Living Trust Essentials


Living Trust Essentials


What is a Revocable Living Trust? A Living Trust is an instrument that directs how your estate is managed and distributed upon your death or incapacity. Assets administered through a Living Trust are not subject to the Probate court process, and a Living Trust can provide for management of assets during your lifetime if you are ever incapacitated.


What is the difference between a Will and a Living Trust? One of the primary differences is that assets administered through a Will are subject to a Probate court proceeding, whereas those administered through a Living Trust are not. A Living Trust can also help with management of your assets during your lifetime if you become incapacitated, whereas a Will does not, and a Living Trust can administer more complex distribution provisions and scenarios.


What is Probate? Probate is a costly, time-consuming, public court process through which your estate must pass if you do not have a Living Trust in place.

Aren't Living Trusts just for the wealthy? The current probate limit [in 2015] in California is $150,000, so if the total gross value of your estate exceeds this amount at your death, it will be subject to Probate. Therefore, if you own real estate in California, it is almost certain that a Living Trust is right for you.

Who cares for my children if I pass away? An important reason to have a comprehensive Estate Plan is to nominate a guardian to take care and custody of your children in the event of death or incapacity. This document is typically included in a Living Trust Package, and an attorney can help guide you in your selection of the right persons.

At what age will my children inherit my estate? If you have no estate plan in place, your children could inherit your entire estate at the age of eighteen (18). With a Living Trust, assets can be managed until the age(s) you determine would be appropriate for inheritance.


What if I am not a United States citizen? If you (and/or your spouse) are not a citizen of the United States, you can still execute a Living Trust but there are additional tax issues to address. An attorney can advise you of these tax considerations and discuss tax and estate planning strategies specifically designed for non-citizens.

Can non-traditional couples such as unmarried partners or same-gender couples create an Estate Plan? Yes. These couples can establish estate plans to manage and distribute their estate at death, as well as documents to address tax considerations, finance management, and health care decisions that are unique to these couples.

Can I change the terms and conditions of my Estate Plan? Yes, a Revocable Living Trust is revocable and amendable during your lifetime. This allows you to make changes to the Trustees or beneficiaries, or any other terms, while you are living. Of course, this is true only if you possess the necessary physical and mental capacity to do so at the time.


What is included in a comprehensive Living Trust package?

  • Revocable Living Trust

  • "Pour-Over" Will

  • Guardianship for minor children

  • Power of Attorney

  • Advance Health Care Directive (Living Will)

  • Health Care Information Authorization

  • Trust Transfer Deeds


How can real estate property and business interests be transferred to my Living Trust? Typically, an attorney will prepare and record Trust Transfer Deeds, which transfer your home(s) or other real estate property holdings into your Living Trust.  The documents that assign business interests to your Living Trust can also be prepared and executed.


How can other assets (bank accounts, stocks, investment accounts) be transferred to my Living Trust? This process is called 'funding' the trust, and most attorneys provide a Trust Certification document and a list of instructions so that you can handle the titling of many of your assets yourself.


Review and Update of Existing Living Trust

If I already have a Living Trust, do I need to update it? Yes, the law changes frequently and a thorough review on a regular basis helps ensure that your documents are keeping current with the law. You may also need to consider a review of your current Living Trust if you have experienced any of the following life developments:

  • Growth of assets or significant changes in type of assets

  • Change in Marital Status

  • Family events such as births, deaths, divorces or children reaching the age of majority

  • Purchase or refinance of real estate property


Trust Administration Upon Death

Is there anything I must do to administer a Living Trust after someone passes away? Yes, there can be crucial steps to take when settling a Living Trust upon Death. There are important issues that must be addressed when someone passes away - even if the successor is the surviving spouse. Some of these critical and time-sensitive issues are:

  • Notification of Beneficiaries and Heirs

  • Asset Valuation, including:

    • Establishing Tax Basis of Assets

    • Obtaining Real Estate Appraisals

    • Estate Valuation

  • Making Tax Elections and filing an Estate Tax Return, if needed

  • Preparation and recording of an Affidavit of Death to remove deceased from title to real estate property and financial accounts


Don't Make this Common Mistake

I'm still young! Should I get started right away? Yes. Don't make the mistake of putting it off - this vitally important planning should be done now, especially if you have young children, elderly parents or others who rely on you for support. Although we all hope to live a long and prosperous life, there is always the possibility that illness or accidents will alter life's course. Take this crucial step now, and create the peace of mind that comes with knowing you are prepared.


Law Offices of Linda J. MacKay



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© 2015 by Kip Barnard, Broker. CalBRE #01428934