Revocable Living Trust Attorneys in El Cajon
Creating an estate plan that provides for loved ones and ensures that assets are managed and distributed per your wishes is surely a top priority. As part of your estate plan, the creation of a trust may be appropriate. At the law office of Garmo & Garmo, Attorneys at Law, LLP, our experienced estate planning lawyers can help you to understand the various tools available to you and the different types of trusts.
The following provides a primer on revocable living trusts in California. If you have more questions about revocable living trusts or want to create a trust, please reach out to our firm at your convenience for legal counsel you can depend on.
What Is a Revocable Living Trust?
A trust is a legal arrangement where a grantor (the party who creates the trust) chooses a trustee (a third-party fiduciary) to manage assets placed in the trust on the behalf of a beneficiary/beneficiaries. The assets that are held within the trust are referred to as the trust fund. There are two broad categories of trusts: irrevocable and revocable living trusts.
Both trust types are true to their names – irrevocable living trusts cannot be canceled, amended, or revoked, whereas revocable trusts can be amended or revoked during the life of the grantor (upon the grantor’s death, however, the trust becomes irrevocable).
Benefits of a Revocable Living Trust
Trusts are used to leave assets to loved ones, avoid probate, mitigate taxes (depending on the type of trust), avoid liabilities, and more. Revocable living trusts provide some of these advantages. Specifically, the key benefits of creating a revocable living trust include:
- Avoiding probate. When an individual dies their estate must pass through the probate process. During probate, an inventory of all of the estate’s assets is made, creditors are paid, and assets are distributed to beneficiaries per the terms of a will or per California intestate succession laws if no will exists. The process can be time-consuming and punctilious. When assets are held in a trust, however, these assets are not subject to the probate process. Because there is no waiting for the probate process to conclude, assets that are held in a trust are available at the time of the grantor’s death.
- Flexibility. One of the greatest advantages of a revocable living trust compared to an irrevocable trust is the flexibility in management that the former provides. Making changes to a revocable trust is straightforward and may even be easier than amending a will. With a revocable trust, the grantor can change the terms of the trust, move assets in and out of the trust, and change instructions regarding the trust. What’s more, a revocable trust can be used to name a variety of individuals, including non-related and out-of-state individuals, to be responsible for property administration at the time of death.
Are There Any Disadvantages of Revocable Living Trusts Compared to Irrevocable Living Trusts?
While revocable living trusts are often preferred over irrevocable trusts because of the flexibility they provide the grantor, including the ability of the grantor to cancel or modify the trust, there are also some disadvantages of revocable trusts compared to irrevocable trusts. For example, a revocable trust will not offer the same tax advantages as does an irrevocable living trust. When assets are placed in an irrevocable trust, the grantor releases control over those assets, and is therefore not subject to an estate tax on those assets; this is not the case when assets are placed in a revocable trust.
Revocable trusts can also be more expensive to create than are irrevocable trusts and they require that any assets that are held in the trust must be re-titled in order to avoid the probate process. Assets that are held in a revocable trust, as well as the grantor’s estate, must also be monitored regularly to ensure that the objectives of the trust are satisfied. What’s more, there aren’t protections from liability associated with a revocable trust – a creditor can still access assets held in a revocable trust, as could a court in the event of a legal settlement.
Finally, note that even if you create a revocable living trust, this is not sufficient to consider your estate plan complete. You’ll also want to create a last will and testament to address how property should be distributed upon your death, as well as a variety of other estate planning documents, such as a living will, powers of attorney, etc.
How to Know Whether to Choose a Revocable or an Irrevocable Trust
Creating a trust–whether revocable or irrevocable–is usually strongly recommended and is considered a smart strategy for planning for your estate and your loved ones. However, knowing which type of trust is appropriate for you is often more confusing. When you are thinking about creating a trust, it is strongly recommended that you consult with a financial professional who can assist you in understanding the total value of your estate, as well as an attorney who can advise you regarding the types of trusts, how to create a trust, and various considerations that are specific to your situation.
Our Trust and Estate Planning Lawyers Can Help
At the office of Garmo & Garmo, Attorneys at Law, LLP, we realize how significant a decision creating a trust is. We also understand that your estate planning needs are unique to you and that taking a cookie-cutter approach to advising you would never be appropriate. When you choose our law firm, we’ll provide you with personalized attention and design a customized strategy for protecting your estate, your wealth, and your family members and other interests.
To learn more about revocable trusts in California and how our lawyers can serve you, please call us today at 619-441-2500. You can also reach our law firm by sending us a message telling us more about your situation and the estate planning services you’re looking for, or by visiting our El Cajon office today.