Before trying to sort through the types of trusts and their benefits, it may be helpful to brush up on the fundamentals of trust law. Knowing how these trusts work will in turn help choose a professional living trust Fairfield CA attorney who can create a fool-proof system. Remember that the aim here is to safeguard family wealth and facilitate its smooth transfer to children and other beneficiaries while minimizing the tax liability and other costs.
Trusts may be set up by a property owner (settlor), who can then appoint a trustee to oversee the affairs of the trust and make financial decisions related to the property and its growth. It's usually a more superior alternative to wills, but the primary intention is the same - transfer of benefits to a named beneficiary or set of beneficiaries. This structure allows separation of benefits from the ownership and control of property.
There are different types of trusts, but the most relevant classification here is whether it becomes active during the settlor lifetime or only after their death. The latter type, which works as nothing more than a vehicle to execute a person's last will and testament, is called a testamentary trust. Consider it as the legal entity that will control part or all of the estate after the settlor's death.
Trusts that become active while the owner is still alive are called inter-vivos or living trusts. They can created as either revocable or irrevocable trusts. The structure, beneficiaries and other aspects of revocable trusts can be modified after creation.
Irrevocable trusts may not be modified, so the original property owners will not have the ability to change the terms afterwards. One of the biggest advantages of inter-vivos trusts is that they can be used to avoid probate when the settlor dies. The remaining estate will be subjected to the probate process and its attendant costs and delays, while property inside the trust gets a pass because it is technically in the trustee's custody and not owned by the deceased.
These trusts are obviously efficient vehicles for transferring wealth to beneficiaries without being subjected to the usual taxation and regulatory hurdles. They're also an excellent way for a settlor to retain control over property without all the associated hassles. The trustee manages the investments, implements tax strategies, handles the distribution to beneficiaries, etc.
The property owner doesn't have to be bothered by all this. Despite this lack of personal involvement, the well-defined structure of these trusts and the duties of their trustees ensure that the property is taken care of and benefits provided in the exact manner the settlor demands. If it is revocable, it affords even more control since the owner may add or remove beneficiaries and make other changes as required.
It's understandable that many people think only high-wealth individuals need a living trust. But a free consultation with a Fairfield CA attorney will prove that it's actually very useful and beneficial for any family where the home, retirement accounts, life insurance benefits and other such assets are being handed over to the next generation. It's also a good idea because trusts are air-tight and cannot be overturned, while wills are easily challenged in court.
Trusts may be set up by a property owner (settlor), who can then appoint a trustee to oversee the affairs of the trust and make financial decisions related to the property and its growth. It's usually a more superior alternative to wills, but the primary intention is the same - transfer of benefits to a named beneficiary or set of beneficiaries. This structure allows separation of benefits from the ownership and control of property.
There are different types of trusts, but the most relevant classification here is whether it becomes active during the settlor lifetime or only after their death. The latter type, which works as nothing more than a vehicle to execute a person's last will and testament, is called a testamentary trust. Consider it as the legal entity that will control part or all of the estate after the settlor's death.
Trusts that become active while the owner is still alive are called inter-vivos or living trusts. They can created as either revocable or irrevocable trusts. The structure, beneficiaries and other aspects of revocable trusts can be modified after creation.
Irrevocable trusts may not be modified, so the original property owners will not have the ability to change the terms afterwards. One of the biggest advantages of inter-vivos trusts is that they can be used to avoid probate when the settlor dies. The remaining estate will be subjected to the probate process and its attendant costs and delays, while property inside the trust gets a pass because it is technically in the trustee's custody and not owned by the deceased.
These trusts are obviously efficient vehicles for transferring wealth to beneficiaries without being subjected to the usual taxation and regulatory hurdles. They're also an excellent way for a settlor to retain control over property without all the associated hassles. The trustee manages the investments, implements tax strategies, handles the distribution to beneficiaries, etc.
The property owner doesn't have to be bothered by all this. Despite this lack of personal involvement, the well-defined structure of these trusts and the duties of their trustees ensure that the property is taken care of and benefits provided in the exact manner the settlor demands. If it is revocable, it affords even more control since the owner may add or remove beneficiaries and make other changes as required.
It's understandable that many people think only high-wealth individuals need a living trust. But a free consultation with a Fairfield CA attorney will prove that it's actually very useful and beneficial for any family where the home, retirement accounts, life insurance benefits and other such assets are being handed over to the next generation. It's also a good idea because trusts are air-tight and cannot be overturned, while wills are easily challenged in court.
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