Trusts

A trust is a document that allows you to designate how you would like your assets to be distributed upon your death. A trust is a useful tool not only for estate planning, but also for tax planning and asset protection. A trust can also be used to protect young beneficiaries from mishandling assets before they are capable of managing money. Many people use trusts as an estate planning tool because trusts are not required to go through the California probate process and are therefore far less expensive and easier to administer. A trust can also be used to reduce estate tax liability.

Trusts are a widely used estate planning tool because they allow a person to maintain control of the distribution of the funds even after death. A trust allows you to specify a timeline for allowing your beneficiary to access the assets held by the trust. Trusts are useful tools for parents to provide for their children in the event that the parents die before their children reach adulthood. A parent can set up a trust for a child but designate in the trust document that the child cannot access to the funds until they reach a specific age or a parent can attach certain conditions to the trust. For example, a trust document could specify that a child will not be eligible to receive trust funds until he turns 25 or until he or she graduates from college.

Setting up a Trust

To set up a trust, you (the settlor) will designate a beneficiary (or multiple beneficiaries), who will benefit from the trust in some way. You must also designate a trustee to manage the trust and follow the instructions specified in the trust document. The trustee owes a fiduciary duty to care for and account for the assets of the trust to the beneficiaries.

A trust can be revocable or irrevocable.  A revocable trust is easily modified or amended by the settlor or the trustee. Irrevocable trusts are not subject to modification except in limited circumstances or as provided by state law.  As one might expect, each type of trust is used for different purposes dependent upon your specific circumstances and desires.

A revocable living trust is the most common type of trust and is an estate planning tool that adjusts according to the settlor's life phases. In most cases, the settlor acts as the trustee as long as he or she is alive and healthy. The settlor can modify or cancel a revocable living trust at any time, as long as he or she is capable of making decisions. In case of illness or injury resulting in incapacitation, the trust document designates a successor trustee to manage the assets according to the trust document's instructions. When the settlor dies, the trust document specifies a successor trustee and dictates how that trustee is to distribute the remaining assets.

Contact an Estate Planning Lawyer at Conejo Valley Law

Trusts are complex legal documents that are not suitable for all people or in all situations. An experienced attorney can educate you about the benefits and protections offered by a trust or other estate planning tools, and help you determine which estate planning tools are right for your goals and situation.

To learn more about incorporating a trust into your estate planning strategy, please contact the Conejo Valley Law Group to schedule a consultation.