What is a Living Trust?
Much has been written recently regarding the use of “living trusts” (also known as a “revocable trust” or “inter vivos trust”) as a solution for a wide variety of problems associated with estate planning through wills. Some attorneys regularly recommend the use of such trusts, while others believe that their value has been somewhat overstated. The choice of a living trust should be made with the advice and counsel of an experienced estate planning attorney after consideration of a number of factors.
This brief summary borrows heavily from an ABA article on the subject and is intended to provide a framework of basic knowledge regarding “living trusts” in general. I hope this will give you a little background on living trusts as an estate planning tool and inform you if there is a living trust in your life that you have questions about.
The term “living trust” is generally used to describe a trust which (a) you can create during your lifetime, and (b) you can revoke or amend whenever you wish to do so. These are commonly called “revocable” living trusts, because you can revoke them at any time you see fit. “Irrevocable” trusts are far less common and generally only used in specific circumstances for tax purposes we won’t get into in this article.
The most common scenario is one where you work carefully with an estate planning attorney to craft a trust that carries out your wishes. Then you put most of your major assets into the trust, acting as “settlor” or “grantor” of the trust, and you also act as the “trustee” who manages the trust assets during your life. This has several profound effects on your estate planning, the most notable being that this mechanism is one of the most effective to retain your assets during your life and yet pass them on at your death without requiring a formal probate. This is done by also executing a simple “pour over” will that puts any remaining assets outside of the trust into your trust upon your death.
Generally speaking, the trust document also specifies who will act as trustee in the event of your incapacity or death. If you become incapacitated, you don’t need to worry about granting someone power of attorney to manage the assets you’ve already put into the trust, the next trustee in line will assume control of the assets by operation of the trust and must guard those assets for your benefit for the rest of your life, unless you’ve instructed otherwise. Usually, these trusts provide that upon your death, the trust becomes irrevocable (the assets in the trust are “locked in”) and must be disposed of or preserved according to your instructions (in the trust).
These trusts can be very elegant solutions for estate planning, but if the trustee who takes them over either doesn’t know what he or she is doing or tries to do something that goes against the trust, you need a Sacramento Trust Litigation Attorney to assert your rights and ensure that the wishes of the grantor are carried out.
If you have specific questions regarding a trust, whether you are thinking about setting one up, have recently been asked to serve as trustee of one, or are a beneficiary who has questions about your rights, contact a Sacramento trusts and estates lawyer for a free consultation regarding your specific circumstances. Contact the Law Office of Bowman and Associates today at (916) 923-2800 and we will help you understand your situation and the options available to you.
Sacramento Probate Litigation Attorney Tobin Dietrich helps clients across California. If you or someone you know has legal questions regarding workers' compensation, probate, employment law or family law matters, Tobin Dietrich is an aggressive advocate for your rights.
