DETAILS ABOUT A LIVING TRUSTS IN CALIFORNIA

WHAT IS A LIVING TRUST AND HOW CAN IT HELP YOU AND YOUR FAMILY?

Generally, if done correctly a living trust will avoid probate, which ends up saving you money time and many delays. But this is only for the assets that have been transferred to the trust. Probate is a costly, time-consuming process that many estates do not need. However, there are some cases in which having a living trust will not provide protection against probate because the estate has few probate assets and probate is not required.

Also generally a living trust also can avoid a conservatorship, which is a court proceeding that is expensive, time-consuming and restrictive. Conservatorships are needed when an individual can no longer manage his or her financial affairs. A conservator is appointed by a court and given the power to manage the conservatee's financial affairs, and also make decisions concerning the conservatee's living arrangements. A properly prepared trust can provide a successor trustee who will manage the trust for the benefit of the trustor, sometimes avoiding the need for a conservatorship.

Another general factor is that for married couples with estates subject to the federal estate tax, a living trust can reduce or eliminate federal estate taxes by setting up an Exemption Trust.

We at McNamara & McNamara will assist you in drafting a living trust, and properly funding the trust. How is this done?

A trust document is prepared that usually names the trustors (the persons who are setting up the trust) as the trustees of the trust. The trustees are responsible for managing the trust and its assets. The trust usually nominates other persons, banks, or trust companies as successor trustees. The successor trustee(s) will take over management of the trust after the death, resignation, or incompetency of the original trustee(s).

The trust also provides for distribution of the estates of the trustors after the deaths of both trustors. These provisions can be the same as those found in a will and might include trusts for younger beneficiaries, gifts to charities, etc. Depending on the size of the estate, the trust might also include provisions that will reduce or eliminate federal estate taxes.

After the trust is signed, the trustors transfer their assets to the trust. This will include certain bank accounts, property, titled assets, etc. Many individuals neglect to take this almighty step. If this is not done, additional legal work, possibly including a probate of these assets, will be required after the deaths of the trustors.

SOME OF THE ADVANTAGES OF LIVING TRUSTS, WHICH YOU SHOULD CONSIDER ARE, AS FOLLOWS:

Assets held by the trust will not need to be probated. Legal fees for probating an estate are usually much higher than the fees for administering a trust. Probates can also take a year or longer to complete, but a trust administration usually can be completed in a much shorter time.

If a trustor becomes mentally incompetent, the successor trustee can take control of the trust and avoid the cost of a conservatorship in most cases. Conservatorships are often used in situations in which someone can no longer manage his or her own financial affairs or personal care. A conservatorship is a court-supervised proceeding that can involve substantial legal fees.

Federal estate taxes can be reduced or avoided. For more information about federal estate taxes, click here: Federal estate taxes

The trust is revocable during the lifetimes of the trustors. If an Exemption Trust is used, part of the trust will become irrevocable after the death of the first trustor.

SOME OF THE DISADVANTAGES OF LIVING TRUSTS, MAY BE:

A living trust costs more than just having a will. However, a comparison between the two i.e. a living trust cost versus a will and probate fees and attorney fees in this arena, is a no brainier.

Transferring assets to the trust involves costs and paperwork not required for less elaborate estate plans.

Administration of an Exemption Trust can involve additional effort for the surviving spouse.

Refinancing real property that is owned through a trust may require transferring the property out of the trust before the refinancing, and then putting it back into the trust. A few lenders do not require that property be taken out of the trust when it is refinanced.

COST

The cost to set up a revocable living trust which is prepared on a flatt fee and package basis depending on the needs of a the person, family, or couple. However, we at McNamara & McNamara also include the following related documents will be included with your trust:

• Pour over Wills for both husband and wife
• Durable Powers of Attorney for property and for health care for both husband and wife
• Deed to put house in Living Trust
• Assignment of personal effects to Trust
• Community Property agreement

The cost is a bit less for single persons, and can go much higher, depending on the complexity of the estate and which attorney you choose to do the work. The cost of a simple will is usually a couple hundred dollars or so per person; cheaper now, but much more costly to your loved ones left behind. Any further legal consolation which the clients feel is necessary, or legal advice sought is available at the regular hourly rates.