Important details related to living trusts

A popular option in estate planning for California residents is the living trust, an option that enables grantors to achieve significant protections such as avoiding probate and maintaining privacy. However, there are situations in which probate might be beneficial and in which privacy is not perfect. Facts about living trusts that are not as well known could make a difference in one's planning and structuring of a revocable trust.

Those who want their final affairs to be as private as possible may benefit from using a living trust as a primary means of estate planning because a will is a public document. However, a trust could become public if there is any legal action taken disputing its terms of that trust. Additionally, it is important to recognize that a living trust does not necessarily alleviate the need for a last will and testament. A pour-over will is used to transfer any remaining assets into the trust at the time of a grantor's death. It is also important to recognize that probate can limit the amount of time that creditors have to make claims against an estate. Without probate, the statute of limitations on such claims can be much longer in some states.

In some situations, it is better to list a trust as a beneficiary of an account such as a life insurance policy. If a minor child would inherit the proceeds, there might be a need for a guardian to handle the funds. However, distributing these funds to a trust allows for a grantor to make the directions for the resources clear. At the same time, listing a trust as the beneficiary of a retirement account could have serious tax implications.

Because every person's financial needs and goals are unique, it is important to tailor a trust or will to the specific details of a given estate. An individual who needs to make a decision about creating a trust may benefit from the counsel of an estate planning lawyer.


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