Estate planning contains many facets, one of which is revocable living trusts. It is a legal document that plays an important part in estate planning because it enables you to put aside assets that can be used for your benefit if you ever become incapacitated. You can draw up your trust documents with a living trust attorney in Orange County.
What Does a Living Trust Do?
The primary purpose of a living trust is to enable the trustor (you) to transfer assets (an investment portfolio) into a trust fund that will be managed by an assigned trustee. As a living trust, it’s accessible to the trustor when necessary. For example, suppose you’re in an accident and are in a hospital in a temporarily induced coma. The trustee can release funds to pay the bills.
You can be the primary trustee, but you must assign someone you have the utmost faith in to manage the trust on your behalf when you become incapacitated.
Trust is the crux of the matter because trustees must carry out your wishes and make decisions with your best interests at heart. Basically, the trustee has a legal obligation to manage the trust for you to the best of their abilities.
The secondary aim of a revocable trust is to distribute the assets in the trust according to your wishes while avoiding the probate process and estate tax.
In some instances, you might want the trustee to manage the trust until a particular requirement has been met. For instance, your daughter only receives her share of the trust when she graduates from college. Alternatively, you might want the trustee to manage the trust indefinitely.
If the latter is the case, you’ll need to designate a successor trustee. After all, you can’t expect your trustee’s great-granddaughter to keep your trust going. Instead, you can make your trust attorney in Orange County, CA, your trustee. In this way, trust management is always in the hands of professional trustees.
Two Things to Note
- It’s revocable. You can revoke it if you choose to do so. You can also change the terms if something in your circumstances changes. The proviso is that you need to be mentally competent at the time.
- If things go wrong financially, trust assets can be claimed by creditors. There is no form of asset protection. If you want a trust that provides asset protection, you should talk to your trust lawyers in Orange County.
6 Steps to a Living Trust
Setting up a living trust is quite easy, especially if you have an attorney who specializes in the different types of trusts.
1. List the Assets
You need to look at all your assets and choose which you want to include in the trust. Assets you can transfer include cash, retirement accounts, personal investments, personal property, and real estate.
Try to include details; for example, their value and location are important if you own rental properties elsewhere in California.
2. Choose a Trustee
You must think carefully before you choose your trustee. It’s a role that requires a great deal of responsibility. You might be tempted to choose your best friend, but if she can’t manage her own finances, let alone yours, you should choose someone who can manage trust administration.
You absolutely have to talk to the person before you designate them as your primary trustee. The person might be perfect for the role but is uncomfortable with the trust administration process and distribution of assets.
Make a list of potential candidates and go through it with your Orange County trust attorney to determine who has the right qualities for the job. You aren’t limited to one trustee. In fact, you shouldn’t leave it to one person. You should have at least one successor trustee in case something happens to your primary trustee.
3. Choose Your Beneficiaries
This is not as easy as you might think. Family politics can be a nightmare, especially if you have an extended family with stepchildren. It’s essential to name the stepchildren in your trust because they aren’t automatically considered trust beneficiaries and could miss out on items you specifically wanted them to have.
Write a list of all the people you want to include in the trust. This might take some time because the list is likely to change a few times, for instance, if you forget someone.
Then match your assets to beneficiaries. Work with your Orange County-based trust attorney to ensure it’s a valid legal document.
4. Complete the Declaration of Trust
You could, in theory, complete the declaration on your own. There are plenty of online services that offer help. However, an experienced estate planning attorney who specializes in trust agreements is best.
They know the law, and they know it well. They’ll help you iron out any problems, give you sage legal advice, and ensure the documentation glides through the legal system and estate administration process.
5. Sign the Declaration
The rules regarding the declaration differ from state to state. In California, you just need to sign the document to make it legally enforceable. It needn’t be in the presence of an estate attorney or notary, but it’s always a good idea to sign the documents in front of an experienced attorney so that nobody can claim it’s not legally binding.
6. Property Transfer
Finally, you must transfer the property to the trustee, who will assume responsibility for managing the trust. If you’ve decided you want to be the trustee, you must redesignate yourself as the owner acting as the trustee.
McKenzie Legal & Financial: Specialists in Living Trusts and Estate Planning
You want someone you can trust when it comes to the estate planning process—someone who will always act in your best interest. The law firm McKenzie Legal & Financial has expert living trust attorneys in Orange County to help you through this emotionally trying process.
We have a department dedicated to living trusts, so you can be sure that only an attorney who has expertise in this aspect of estate planning will guide you through the steps. We’ll be with you from the free consultation to signing the final declaration and overseeing the transfer of assets to the designated trustee.
Contact us if you have any questions or want more information on the subject by calling 562-594-4200 or completing the contact form on our website.