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Trusts are estate planning documents used to manage one’s assets during their lifetime and provide a plan for what happens when they pass away. There are two main types of trusts, and our California estate planning team tells you what you need to know below.
The Benefits of a Trust Over a Will
Trusts and wills are some of the most common tools used during the estate planning process to manage assets and distribute them to the proper beneficiaries then the trustor passes away. Trusts, however, provide a level of customization and control that is simply unavailable under a last will and testament.
Here are some advantages of trusts that cannot be found in traditional wills:
- Trusts are not subject to probate
- Trusts can hold provisions for healthcare and end-of-life requirements
- Trusts give beneficiaries immediate access to assets and property
- Trusts do not become public documents, unlike wills, and are less likely to result in family disputes
- Trusts provide protection in case of incapacity of the trustor or beneficiaries
Two Main Types of Trusts
There are two main types of trusts that can be established: Revocable living trusts and irrevocable trusts.
Revocable Trusts
Revocable living trusts allow grantors to modify the terms of the trust, and the assets placed within it during the course of their lifetime. This means they can add or remove beneficiaries and adjust how their property is managed at any time.
Revocable trusts are designed to provide maximum flexibility all while avoiding probate and maintaining privacy.
Irrevocable Trusts
Irrevocable trusts are similar to revocable trusts in the way they are established, but they cannot be modified once the papers are signed. The primary benefit of irrevocable trusts is their ability to defend against estate taxes. When someone passes away their estate must be evaluated to determine the amount of state and federal taxes to be owed, however, any property placed within an irrevocable living trust is left out of this evaluation and will not affect the estate tax.
The property held within an irrevocable trust is also protected from liquidation if the grantor owes money to their creditors when die, and can be immediately distributed to beneficiaries.
Get in Touch With Us Today
Planning for the future can seem like a daunting task, and the team at The Sexton Law Firm is committed to a compassionate and personalized approach to make sure your loved ones are well taken care of in the future.
If you would like to learn more about how we can help you get started on your estate plan, contact us today through our website or give us a call at (619) 202-8976 to schedule your consultation today!