A Lawyer Who Understands The Purposes Of A Trust
A trust is private, efficient and minimizes taxation. Assets placed in a living trust may transfer automatically upon the death of the original owner, passing to the spouse, children or other heirs without going through the public process of probate. A trust is commonly included in a comprehensive estate plan as an asset preservation strategy in the face of estate taxes and the rising costs of probate.
A well-written trust will be clear and flexible. In 35 years of practice, I have helped individual clients modify trusts and wills as each client moved from one stage of life to another. However, these periodic updates may not be enough. As your attorney, I will create your trust in a way that clearly states how the trust should be administered in the event of foreseeable changes in circumstances before your death or disability.
The Types Of Trusts I Can Prepare
Common types of trusts that I prepare include:
- A-B trusts: A-B trusts, also called bypass trusts, survivor trusts, A trusts (marital trusts), B trusts (family trusts) and credit shelter trusts minimize federal estate taxes on a married couple’s combined estate. Property automatically transfers to one spouse upon the death of the other.
- Living trusts: Homes, personal property, businesses, stocks, mutual funds and bank accounts can be transferred into a living trust (also known as a revocable or inter vivos trust during your lifetime, a process called funding the trust), to avoid probate, provide for the smooth transfer to heirs upon your death and avoid a court-appointed conservatorship in the event of your incapacity.
- Standard two-person trust: While registered domestic partnerships do not have federal recognition, a lawyer like myself can draft a standard two-person trust to provide for the transfer of assets.
Should I have a trust? Maybe. Many single or married people need only a simple will, living will or advance health care directive, and durable power of attorney to complete their estate plan. As your attorney, I will evaluate your goals and resources, consult with your CPA if needed, and help you determine whether the modest investment in a trust is appropriate in your situation.
Answering Common Questions About California Trusts
Planning for the future can feel overwhelming, especially when trying to protect your loved ones and preserve your legacy simultaneously. The answers to these frequently asked questions offer clarity and reassurance for those considering or managing a trust in California.
What happens if I become incapacitated and have a living trust?
Upon your incapacitation, a properly funded living trust allows your successor trustee to immediately take over management of the trust assets. This prevents the need for court-appointed conservatorship, which can be time-consuming and costly. The trustee must follow the instructions outlined in the trust document, which may include paying bills, managing investments or supporting dependents.
A living trust allows for uninterrupted financial oversight and helps ensure your affairs are handled according to your expressed wishes. Keep your trust up to date and make sure all included assets are titled in the name of the trust to avoid delays or confusion.
Can a trust be contested in California, and how can I prevent this?
Yes, a trust can be challenged under specific circumstances, including claims of undue influence, fraud or lack of mental capacity at the time the trust was created. To reduce the risk of a challenge, work with an attorney to draft a clear and legally sound trust document. Consider including a no-contest clause, which can discourage beneficiary disputes.
You may also want to document your intentions through written statements or video recordings and obtain a medical evaluation to confirm your mental capacity. Keeping detailed records and communicating openly with beneficiaries can help prevent misunderstandings and future disputes.
Can a trust help me qualify for Medi-Cal (California’s Medicaid) benefits?
Certain types of trusts may help you qualify for Medi-Cal benefits, but the rules are complex and typically require careful legal guidance. Here are some points to consider:
- A properly structured irrevocable trust may allow you to transfer assets and preserve eligibility, depending on its timing and terms.
- California applies a 30-month look-back period to asset transfers, and improper planning can result in penalties or delayed benefits.
- Special needs trusts and other exempt trust structures may be appropriate for Medi-Cal planning in specific cases.
Additionally, revocable living trusts cannot protect assets from Medi-Cal consideration. While they may not aid with eligibility, they can help avoid probate and reduce the risk of the state recovering costs from the estate after death.
How To Contact My Firm
If you would like to discuss representation or have another question about Michael A. Sawamura, Attorney at Law, please contact my firm by calling 916-248-4465. You can also send an email to my Sacramento, California, office to arrange for an appointment.