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Estate Planning: FAQ

What is a Living Trust?

A Living Trust is one aspect of what is commonly referred to as Estate Planning.

A Revocable Living Trust is a document which outlines in detail exactly who you desire to receive your entire estate at the time of your death. button_01

The advantage of a revocable living trust is that you can avoid the cost of probate proceedings, with no adverse effects to you or your estate. The costs of probate proceedings can be thousands dollars.

One of the reasons revocable Living Trusts are so popular is that you can cancel your living trust at any time.

If you decide to create a revocable living trust it is often a good idea to also have a “Pour Over Will”, a Durable Power of Attorney, and a Health Care Power of Attorney.

What is a Pour Over Will?

Drafting a Will with your Living Trust, also known as a “Pour Over Will” allows you to include in your Living Trust, assets which for some reason you left out of your Revocable Living Trust at the time it was created or you acquired after its creation.

What is a Durable Power of Attorney?

A Durable Power of Attorney allows you to appoint a trusted person to act as your financial manager, in your place, if the need arises in the future.

What is a Health Care Directive (Health Care Power of Attorney)?

A Health Care Power of Attorney allows you to appoint a trusted individual to make medical decisions, according to your wishes, on your behalf when you are no longer able to do so.

A very effective yet simple estate plan, is to have drafted at the same time the following documents: Revocable Living Trust, A Pour Over Will, a Durable Power .

How Can an estate plan help me?

Estate Planning allows you to designate the recipient of your assets upon your death.  It can serve as a vehicle in which a guardian for minor children is selected. It allows for greater control over your assets, who gets them and in what manner, after your death.

What is a probate?

A probate is the legal process of administering the estate of a decedent who dies with out a will, a living trust or who has not created a living trust.

What is a Will?

A will is a written document directing how your assets are to be disposed at the time of your death.

Can I appoint one of my children as the Trustee (Manager) for my Living Trust?

You can appoint one of your children as the trustee of your living trust. Usually you remain the trustee during your lifetime and your children take over at your death. You cannot name a minor child as a trustee.

Can a Living Trust be contested like a Will?

Usually not, A living trust contains language that makes it almost impossible to contest, even by an heir.

Does transferring property into a living trust cause a reappraisal of the property so that property taxes are raised?

Absolutely Not! Revenue and Taxation Code 62 specifically states that a transfer into a Revocable Living Trust does not cause a reappraisal or revaluation of the property for tax purposes.

Do I have to file a special tax return for a living trust?

No you continue to file a personal 1040 tax return as you always have, using your social security number. A living trust being revocable does not need a tax identification number and does not file a tax return on its own.

How does a Living Trust avoid Probate?

Property you transfer into a living trust before your death doesn’t go through probate. The successor trustee, the person you appoint to handle the trust after your death, simply transfers ownership to the beneficiaries you name in the trust. In many cases, the whole process takes only a few weeks, and there are no lawyer or court fees to pay. When all of the property has been transferred to the beneficiaries, the living trust ceases to exist.

Is a living trust document ever made public?

A will becomes a matter of public record when it is submitted to a probate court, as do all the other documents associated with a probate. The living trust and its contents have no need to be made public.   

Can I sell assets or add assets to my Trust?

You can sell assets and add new assets to your trust. You can do anything you want with your property while it is in the trust. You retain complete control over your assets and you can terminate your trust any time you choose without notification to your beneficiaries. The only exception to this is if you create an irrevocable trust which cannot be altered or changed after its creation.

What is a Grantor?

An eligible person who grants or gives property or the right of property in the establishment of a trust and transfers his or her property to it.  Also called a Settlor.

What is a Beneficiary?

Individual,  agency,  association, branch, corporation, estate, group, partnership, or other entity or organization having legal rights and responsibilities separate from those of other entities and/or of its owners or members.

What is a Personal Representative (Executor)?

The person identified in your Will to manage your estate through the probate process. If married, the first choice is usually the surviving spouse.  However you are free to name any adult to probate your estate.

What is a Trustee?

A person or institution appointed to hold and manage
property put into trust by that person,  and to make distributions of the trust property.