Types of Trusts used in California Estate Planning

If you hear the word “trust” and think it is an estate planning tool used only by the rich, you should know that over the past few decades, individuals and families in all income brackets are using trusts to plan their estates and to avoid the costs and delays of probate. Trusts have become an even more important estate planning tool throughout Southern California and Orange County because of the appreciation of real estate. With the average cost of a home exceeding $500,000, a trust can save the heirs thousands of dollars by avoiding the probate process where court costs, executor fees, and attorney fees are based on a percentage of the value of the estate.           

What is a Trust? 
A trust is simply a written contract executed by the grantor (the person who creates the trust) and delivered to the trustee (the person who is in charge of the trust, usually the same person as the grantor), which is made for the benefit of a group of people (your “beneficiaries”). A living trust is called “living” because it is created and takes effect while you are alive. Some people create "testamentary trusts" which only take effect upon death. 

The beginning of any good estate plan includes a "revocable living trust" which allows you to revoke or change it any time, and as often as you like. Revocable trusts are very flexible, and can “own” all or some of your property. You can even have more than one revocable living trust to own different types of property, such as your separate property and your community property. There are many benefits to having a trust.

The Difference between Trusts and Wills
Remember, there really is nothing complicated about a revocable living trust – it is just like a will, but is merely administered differently upon your death. While you are alive, you will still own all of your property, and may do whatever you want with it. The most important difference between a will and a living trust is that your trust must be “funded” with all of your property in order to avoid probate. If an asset is not properly titled, it may have to be probated by your heirs, thereby defeating the very reason for making a trust. Not all of your assets should be in the trust due to taxes and other reasons. 

Orange County Estate Planning Law Firm
When you begin planning your trust, it is important that you speak with an estate planning attorney, and obtain proper advice on how the entire process works. At MORTENSEN & REINHEIMER, PC, we will help you identify the right type of trust for you and your family.  There are many different types of trusts, including:

• Married A-B Trusts
• Special Needs Trusts for Disabled Beneficiaries (also see article at MDA Publications)
• Generation-Skipping Trusts to avoid taxation in the beneficiaries estates
• Honorary Trusts for the care of your pet
• Personal Residence Trusts to allow a beneficiary the use and enjoyment of your home for their lifetime
• Married Q-TIP Trusts

Our attorneys will review your trust funding options, and help you accomplish this funding so it is done correctly. With your basic estate plan, you will receive one real property transfer deed.  Our Law Firm will then direct you on how to fund your trust with the rest of your assets.

Contact Our Law Firm
Call the estate planning attorneys at MORTENSEN & REINHEIMER, PC today at (714) 573-7149, or send an e-mail to info@ocestateplanning.net, and we will contact you to set up a free initial consultation.