Establishing a Trust
Like in any other estate planning tool, being familiar with basic trust rules and relevant state law is necessary before one creates a trust. Unknown to most people, drafting wills is not the only legal document that will allow one to distribute or to transfer inheritance from a deceased person. Consult with an experienced estate planning lawyer so you can explore your options. Other estates planning documents are also useful for distributing or transferring estate assets and naming family members as heirs.
As stated in relevant trust law, trust documents can determine how any property in the trust is to be handled once a grantor is deceased. After a grantor has created a trust, his or her personal property, real property, or even bank account will be put in the name of the trust. Since they are held in trust, they are owned by the trust and not (anymore) by the grantor.
Advantages of Creating a Trust
When you establish a trust, you make things easier for your surviving spouse, child, grandchild, or any family member you designate as a trust beneficiary. Because of provisions in relevant trust law, a living trust is extremely helpful if you want to avoid probate after death. If a deceased loved one established a trust, his or her trust property need not be brought to court to be probated (when compared to a decedent who drafted a last will and testament). Given high probate costs and the stressful proceeding involved, avoiding probate is very useful for any beneficiary of a trust.
Including a trust in your estate plan options is also advantageous for you in many ways. For one, all income from your trust assets will be given to you during your lifetime (although they are taxable). In the case of revocable trusts, these may be revoked or amended throughout the remainder of your life.
Appointing a Successor or Back-up Trustee
If you do decide to set up a trust, you are to appoint a trustee who shall be managing, investing, and administering whatever assets in a trust account. Grantors are usually appointed as initial trustees, although such is not necessary. A trust you set up can have an individual or a trusted company as a trustee, or as a successor trustee.
As stated in relevant trust law, a successor trustee is someone (or an entity) who also has control over trust property and accounts. He or she has certain legal responsibilities. One of these is the fiduciary duty of administering the trust for the sole interest of beneficiaries, which must be dealt with impartially. This being a fiduciary requires a higher standard of care.
Successor trustees are not allowed to use property held in trust for purposes that were not specified, or for his or her benefit. He or she also should not enter into transactions that will create a conflict of interest (either between the trustee and the trust beneficiaries, or the trustee and the trust itself). That is unless such is specifically authorized and stated in the trust document.
Advantages of Having a Successor Trustee
Having a back-up trustee is another reason why you should include trust documents in your estate planning options. Take for example a revocable living trust. If you are the initial trustee of your revocable trust, the successor you have named will manage, invest, and administer the trust when you die. Aside from being able to carry out the wishes of the decedent without complications, this means that the property of the deceased person can continue to grow for the beneficiaries of the trust.
When you create a trust, your successor trustee can step in case you cannot make decisions anymore (incapacity) or if you just want to be a beneficiary of the trust before you pass away. Your successor can also become a co-trustee. This will allow you to see how he or she will be managing and administering your trust account when you die.
Protecting Yourself and Your Loved Ones through Your Estate Plan
Revocable living trusts are very useful both after death and while you are still alive but cannot manage your affairs anymore. In contrast to other estate planning tools, revocable trusts allow you to maintain privacy in how property and accounts are managed. It also enables you to enjoy and keep control of your assets and spare your family members from going through the probate court.
For your estate plan to work as you would want it to be, talk to an experienced Calabasas estate planning attorney before creating a trust. An expert on trusts and estates can help explain to you the advantages of the different types of trusts and the roles and duties of your would-be successor trustee.
For questions on revocable or irrevocable living trust, asset protection, or trust administration, call our law office. Call us at Moschetti Law Group for reliable estate planning services.