A living trust is a separate legal entity often created as part of an estate plan. A trust is separate from the individual who creates it. It can own and control property. The person creating a trust funds it by transferring assets that they own to the trust.
Setting up a living trust is typically more complex than simply drafting a will. A testator must plan for specific resources and name a trustee to take over their management after they die. Some Californians overlook the value of a living trust because of the complexity of creating one. However, the benefits of a trust often outweigh the investment required to create this resource.
Continued control over assets
When someone directly inherits resources, they obtain immediate and total control over those assets. Many people can misuse inherited resources. They may spend them frivolously or fail to properly manage them, resulting in a significant reduction in their value. Those who create trusts can specifically control what happens with their property and how people use their inherited assets. They can also name a trustee who is capable of maintaining or increasing the value of those resources.
The protection of minor beneficiaries
Especially if someone wants to leave resources for children or grandchildren who are minors, a will is not the best solution. Children cannot technically inherit on their own behalf and must rely on their guardians or parents to manage their resources. A living trust can help hold assets for minor children until they are old enough to control their own inheritance.
Support during incapacity
While the focus of a testator creating a living trust is often their beneficiaries, a trust can be useful for their support as well. If someone becomes incapacitated but does not die, the successor trustee that they name can take over trust administration and help preserve their resources. That trustee can be a crucial form of financial and practical support when someone experiences lasting incapacitation.
Enhanced family privacy
Typically, when someone dies, the probate courts oversee the distribution of their assets. The property in someone’s name will therefore become part of the public record. Resources held in a trust are not subject to probate oversight and can therefore remain private.
The creation of a living trust can give someone who is preparing for retirement greater peace of mind about their own stability and the support that their loved ones will receive in the future. Using the right tools when planning a California estate can make a big difference for a testator and the people they love.