What Are the Benefits of A Living Trust?
Establishing a living trust offers many benefits to the trust’s creator and beneficiaries. Benefits of a living trust include:
Benefit #1: Your Trust Avoids Probate
Unlike a will, your trust can be distributed immediately after death. A living trust avoids the probate process by assigning assets to beneficiaries, including you while you are alive. You name a trustee to distribute the property to the ultimate beneficiaries at your death without the need for interference from a probate court.
Benefit #2: You Keep Your Privacy
Since you avoid probate with a living trust, your estate matters stay outside of the court system. This means your personal life stays private.
Benefit #3: Estate Management If You Become Incapacitated
You can use a trust to name a trusted friend or family member to manage it if you become incapacitated. This can help to avoid the court ordering a conservatorship proceeding. A conservatorship proceeding would legally appoint someone in the absence of a trust.
Benefit #4: Save Time, Money, and Stress
Avoiding probate and conservatorship can help maximize the amount of benefit your heirs receive. By removing the court system, expensive lawyers, and fees, a living trust minimizes the risk of legal disputes that can cost beneficiaries thousands in legal fees. In addition, probate court and conservatorship proceedings can sometimes take several months or years to resolve before any assets are distributed.
What Are the Disadvantages of A Living Trust?
Like any other legal option, a trust does have its drawbacks. Disadvantages include:
- You cannot name a guardian for minor children after death
- A living trust is typically more expensive than creating a final will and testament
- A living trust is more complex to create
- Creating a living trust may require more paperwork if you want to use trust assets as collateral
What Is the Difference Between a Will and Living Trust?
While many people believe that a will is the gold standard of estate planning, living trusts are a better option for many people. Both tools identify who will receive your assets after death. However, several key differences separate wills and living trusts:
- A will does not go into effect until the creator’s death. This means that you cannot use it to handle assets if you become incapacitated. A trust goes into effect as soon as it is made.
- A will must go through the time-consuming and expensive probate process. During probate, the court verifies the validity of the will and ensures that all debts are paid before assets distribution. A trust does not have to go through probate.
- A trust does not let you name a guardian for your minor children, but a will does.
- With a living trust, you can distribute assets to beneficiaries on a set schedule. A will does not have this flexibility.
You can combine living trusts and wills with other estate planning tools to protect your assets and family. Other tools include power of attorney and advanced health care directives. Our Cathedral City living trust attorney can help you understand your options.
What Are the Types of Trusts in California?
There are many types of trusts in California. A few examples include:
- Revocable living trust. These can change as your wishes or circumstances change. As the trust creator, you remain in full control of assets until your death.
- Irrevocable trust. A trust that you cannot generally modify, amend or revoke. Upon its creation, you no longer have access to it or control over its assets.
- Charitable trust. A trust that a donor assigns to assets, usually liquid, to create or fund a charitable foundation.
- Life insurance trust. This type of irrevocable trust assigns a trustee to invest insurance proceeds and administer the trust for the beneficiaries. This trust keeps life insurance separate from other assets, so proceeds are exempt from estate taxes.
- Marital trust. This trust allows you to provide for your spouse while also securing an inheritance for your children.
- Minor’s trust. This trust protects assets and ensures that they are used for the benefit of the child.
How Much Does a Living Trust Cost in California?
The cost of a trust depends largely on what you want to accomplish with your estate plan. Compared to the alternatives of probate and guardianship, a living trust is not expensive. In a free consultation, our Cathedral City living trust attorney can discuss the costs with you.