“Life is short. And while no one wants to focus on the end, forcing yourself to do so can ultimately make things a bit easier for your loved ones, not just emotionally, but financially too. One way to deal with the latter concern is to put your home in a living trust.”
A living trust is a legal document that holds title to your assets for your benefit (and likely with you as the trustee) while you're alive. It then manages those assets for you if you become disabled and administers them for your beneficiaries according to your instructions at your passing. In California, if your assets exceed $150,000 we recommend a trust to avoid probate on your assets upon your death.
This was the subject of a recent Fox News article, “Why Should I Put My Home in a Living Trust?”
Living trust versus a will. A living trust is similar to a will in that it’s a legal document that instructs how to distribute your possessions after your death. If you have a will when you pass away, your estate goes into probate where the court monitors the distribution of your estate. But if you set up a living trust while you're alive, you’ll work with an attorney to do the paperwork ahead of time and avoid court supervision of the most valuable items you own after you're gone
Whatever you place in the trust can be distributed usually faster than probate assets after your death. Also, a living trust is private, not like a will, which is a public document.
A living trust is typically funded with your assets, such as your home. You also should put any vacation homes in different states in the trust to avoid separate probate proceedings in those states. To place property in a living trust, your estate planning attorney will draw up a new deed in the name of the trust and maintain a list of what's in the trust to make it easier for your successor trustee.
Revocable or an irrevocable trust. The creator of the trust also needs to opt for either a revocable or an irrevocable trust. A revocable trust is one that lets you change what property is in the trust—or even the very existence of the trust itself. This is good for someone who wants to stay in control over his or her assets, right up until the moment he or she can no longer mentally do so, at which point a designated trustee is ready to assume control.
An irrevocable trust is one where once you create it—that’s it. You can't take things in or out, or dissolve it. You have basically created the trust for someone else to enjoy your assets. This type of trust isn’t included in your estate's value for taxes, so an irrevocable trust can save you some potential tax money there. But because of this lack of flexibility, the irrevocable trust usually makes more long-term financial sense.
Talk with a qualified estate planning attorney about your situation.
One of the main goals of our law practice is to help families like yours plan for the safe, successful transfer of wealth to the next generation. Call our office today to schedule a time for us to sit down and talk about your estate plan, where we can identify the best strategies for you and your family to ensure your legacy of love and financial security. Our office is located in Santa Ana, CA but we serve all of California including Irvine, Orange, Tustin, Newport Beach, and Anaheim.
Reference: Fox News (October 5, 2016) “Why Should I Put My Home in a Living Trust?”