What is a Trust?
There are many different types of trusts but in its essence, a trust is a document that is meant to protect your family by re-titling your assets in the name of the trust. Some types of Trusts are the following: Irrevocable Trusts, Revocable Trusts, Bypass Trusts, A/B Trusts, Asset Protection Trusts, Charitable Trusts, Constructive Trusts, Special Needs Trusts, Spendthrift Trusts, Continuing Trusts, Sprinkling Trusts, Etc. The most common type of Trust is the Revocable Trust but can contain other types of Trusts within it depending on the Estate.
Why is a Trust Important for my Family?
If you have assets or own property in California then you should look into getting a Trust in order to avoid a process called probate and to save taxes. If you do not have a trust then you could force your family to go to probate court when you pass away, which is required by California law. The probate process takes one year to many years. Until the probate process is started your assets could be frozen at the time of your death. Essentially, your family will not have access to your assets until the probate process has begun. On the other hand, if you have a Trust and your assets are properly placed into the Trust then your Estate will bypass the probate court and your family will be protected.
What is a Will?
A Will is a document that you create that gives away your property but does not change the title or beneficiary designations to any assets. A Will does state your intent but at the time of your death your Estate is going to have to go through probate court. A Trust is different than a Will because with a Trust you are generally changing the title or beneficiary designations to assets and at the time of your death they will go to the Trustee and will not normally be subject to the probate process.
What is a Pour-Over Will?
A Pour-Over Will is essentially a “Will” as mentioned above but it comes with an Estate Plan and your Trust, as a separate document. It essentially states that if any assets are not properly transferred to your Trust or Trusts at the time of your death that it was your intention for it to be a part of your Trust Estate. This is important to avoid probate in California if there was an asset that was left out. If an asset of a certain value was left-out of the Trust then I would lodge the Pour-Over Will and file a “Heggstad Petition” under California Probate Code Section 850(a)(3). Then the Court would grant an Order stating that the property has been transferred to the Trust avoiding and probate process.
What is an Executor, Administrator or Trustee?
An Executor is a person nominated in a Will or by a family member that is administering the probate of an Estate.
An Administrator is a person that is nominated and is the immediate family of the decedent that is administering the probate of an Estate.
A Trustee is nominated in a Trust to manage the assets of a Trust. During your lifetime if you created the Trust then you are most likely the Trustee, unless you resigned or it is a type of trust, such as, Irrevocable. Once you pass away then the people you choose will be the Successor Trustees. Normally, these people are inheriting but they do not have to inherit.
What is funding my Trust?
“Funding” your trust is a term that is used to describe the process of transferring title or beneficiary designations to the name of your trust with you as Trustees. There are many different types of assets and each of them will need to be addressed. Please call our office with any questions that you may have. We have a worksheet that can help you or can do the funding for you.
How do I know whether I need to get a Trust or a Will?
As mentioned above, a Trust could allow you to bypass the probate process. If you have assets, including real property hen it could be a good idea to obtain a Trust. A Trust is not for everyone and a Will might be appropriate. If you If you are interested in having a Trust or a Will please contact us and we can determine if you are a candidate for a Trust and what type of Trust is appropriate.
What if I have a minor?
If you have a minor, a person under the age of eighteen (18), is considered to be a minor in California. Minors are not allowed to directly own property, open bank accounts, receive money from life insurance proceeds, etc.
First, it is important to make sure there is a guardianship nomination for your minor children. This is a document that will nominate persons that will serve as temporary and permanent guardians of your children if something should happen to you and your spouse. If you move to California then you will most likely need a new guardianship nomination. Institutions, such as banks, do not normally recognize documents, such as, guardianship documents of other states and will need a Court order in order to proceed.
Second, it may be a good idea to have your Trust listed as a contingent beneficiary on your Life Insurance Accounts, IRA Accounts, 401K Accounts and other beneficiary designated accounts. Please contact us to discuss this further. It is not a good idea to list minors as your contingent beneficiaries.
What if I am getting Divorced?
If you are getting a divorce it is very important that you revoke your married Trust. If this is not done it is possible that your spouse could receive under your married Trust. While the Family Law Court will determine who gets what if something should happen to you then it is possible that your spouse will still receive your property as stated in your Married Trust. Generally, when people revoke their married Trust they will create a new Separate Property Trust.
I am Retiring? What Now?
If you are retiring then, congratulations, and it is generally a good time to have everything looked over. Please contact us to set-up a Trust, Will or Advance Health Care Directive review.
My Mom or Dad are No Longer Making Good Decisions.
If your Mom or Dad are no longer making good decisions, meaning that they cannot pay their bills, make medical decisions they may need to resign as Trustee of their Trust. If they no longer have capacity to make financial and medical decisions and there is no: Trust, Durable Power of Attorney, or Advanced Health Care Directive then you might need to obtain a conservatorship with the probate court. One out of every two person become incapacitated during their lifetimes. Do not wait until this point, get the necessary documents in place while you are of a sound mind.