You might feel overwhelmed when it comes time to consider how you want to divide your assets when you pass, but doing it when you’re healthy is important for maintaining control over what happens. Consulting a trust lawyer can also help you rest assured that you have a clear plan for where your assets end up and under what conditions.
When you set up a trust, you draw up a legal agreement that lets you protect and distribute your assets to beneficiaries of your choice. If you put your assets into a trust, you can maintain control over them and avoid a lot of the high fees associated with wills, not to mention the probate process. If you don’t set up a trust, your assets might not end up distributed the way you wanted.
Trusts can look very different depending on the assets involved, but in general, there are two types – revocable and irrevocable. Also called living trusts, revocable trusts, just like the name suggests, can be taken away at any time. This type of trust allows people to maintain complete control over the trust while they are alive. In the event that they change their mind about the distribution of assets, they can dissolve the trust. Revocable trusts are subject to estate taxes. On the other hand, irrevocable trusts can never be altered and are not subtext to estate taxes. Irrevocable trusts are typically created for the benefit of descendants. A knowledgeable trust attorney can help you determine which type of trust meets your needs.
A: If you set up a living trust, you can control your assets in the unfortunate event that you become incapacitated, which you can’t do to the same extent with a will. You can also help your family avoid probate, minimize estate taxes, and decide precisely who is entitled to your assets and under what conditions. Although you might fear a trust is complicated to set up, a lawyer can help. In the long run, an attorney can ensure your loved ones avoid confusion and hassle when you pass on.
A: Some people might choose to set up a will but not a living trust because of the stigma about trusts being more expensive and more complicated. However, a trust lawyer can guide you through all the steps of setting up a trust to make it as simple and stress-free as possible.
A: If you’re setting up a trust with a lawyer, you can choose to add the 5 by 5 clause, which allows your beneficiary to withdraw 5% of the trust’s fair market value every year, or $5,000. You might want to do this if you are concerned about the beneficiary’s competence. You might also consider permitting flexibility for the beneficiary to use some money from the trust every year for any reason. The 5 by 5 rule can also reduce capital gains taxes from the trust’s assets.
A: One advantage of having a trust is that the trust can avoid the lengthy and stressful public probate experience. A trust can also help you stay in control of your assets if you become incapacitated but are still alive. Additionally, a trust grants you the flexibility to articulate specific conditions for the distribution of your assets, like what age the beneficiaries can access the money and for what purposes.
We know how confusing it can be to set up a California trust, and we can’t stress enough how important it is to have a lawyer help you navigate the legal complexities involved. Robert G. Petrovich, Attorney at Law, has over 30 years of experience navigating clients and can help you craft a detailed plan for your estate too. Contact the office to get started protecting your assets today.
Based in San Marino (near Pasadena), Mr. Petrovich handles estate planning, probate, business law, real estate, and other legal matters throughout the San Gabriel Valley.