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Creating a Trust in San Diego County

As you age and start to think about what will become of your estate when you are no longer living, the creation of a trust may be an important consideration. A trust can help you to ensure that your loved ones are provided for when you’re gone, and may also provide certain tax benefits, as well. To learn more about trusts in California, or to create a trust today, contact the law offices of Garmo & Garmo, LLP. We have over 20 years of experience helping clients in the San Diego and surrounding areas make smart plans for the future.

What Is a Trust?

A trust is the legal name for an arrangement in which assets are held by another party (called the trustee) for the benefit of a beneficiary or beneficiaries. The trustee is a third party who will not benefit from the trust, and who has a fiduciary relationship with the trustor (the person who creates the trust). Trusts are used to provide benefits or assets to beneficiaries, to protect the private finances of a party (wills are public documents; trusts are private), to avoid probate, to take advantage of the tax benefits of certain trust types, or to hold assets for children who are under 18 years of age or persons with special needs.

Parties in a Trust

A trust arrangement will have at least three parties: the grantor, the trustee, and a beneficiary.

  • A grantor–also called a settlor–is the person who makes the trust and places assets in the trust (known as the trust fund). Depending on the type of trust that is formed, the grantor may retain some control over the trust. For example, if the trust is revocable, the grantor maintains the right to move assets in and out of the trust, amend the trust, or even cancel the trust.
  • The trustee is the person appointed by the grantor to manage the trust and distribute assets to the beneficiary or beneficiaries. The trustee must manage and distribute assets per the terms of the trust, which are established by the grantor. The trustee is a fiduciary, which means that they are legally bound to act in a manner that is in the best interests of the other party. The trustee must make decisions that are in the best interests of the beneficiary of the trust; if this duty is breached, an action could be brought against the trustee.
  • Finally, the trust is created for the purpose of distributing assets to beneficiaries. This might include a grantor’s child, partner, dependent, or another entity, such as a charitable organization. Different types of trusts may be used for different beneficiaries.

Types of Trusts

There are many different types of trusts, which is one of the reasons working with an experienced California trust attorney, who can guide you through the various types of trusts and which is most appropriate for your financial situation, is so important. Some of the most common trust types include:

  • Living trusts. A living trust is a type of trust that you can change during the course of your life, and you are typically named as the trustee on the trust. Similar to a will, you will put most assets, like a home, money in bank accounts, real estate, vehicles, etc., into your living trust. When you die, these items will be distributed according to your wishes. The biggest benefits of creating a living trust is that the trust is private, and by creating a living trust, your estate will avoid the probate process.
  • Irrevocable trustsWhile a living trust is revocable, which means that it can be changed at any time during the lifetime of the creator of the trust, an irrevocable trust cannot be changed. This means that once property is put into the trust, the creator of the trust cannot take it out.
  • Special needs trusts. Special needs trusts are unique because they are created with a different intent than normal trusts: to allow a person with special needs to benefit from the trust while also remaining eligible for federal programs, such as Social Security Disability Insurance or Medicaid. In order to do this, the trust is set up and managed by a trustee who purchases items for the beneficiary, but does not provide the beneficiary with control of the trust or trust fund withdrawals.
  • Charitable trust. A charitable trust is what it sound likes – a trust that is established for the purpose of benefiting a particular charity or organization. Not only are charitable trusts beneficial because they allow the trust creator to give to organizations in need, but they can also provide financial benefits for the creator, too.

There are multiple types of trusts, and the list above only names some of the most common trust types.

Trust Formation and Litigation

Forming a trust is a legal process that not only requires understanding your assets and the laws surrounding adding those assets into a trust, but also the tax penalties/benefits you could be facing, as well as which type of trust is best for you and your beneficiaries. For all of these reasons, working with a seasoned California trust lawyer who knows California law is strongly encouraged.

In addition to the basic difficulties associated with trust creation, another complication that you may face at some point is a dispute about a trust. Because trusts are essentially contracts between trust creators and trustees, there are times when a contractual agreement or fiduciary duty is breached. Some of these disputes might include disagreements over whether or not a trust is valid and legal, whether or not a trustee is performing their duties as stated by the trust agreement, disagreements about interpretation of trust language, or misappropriation of funds by trustees. Of course, these issues may be accompanied by other will and estate disputes, ranging from proving the validity of a will to removal of a personal executive of an estate to contested guardianship proceedings or allocation of assets and more.

When any sort of trust dispute arises, you need an aggressive and knowledgeable attorney on your side. The outcome of a trust dispute case could have a huge effect on your financial well-being and future; it is important that you work with someone who understand the issue you’re facing, has handled cases like yours in the past, and isn’t intimidated by the possibility of litigation.

Contact Our Experienced Law Firm Today

Creating a trust can be an important part of your future. At the law offices of Garmo & Garmo, LLP, we care about you, and will competently guide you through the process of creating a trust that provides you with peace of mind. If you currently have an existing trust, are a trustee, or are the beneficiary of an existing trust and have encountered a legal problem, we want to hear about it and provide you with legal advice today.

Our California trust attorneys always put our clients first, and are very good at what they do. We have a long history of success and client satisfaction, and are very familiar with the California court system. If you are looking for a legal advocate whom you can count on, call our law offices today or send us a message.

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Garmo & Garmo LLP office update (July 2, 2020)

Garmo & Garmo, LLP’s physical office is still open to assist you with your legal needs. We are following guidelines provided by the County of San Diego and the Centers for Disease Control (CDC). Please keep the following in mind when coming into our physical office:

1. Please do not enter our office if you have any of the following symptoms:

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We are closely monitoring the latest advisories from the County of San Diego, the Centers for Disease Control and the local court system. We will update our policies as we receive new information.

We appreciate your patience and confidence in Garmo & Garmo LLP’s ability to serve you.