trust.
Saving Money Through a Living Trust
Many people assume that creating a trust will cost them a significant amount of money. However, creating a living trust may save you money over the long-term, depending on your unique financial situation. Creating a living trust is typically more expensive than creating a will because a trust is a complex legal document. You also need to transfer ownership of your assets into the trust to fund the trust through separate paperwork. The cost of these legal actions does add up, but they can save you money in the long run.
When you create a living trust, your estate will avoid paying all of the fees and costs associated with the probate process. Depending on your situation, you may save on estate taxes, especially if you are a married couple who creates a joint living trust.
A Trust Offers Privacy
Many of our clients are drawn to creating a living trust because it allows them a certain amount of privacy. The trust agreement is never made public. When you pass away, your estate will be distributed in a private matter. On the other hand, during the probate process, your will becomes a part of the public record, and all transactions related to it will also be public. Should a will contest occur, all of the details about the contest can become public, as well. If you own property outside the state of California, you can avoid going through the probate process in that other state by creating a living trust.
Contact a Sacramento Living Trust Lawyer Today
If you are interested in creating a living trust in California, the Law Office of Daniel Hunt is here to help. Contact us today to learn how we can help you with your estate planning goals.
Law Offices of Daniel A. Hunt
The Law Offices of Daniel A. Hunt is a California law firm specializing in Estate Planning; Trust Administration & Litigation; Probate; and Conservatorships. We've helped over 10,000 clients find peace of mind. We serve clients throughout the greater Sacramento region and the state of California.