What Are the Different Types of Trusts in California?
Trusts are flexible estate planning tools that help California residents protect their assets and ensure that their assets are used appropriately. There are many different types of trusts in California. Depending on what you want to accomplish with your estate, you may use one or more of these types of trusts in your estate plan. Consider working with a Cathedral City trust lawyer who focuses on lasting relationships and personalized service.
Different Types of Trusts in California
Revocable Living Trust
Revocable living trusts allow you to maintain control over your assets during your life and directs how you want your assets to be distributed when you die. Living trusts avoid the hassles and expense of both living probate and death probate. After you create it, you can modify it at any time. This includes adding and removing assets, as well as adding and removing beneficiaries.
Those interested in maximizing tax benefits or seeking to protect assets from the high c0st of nursing homes may look into irrevocable trusts. After you create an irrevocable trust, you cannot modify it. While this does not have the flexibility of a revocable trust, it does offer some protection of assets from creditors.
If you have one or more causes that you are passionate about, a charitable trust allows you to donate your assets to a charity. There are tax benefits associated with charitable trusts for estates subject to the Federal Estate Tax.
Life Insurance Trust
With a life insurance trust, you may be able to reduce estate taxes. This ensures that more of your hard-earned assets go directly to your beneficiaries. A life insurance trust owns your policies, which keeps the policies separate from your estate.
Marital trusts allow the assets of both parties to provide for the surviving spouse and protect the inheritances of the children of both spouses in a blended family. The trust goes into effect when the first spouse passes away. At that point, assets are moved into the trust and the income they create is used by the surviving spouse. When the other spouse passes away, the trust is distributed to the named beneficiaries.
Under a minor’s trust, property is given to a minor. Willing assets to a minor is challenging. This is because minors cannot be expected to manage large amounts of money nor do they have legal capacity to make decisions about the assets. However, a trustee controls the property until the minor reaches a specific age. If all the trust property is distributed by the time the youngest minor is 21, this type of trust comes with certain tax benefits.
Also known as a “will trust,” a testamentary trust is established under the terms listed in an individual’s last will and testament. Depending on the terms of the will, an individual’s estate could include more than one testamentary trust.
Special Needs Trust
If an individual with special needs gets assets under a conventional trust option, their assets could disqualify them from public services, including health care and long-term care funding. A special needs trust is the solution to this issue. A trustee holds and manages the assets.
Start Your Estate Planning Journey With Our Cathedral City Trust Lawyer
At the Law Offices of Robert L. Firth in Cathedral City, our goal is to exceed all of our clients’ needs. Attorney Robert Firth focuses on helping every individual develop the right estate plan for their long-term goals. Take the first step now and contact us to set up a consultation.