How important it is to begin your estate planning process before an emergency arises. Very few of us want to think about our death but if you have assets that you want to transfer as painlessly as possible to your heirs, then it is VERY important that you take the time to prepare a living trust or will.
It only takes a $100,000 in assets to send your heirs to probate court, which is a notoriously long and costly process.
Get Your Living Trust Notarized with Zekes Mobile Notary. I can notarize your Living Trust Packet at a location convenient for you in the Kern County area.
What documents should be included with your Living Trust Packet...
- Declaration of Trust (Living Trust): Will need to be Notarized
- Last Will and Testament (Pour-Over Will): Only needs two Witnesses to sign
- Advanced Health Care Directive: Will need to be Notarized
- General Durable Power of Attorney: Will need to be Notarized
- Transfer Deed: Will need to be Notarized
To help you understand the process and procedure of Probate and Living Trusts, I have put together a list of frequently asked questions.
Please contact an attorney if there are other questions you would like answered.
What is a Living Trust?
A Living Trust is a legal tool for financial planning that allows a person (Trustee) to hold another person’s property (Settlor) for the benefit of someone else (Beneficiary). Unlike a testamentary trust, a Living Trust goes into effect during the settlor's lifetime. In most cases, the settlor, trustee, and beneficiary are the same person (at least until that person dies or becomes incompetent). In other words, if you set up a Living Trust, you can be the settlor, the trustee and the beneficiary of the trust. You keep full control over the property and have the right to use and spend that property as if it had never been put into the trust.
What are the advantages of a Living Trust?
The most common reasons people set up a Living Trust are:
- Or if you become incompetent, a conservatorship is not needed to manage your property. In either case, the person named in your trust as the successor trustee takes over.
- If you die, the successor trustee can distribute the trust property according to your wishes without having to go to probate court to authorize the distribution.
- If you become incompetent, the successor trustee can manage the property for your benefit without having to go to court for a conservatorship and without ongoing court supervision.
- But a Living Trust does not shelter the settlor from creditors. A creditor of the settlor has the same right to go after the trust property as if the settlor still owned the assets in his or her own name.
- The only exception is a new law that says the successor trustee must give all your heirs at law (the relatives who would have the right to inherit from you if you had died without a Will) the right to ask for and get a copy of the trust.
What is Probate?
Probate is the process of having a court supervise the taking of an inventory of assets, appointment of a representative for the deceased, notification of creditors, and payment of the debts of the deceased, payment of any taxes due, notification of all potential heirs or beneficiaries of the deceased, and thereafter granting of a judgment of distribution transferring ownership to the rightful heirs or beneficiaries of the deceased.
Is a Living Trust only for the rich?
No. A Living Trust can help anyone who wants to protect his or her family from unnecessary probate fees, attorney's fees, court costs and estate taxes. In fact, if your total estate is greater than $150,000, a Living Trust offers substantial protection for your estate.
Is a Living Trust a good idea for a single person?
Yes. If you are widowed, divorced, or unmarried, a Living Trust offers protection for your estate as well. It completely eliminates Probate, Conservatorships and you can pass $5,400,000 Estate Tax free.
Is the Revocable Living Trust just a tax loophole that the government will close down?
No. The Revocable Living Trust has been authorized by the law for centuries. The government has no interest in making you go through Probate or Conservatorship. Those proceedings only clog up the court system. In addition, there is no movement in Congress to reduce the Estate Tax benefits available to a Revocable Living Trust.
Is it difficult to transfer assets to my Trust?
No. All your assets except IRA and pension benefits, which have beneficiary designations, should actually be owned by your Revocable Living Trust. We transfer your real estate and all your personal property for you. The only assets you need to transfer are your stocks, bonds, and bank accounts and, in most cases, there is no fee for changing title to these assets. A simple beneficiary change is used for "Tax-Qualified" plans such as IRAs, 401Ks, and pension benefits.
Can I transfer my separate property as well as my community property into the Living Trust?
Yes. All your assets both separate and community are transferred into your Living Trust but they are not commingled. Separate property assets retain their separate property character while in your Trust. If there is a divorce or dissolution of marriage, all assets come out of your Living Trust in the same way they went in: Community property is divided between the parties and separate property is returned to the party who originally owned it.
Can I transfer real estate into my Living Trust?
Yes. In fact all real estate should be transferred into your Family Trust. Otherwise, upon your death, there will be a Probate in every state where you own real property. When it is owned by your Living Trust, there is no Probate anywhere.
If I transfer real estate into my Living Trust, will my property taxes go up?
No. Transfers into a Revocable Living Trust have no effect on your property taxes.
If I am only a part owner of property, can I transfer my share into a Trust?
Yes. Your share can go into the Trust without changing the shares owned by others.
Will I have to consult an attorney every time I buy new assets?
No. Once your current assets are transferred to your Living Trust, you take title to all new assets in the name of the Trust and they will automatically be owned by your Trust.
Can I sell assets owned by my Living Trust without complications?
Yes. You sell assets in the same way you currently do. You will, however, add the word "Trustee" after your signature.
Can I change the terms of the trust?
Yes. While you are alive and competent, you can alter the Trust or even revoke it without penalty at any time.
Does my Living Trust need to be registered or recorded anywhere?
No. The Revocable Living Trust is a private document which is not recorded. However, if you own any interest in real estate, the new deeds showing Trust ownership will be recorded.
Can I name Trustees and Beneficiaries who live out of state?
Yes. There is no limitation on where your Trustees or Beneficiaries reside.
What if I move to another state, is the Trust still valid?
Yes. The Revocable Living Trust is valid in all 50 states, regardless of the state where it was originally created.
Are there any major disadvantages to a Revocable Living Trust?
No. Because you have complete control of all assets in your trust, you are free to manage your Trust in any way. Also, because your Trust is revocable, you have the right to make any changes in it while you are alive and competent.