There is a vigorous debate as to whether Californians need a trust or not. Many people, including some financial professionals, have concluded that these estate planning vehicles are simply not worth the effort. But many Los Angeles Trust Attorneys strongly disagree.
In fact, at Archimedes Law Group, we design trusts to ensure the creditors are paid after death, beneficiaries receive monthly allotments instead of lump sums to avoid unpleasant tax penalties, and that inherited assets are allocated toward particular uses, such as a child’s college education.
Trusts and Probates: Which Is Best For You?
Those opposed to trusts often cite the relatively high cost of setting up a trust as well as the availability of other methods to dispose of your assets after death. California’s POD/TOD (payable on death or transfer on death) law is one example.
But here are the facts:
Even if the corpus (the property in the trust) is relatively large, an experienced Los Angeles Trust Attorney can set up a trust in as little as one office visit.
Furthermore, the probate process is more expensive in terms of treasure, especially in terms of time. Even uncontested matters may take up to a year to resolve. A well-designed trust, however, rarely if ever takes this long to resolve.
Finally, wills and testaments created as part of the probate processes only take effect on your death, which means that you miss one of the most important goals of a good estate plan: having continuity of managing your estate in the event of serious injury or illness, which a trust guarantees
Trusts Give You Control of Your Assets
One of the benefits of a trust is increased control of your assets compared to a traditional will.. Some specific aspects of control include:
- Distribution of Assets: Under a will or the laws of intestacy, most beneficiaries inherit at a certain time with no strings attached. Many times, that arrangement is perfectly fine. But many other times, there is a need to restrict immediate inheritance. For example, a trust can designate the certain property for medical or educational expenses to ensure that creditors are promptly paid after death and that beneficiaries are less likely to inherit new debt. Furthermore, a Los Angeles Trust Attorney can design a trust to stagger distributions according to age or other variables, which is incredibly useful if a beneficiary is a minor at the time of inheritance. A trust can designate money to be distributed in intervals when the child reaches a certain age and define certain allotments for college or other future expenses.
- Retirement Accounts: Trustees can limit access to 401ks, IRAs, and other retirement accounts so that beneficiaries entitled to monthly distributions cannot cash in the accounts for lump sums. In this way, they avoid unpleasant income tax consequences.
- Identity of Beneficiaries: When the settlor (the person who creates a revocable trust) dies, the trust automatically becomes irrevocable. At that point, assets in the trust are no longer marital property and are therefore not subject to divorce proceedings. This benefit is especially important in a community property state like California.
Types of Trusts Available in California
Another good reason to include a trust in your estate plan is the wide variety of inter vivos (living) trusts that California law recognizes. Taking full advantage of these options gives you a truly customized estate plan that closely conforms to your goals for the future. Ask the Los Angeles trust attorneys at Archimedes Law about vehicles like:
- QTIP Trust: Qualified Terminable Interest Property (QTIP) trusts are excellent for people who want their assets to be split between a second spouse and children from an earlier marriage. QTIPs give income streams to surviving spouses, but after their death, the QTIP dictates that the remaining assets be distributed to the children of the first marriage as opposed to future stepchildren.
- AB Tax Bypass Trust: AB trusts are similar. The difference is that the surviving spouse never actually takes the title of the property. After death, the corpus instead passes outside probate to the trust beneficiaries.
- Charitable Trust: In a charitable lead trust, a charity is the first beneficiary to inherit. That act reduces the estate’s value and therefore reduces the amount of taxes other heirs must pay. In a charitable remainder trust, the settlor receives an income stream from the corpus, even though the trust is irrevocable.
Contact Archimedes Law Group to Talk To a Los Angeles Trust Attorney
In almost every case, a trust should be part of your estate plan. There are so many options available, and so many benefits that make a real difference. For a free consultation with an experienced Los Angeles Trust Attorney, contact Archimedes Law Group. We help families throughout Los Angeles County and nearby jurisdictions with trust and probate administration as well as litigation matters in the event that unexpected changes are discovered with a will or trust.
