Trusts may be created in two main ways. The first is at the end of a person’s life. When a person passes on their estate may pass automatically into a trust if they have executed the appropriate estate planning documents. However, a person can also create a trust while they are alive. An inter vivos trust, also known as a living trust, is created by a grantor and administered by a trustee for the benefit of a beneficiary.
There are a number of reasons that California residents may want to create a living trust. The first is to avoid the probate process. In probate a person’s estate is reviewed and debts are paid. It can take a long time to finish and can be expensive. To this end, even if individuals expect to receive inheritances from a decedent’s estate those payouts may be lowered significantly by the probate process.
Also, living trusts can help protect the privacy of a person’s assets. The probate process can be public and can expose a person’s life to the scrutiny of others. By placing one’s assets in a trust the creator no longer owns their assets and thus may avoid the public experience of having their assets probated.
Finally, a living trust can benefit individuals who become unable to make financial decisions for themselves. The terms of a living trust are fixed when the testamentary document is created, and as such, a person may benefit from having such rules in place if they are no longer able to manage their own assets.
A living trust is one of many tools a person may benefit from creating when they develop their own unique estate plan. Consultation with an estate planning attorney is an important part of ensuring that one’s estate plan reflects not only their end of life wishes, but also the needs they have for how their assets should be managed.
