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Sacramento Estate Planning Attorney

Benefits of an inter vivos trust in the event of incapacitation


Thinking in the worst case scenario is often uncomfortable for California residents, but to ensure financial stability and that wishes are carried out, in the event of incapacitation, it is necessary. One method that can be beneficial to protecting one's property and financial assets is by having a living trust. Before moving forward with it, however, it is important to understand how it can be beneficial.

A person who is functioning as his or her own trustee becoming incapacitated would result in a successor trustee taking over to manage the assets. That would not be the case if there was not a living trust. In that event, someone else would need to manage them. The way in which this would be done is contingent on the assets and if they were community or separate property. Also key is whether there was a durable financial power of attorney.

People who are married or are part of a domestic partnership that is on record will have their assets viewed as community property, if they were acquired while the trustor or the spouse lived in the State of California. If there was property that was owned prior to the marriage or domestic partnership registration and this property appreciated in value, which would likely be viewed as separate property. California will allow most community property transactions to be handled by the spouse or domestic partner, as long as that person is deemed competent. With separate property and incapacitation, the assets would be managed by an attorney or an agent.

A failure to plan for this eventuality can result in the need for probate court, also referred to as a conservatorship. A conservatorship appoints someone to oversee the affairs of the incapacitated person. That might not be preferable to a person who has someone in mind to handle their affairs if incapacitation occurs and why a living trust -- also known as an inter vivos trust -- might be preferable. Speaking to an attorney can provide insight and assistance in moving forward with a living trust to protect against this being an issue.

Source: Calbar.Ca.gov, "Do I Need A Living Trust? -- 4. How could a living trust be helpful if I become incapacitated?," accessed on March 14, 2016

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My Sacramento law practice, Michael A. Sawamura, Attorney at Law, focuses on wills, trusts and estate planning law in addition to business law and corporate defense services. My clients include professionals, government employees, small businesses, blue-collar workers and national corporations.

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