Frequently Asked Questions About Estate Planning
1. Do I need a living trust?
A living trust allows you to transfer your assets into your trust to administer for your benefit while you are still alive and it allows you to pass your property to your loved ones outside of the probate process, which can be lengthy and costly. With that said, not everyone needs a living trust. If you don’t have significant assets and if you don’t own any real property, you will not receive the benefits of a living trust. Additionally, individuals who want court supervision over the distribution of their assets might prefer to have a will in place rather than a living trust.
2. What is the difference between a will and a living trust?
A living trusts takes the place of a will for those who own real property and other significant assets. It makes the administration of an estate easier in that the assets that are included in a living trust are transferred to beneficiaries without the need to open a probate. Although a living trust is costlier to set up compared to a will, it typically eliminates the extra court and attorney fees associated with the probate process.
A living trust also allows you to appoint a successor trustee to manage your assets in case you become incapacitated. If you are unable to manage your own assets, the successor trustee can step into your shoes and take care of your trust’s assets on your behalf. If you do not want to transfer all your assets into your trust, you can set up a durable power of attorney and appoint an agent to manage those assets.
3. How do I transfer assets into my trust?
Transferring assets into your trust sounds more complicated than it actually is. If you own real property, a new deed to your property must be prepared and recorded in which the property will be transferred to the trustee of your trust. Typically, individuals or married couples select themselves as initial trustees and name successor trustees in case of incapacity. Our firm will transfer one California deed into your trust and will provide you with instructions on how to transfer the rest of your assets, including additional real estate, bank accounts, stocks, business interests. Personal property, including your furniture, jewelry, and cars, are typically transferred into your trust with a document titled a “general assignment of property.”
4. I already have a will/trust. Do I need to update it?
Yes, anytime there is a major change in your life, including marriage, divorce, death of your spouse or one of your beneficiaries, when there is an addition to your family, you should modify your estate planning documents according to those changes.
5. Will a living trust reduce estate taxes?
This is one of the most commonly asked questions about estate planning. In California, there is no state estate tax. The current federal estate tax exemption is $11.4 million per individual. For those who have a taxable estate, yes, a living trust allows you to utilize various strategies to reduce, eliminate or defer estate taxes.