Your estate plan can be simplistic and uncomplicated or complex and complicated, depending on the size of your estate and the variety of goals that need to be addressed within the plan. The more complex the plan, the more estate planning tools and strategies you will likely incorporate into the plan. One estate planning tools that can be found in the most basic as well as the most intricate of plans is a living trust. Riverside elder law attorney Dennis M. Sandoval suggests you consider the following top three reasons to include a trust in your estate plan.
A trust is a relationship whereby property is held by one party for the benefit of another. A trust is created by a Trustor, also called a Settlor or a Grantor, who transfers property to a Trustee. The Trustee holds that property for the trust beneficiaries. The beneficiary of a trust can be an individual, an entity (such as a charity or political organization), or even the family pet. A trust must have at least one beneficiary but may have an unlimited number of beneficiaries. A trust may have both current and future beneficiaries.
All trusts fit into one of two categories – testamentary or living (inter vivos) trusts. Testamentary trusts are typically activated by a provision in the Trustor’s Last Will and Testament and, therefore, do not become active during his or her lifetime. Conversely, a living trust is effective during the Trustor’s lifetime. Living trusts can be further sub-divided into revocable and irrevocable living trusts. If the trust is a revocable living trust, as the name implies, the Trustor may modify or terminate the trust at any time. An irrevocable living trust, however, provides only very narrow circumstances, if any, that it can be modified or revoked by the Trustor.
3 Common Uses for Riverside Living Trusts
A living trust can be used to further a seemingly endless number of estate planning goals. Among the most common of those are:
- Avoiding probate – most estates are required to go through the legal process known as probate. Probate serves a number of functions, including identifying, valuing, and distributing assets, notifying creditors and paying debts, and calculating and paying gift and estate taxes. Probate is also used to authenticate a decedent’s Last Will and Testament and litigate any challenges to that Will. Probate can take a very long time to complete and can be very costly. As a result, your loved ones may have to wait months – even years – before they receive their inheritance. Moreover, that inheritance may be significantly less than you intended after the expenses of probating the estate are paid. Not surprisingly, probate avoidance is a popular estate planning goal and a living trust is a popular tool used to help further that goal. Assets held in a trust are non-probate assets, meaning they do not have to go through the probate process before being distributed, making a revocable living trust an excellent tool if probate avoidance is your goal.
- Incapacity planning – most people focus on the possibility of their own death when creating an estate plan; however, planning for the possibility of incapacity is equally important. Before you even reach your retirement years, you stand a one in five chance of suffering a period of disability lasting five months or longer. With every year that passes, your odds of becoming incapacitated increase significantly. If incapacity does strike, someone must make decisions for you and take over control of your assets and finances. A revocable living trust is an excellent incapacity planning tool because it allows you to appoint yourself as the Trustee of a trust and someone you trust to take over control of your assets and finances as your Successor Trustee. If you do suffer a period of incapacity, your Successor Trustee takes over control of the trust assets without the need for a court to approve or intervene.
- Long Term Care Medi-Cal planning – when you enter your retirement years, you will stand a 50-70 percent chance of needing some type of long-term care (LTC) before the end of your life. Like the odds of becoming incapacitated, the odds of needing LTC also increase with time. For many seniors faced with the high cost of long-term care, Long Term Care Medi-Cal or Veterans Aid and Attendance benefits for qualifying veterans is their only hope for help covering those costs. Qualifying for Long Term Care Medi-Cal, however, can put a retirement nest egg in jeopardy if you failed to plan ahead because of the Medi-Cal asset limits used to determine eligibility. Creating an irrevocable living trust as part of a larger Long Term Care Medi-Cal planning component within your estate plan can protect those assets and ensure your eligibility for Long Term Care Medi-Cal down the road.
Contact Riverside Living Trust Attorneys
If you have additional questions or concerns regarding living trusts, contact the experienced Riverside estate planning lawyers at Sandoval Legacy Group, A Professional Law Corporation by calling (951) 888-1460 to schedule an appointment. Dennis Sandoval is the only attorney in California who is a Certified Estate Planning, Trust and Probate Law Specialist, Certified Elder Law Attorney, and Certified Taxation Law Specialist.
Have a question? Ask Dennis.