Having a living trust prepared can help protect your assets in the event you become incapacitated and if used properly, can help shield your assets from the costly and time consuming probate process in California. Only retirement accounts cannot be added to a trust; all other assets can be placed into a trust and those assets will be distributed upon your death as you have instructed in the trust document.
The Basics of California Trusts
When your assets are placed into a living trust, you retain complete control over them until the time you become incapacitated or die. You appoint a Successor Trustee in the living trust document who steps in at that time and is required by law to follow the directions contained in your trust. Living trust agreements are specifically tailored to each person’s financial circumstances and family dynamics. Living trusts are the only estate planning tool which avoids probate in California. You do not need to have substantial assets to benefit from creating a living trust; if you have more than $150,000, you should consider a living trust. If you have a family member with special needs who will need care after your death, you may particularly benefit from having a living trust.
California Trust Attorney
Estate planning using trusts is a complex process. While most of us would prefer to put off creating a plan for our potential incapacity and our inevitable death, putting off having the right documents in place is never a good idea since we never know what lies in store for our future. Working with a trust attorney who understands California laws that apply to trusts, Wills and probate can help ensure you have the plan that is best suited to your individual needs.
Attorney Margaret B. Sharp provides a whole range of estate planning services to residents of California. If you need help designing an estate plan tailored to your specific situation, you can count on her. She has more than 20 years of experience. Contact the Law Office of Margaret B. Sharp at (310) 841-0357 or use our online contact form to set up a preliminary consultation today. You can ensure your family has immediate control of your assets should the need arise either due to your incapacity or death.
Frequently Asked Questions
How do revocable living trusts avoid probate in California?
A revocable living trust avoids probate in California only if title to all of the grantor’s assets has been transferred to the Trustee of the trust. This is because when a person with a fully funded living trust dies, he or she does not own any assets, the living trust owns the assets. Probate is only for assets titled in the name of a deceased person at that person’s death.
Does a retirement plan go into a living trust?
No. A retirement plan must be held in the name of the participant, it cannot be held in the name of the participant’s living trust. Retirement plans may name the participant’s living trust as its designated beneficiary; however, it is often better to have living, breathing people be named as retirement plan beneficiaries so that they can stretch the retirement plan benefits out over their lifetime, subject to certain rules.
All of my assets are listed on Schedule A of my living trust. I’m done, right?
No. Actual transfer of title to the Schedule A assets must occur before the living trust is fully funded and able to avoid probate in California. This means that deeds to real property must be signed and recorded and re-registration of every bank and investment account must be completed once the trust has been signed. Identifying the property or accounts on a list in the trust is not sufficient to transfer title.
If I have a living trust, why do I need a Will?
The Will, called a Pour-Over Will, serves as a safety net which “hangs” underneath the living trust to “catch” all assets that were not titled in the name of the trust at the person’s death. Since a living trust only control assets to which it has title, the Pour-Over Will is used to transfers assets held outside of the living trust to the Trustee upon completion of the probate process.
What is the difference between a Living Trust and a Living Will?
In California, the term “living trust” means the revocable trust created during the lifetime of the settlor (the person who sets it up). The term “living will” comes from states other than California and refers to the document a person signs which states his or her wishes regarding end of life medical decisions. California does not recognize a “living will” but instead allows a California resident to sign an Advance Health Care Directive.