Living trusts are a highly-effective estate planning tool that can spare your loved ones the expensive and time-consuming probate process. Once established, they allow a third party (known as a trustee) to hold and manage assets on behalf of your beneficiaries and when you pass, these assets are passed on to the designated recipients instead of going through probate.
Other benefits of a living trust include:
In this blog, we’ll review the differences between revocable and irrevocable living trusts and explain when each one might be appropriate for your estate planning goals.
As its name indicates, revocable living trusts can be changed and even revoked during your lifetime. In that respect, it’s similar to a will, but where wills have to be probated, assets held in revocable living trusts are passed on quickly and without loss of privacy. You can serve as trustee yourself or appoint a third party. Once you pass, the trust becomes irrevocable, so you know that its terms will reflect your wishes.
Although revocable living trusts have their advantages, there are potential drawbacks that need to be taken into consideration.
Unlike a revocable living trust, you no longer legally own the assets that you place into an irrevocable trust. For this reason, they may be used to avoid estate taxes on trust property after you pass.
Other benefits of an irrevocable living trust include:
In California, irrevocable living trusts are set up and treated differently from some other states. The primary differences are:
A potential drawback is that you cannot serve as trustee, so be sure to name a family member or professional fiduciary that you trust to manage the assets properly and in the best interests of your beneficiaries.
Living trusts have major estate planning benefits but each person’s circumstances are different. At the Carroll Law Office, an experienced estate planning attorney will recommend solutions that protect your legacy and support your goals. To schedule a free initial consultation, call 707-536-1156 or contact us.
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