A Living Trust is a legal tool for financial planning that allows a person (Trustee) to hold another person’s (Settlor’s) property for the benefit of someone else (Beneficiary).  Unlike a testamentary trust, a Living Trust goes into effect during the settlor’s lifetime.

In most cases, the settlor, trustee, and beneficiary are the same person (at least until that person dies or becomes incompetent).  In other words, if you set up a Living Trust, you can be the settlor, the trustee and the beneficiary of the trust.

You keep full control over the property and have the right to use and spend that property as if it had never been put into  the trust.

What are the advantages of a Living Trust?

The most common reasons people set up a Living Trust are:

1. You avoid Probate.

If all your property is in trust when you die (or become incompetent), then legally you don’t own anything in your name.  This means, if you die, no probate (formal court administration of a decedent’s estate) is needed to pass your property on to your beneficiaries.

Or if you become incompetent, no conservatorship (formal court proceedings to administer an incompetent person’s assets) is needed to manage your property.

In either case, the person that you name in your trust as the successor trustee takes over.

If you die, the successor trustee can distribute the trust property according to your wishes without having to go to probate court to authorize the distribution.

If you become incompetent, the successor trustee can manage the property for your benefit without having to go to court for a conservatorship and without ongoing court supervision.

2. Tax Planning.

A Living Trust can help avoid or reduce estate taxes, gift taxes and income taxes, too.  Your tax savings can amount to hundreds of thousands of dollars or more in some circumstances.

Is my Living Trust “revocable”?  Can  cancel or change it?

In most cases, yes.  You can cancel or change the trust at any time.  You act as trustee and manage the property for as long as you are able; and if you want, you can have all trust property returned to you at any time.

The trust usually only becomes irrevocable when you die or if you become incompetent.

Sometimes, however, settlors make their Living Trusts irrevocable from the very beginning.  (Irrevocable means the trust can’t be changed or canceled.)  This is often done for tax planning or to protect assets from creditors.

Depending on your own financial situation they might be appropriate, but they are not for everyone.  You should consider your own situation carefully to determine if you need a living trust, and consider whether you need to hire a lawyer.  The California State Bar offers detailed information on living trusts including how to find an attorney to assist you.

While many of the attorneys and other professionals who can assist you with the estate planning and trusts are honest, there are some who may do you harm.  Planning an estate and choosing investments involve important legal, financial and personal decisions.  If estate planning documents are not properly prepared or executed, they may be invalid or defective which could lead to lasting damage.  Consult with a lawyer or other financial advisor who is knowledgeable in estate planning, and who is not trying to sell a product which may be unnecessary, before considering a living trust or any other estate or financial planning document or service.

Unfortunately, there are unscrupulous actors working for “living trust mills” who will sell you an unnecessary living trust or use your financial information to sell you products that are less secure than your current investments.  This type of scam often targets seniors lured by “free” seminars on living trusts or other estate planning presentations.  These scam artists often work in assisted living centers, churches and other places where seniors gather.  Occasionally, sales agents will pose as estate planners or financial experts to gain the trust of the senior in these “free” seminars and later schedule a visit in the senior’s home to gather information they can use to steal your identity or sell you financial products you don’t need.

As an Attorney having been certified as a specialist in trusts and estate planning under the guidelines prescribed by the State Bar of California, you can rest assured that all of your concerns will be addressed, and your assets will be protected.

Contact Our Claremont Estate Planning Lawyer Today!

Contact attorney Chris Scarcella, Esq., Certified Specialist in Trust, Estate Planning, and Probate by the State Bar of California, Board of Legal Specialization today to schedule an initial consultation.