A trust is a versatile legal instrument that enables individuals to manage their assets during their lifetime and distribute their assets upon their passing while providing flexibility, control, and potential tax benefits. Creating a trust in California involves several straightforward steps that can help secure your financial future and streamline your estate management. Here's a simple guide to setting up a trust in California.
- Choose the Right Type of Trust: There are several types of trusts that can be established in California. Such trusts include revocable trusts (aka revocable living trusts), which are the most common, several types of irrevocable gifting trusts, and specialized trusts such as charitable remainder trusts, charitable lead trusts and special needs trusts. Selecting the right type depends on your goals and circumstances. Working with an experienced Trusts & Estates attorney can help you determine the best option for you and your family.
- Determine the Terms of the Trust: Decide on key elements such as the assets you'll transfer to the trust, the beneficiaries who will receive them in the future, and the terms under which distributions will be made to your beneficiaries. Your attorney will help guide through this process by asking you a series of questions to ensure the right terms are included in your trust.
- Determine Your Successor Trustee (or Current Trustee): You'll also need to name a trusted person or institution as the successor Trustee of your trust who will manage the trust assets if you later become incapacitated or pass on. For some types of irrevocable trusts, you will need to name a person or institution (such as a trust company) to serve as the current Trustee. This person or institution should be trustworthy, organized, and capable of following the trust's instructions.
- Have the Trust Document Drafted: Consult with an experienced Trusts & Estates (aka Estate Planning) attorney to draft the trust document. This legal document outlines the trust's purpose, terms, and instructions for asset management and distribution now and upon the happening of certain future events, such as transfers to others upon death and how those transfers will occur. There are ways to protect a beneficiary from potential creditor threats such as divorce, lawsuits, creditor claims and bankruptcy.
- Sign and Notarize the Trust Document: Once the trust document is drafted, sign it in the presence of a notary public. This adds an extra layer of validity and ensures the document is legally binding. An experienced Trusts & Estates attorney typically has notaries on staff to help their clients get this important step done.
- Fund the Trust: To make the trust operational, transfer ownership of certain assets from your name to the trust. This can include real estate, business interests such as LLCs, LPs and corporations, financial accounts such as bank accounts or brokerage accounts, and personal property to name a few. Properly funding the trust ensures that assets are managed according to your wishes now and in the future.
- Keep Your Trust Someplace Secure: Store your executed trust document in a safe and accessible place. Inform your chosen Trustee and loved ones about the existence and location of the trust document. Most experienced Trusts & Estates Attorneys will also offer to keep a copy of the signed and notarized document on their servers. Give their business card to your successor Trustee as well so they know where to go for help in the future to administer the trust.
Creating a trust in California can offer peace of mind, control, and flexibility over your assets during your lifetime and beyond. However, the process can be complex, and it's recommended to consult with a qualified estate planning attorney who is familiar with California's laws and regulations. With proper guidance, you can establish a trust that aligns with your goals and safeguards your family’s financial future.
If you or a friend or family member needs help updating or establishing a trust or estate plan, we are here to assist. Contact us at (760) 448-2220 or at https://www.geigerlawoffice.com/contact.cfm.
