In an earlier blog post, we discussed estate planning, wills, and living trusts. However, those thinking of creating a living trust may still have questions.
First, if one creates a living trust, they will still need to create a will. The type of will recommended is a, “Pourover Will.” Essentially, this is a back-up estate plan that may have not been transferred into the living trust. This will ensure that if anything was inadvertently left out, it will not be disposed of by California law. Instead, it will be handled according to the owner’s wishes. The Pourover Will ensures that these assets are added to the living trust. This will can also be used to set up guardians for children. Remember, death is unplanned, so plan accordingly.
Second, there are tax planning benefits. Living trusts can reduce gift taxes, estate taxes, and income taxes. This can be a huge advantage, but seeking professional help can help answer complicated tax issues.
Third, as explained in the prior post, control is a key benefit. This control extends to not only how one wants their assets distributed, but also how those who receive these assets use them. For those afraid their heirs will “blow it,” a living trust can be a useful tool.
Fourth, privacy is another benefit because trusts are not part of the public record, so the general public has no right to know what is actually in the trust. Of course, once one dies, the heirs have a right to know, but no one else has access to this information.
Finally, as this type of trust is created while one is alive, it is revocable. The creator can change or cancel the trust at any time prior to death or incapacitation.
Nonetheless, living trusts do not necessarily provide protection from creditors. It is possible to set up a living trust that may be protected from creditors, but this is not the default.
Another issue is fraud. There has been a recent uptick in “living trust mill” con artists. These criminals fraudulently sell trusts, and Attorney General, Bill Lockyer, recently warned the public. Of course, an estate planning attorney can help ensure one is not a victim of these types of frauds.
Estate planning is hard, but needed. It can be scary, but with the help of a professional, one can streamline and make the process as painless as possible.