Living trust

Craig J. Bauman Attorney at Law – California
email cjb@californialawpractice.com or call (858) 488-1497

Establishing an estate plan, with a living trust as its centerpiece, is simply a matter of taking the legal steps to ensure that in the event of a serious illness or accident or in the event of death, that at no time will you or your family be controlled by some stranger in a black robe, sitting in some court room. By establishing an estate plan now, you save you and your family from years of delay, tens of thousands of dollars in needless costs and, for those with larger estates, you can also save your family hundreds of thousands of dollars in taxes. Click on Estate Planning, above for further information OR if you have a lot of questions already, try clicking on Frequently Asked Questions. Strategies and documents may include: revocable living trusts, irrevocable living trusts, life insurance trusts, charitable remainder trusts, charitable lead trusts, family limited partnerships, limited liability companies, incorporations, as well as other documents/strategies.

The subject of revocable living trusts, for many people, still remains a mystery. That is mainly because most people do not understand what happens when a person dies. We all imagine that all we have to do is to place in writing, ( a Will), instructions as to who is supposed to receive our assets when we die. The typical comment by many people is that, “I just want everything to go to my kids! It’s that simple!” Unfortunately, is is not “that simple”. That is what most people do not understand and that is why most people do not appreciate the advantages of a Revocable Living Trust.

Death and Probate: Here is actually what happens when a person dies without a Trust:

(1) If a person dies without a Will, state laws of intestate succession determines who your beneficiaries are. The court appoints some stranger who works with the court and one or more attorneys, to distribute your estate to whoever the law says it goes to.

After a long complicated process to determine who are your heirs, what the assets are, etc., these strangers that the law puts in charge of your estate, then collect their hefty fees (more on fees later – see “with a Will” section below) and then distribute what is left to those whom the state has determined are your heirs. Since most everyone feels that they have worked hard all their life for what they have accumulated, to simply let it be distributed by the State, at random, is totally unacceptable.

(2) If a person dies with a Will, (the document they intend to use to simply transfer their assets), there is no “simple transfer”. What occurs is that the Will and the lists of assets, heirs, and creditors, etc., are all submitted to the court for Probate Then, prior to your heirs receiving any assets, Probate must be completed:

(a) Everything submitted to a court of law is a matter of public record. Therefore, all of your family’s most private details are made public;
(b) The paperwork involved to settle even a small estate is enough to paper several rooms in your house;
(c) With the paperwork and legal process involved, comes all the delays, statutory waiting periods, hearings, etc., the average time to complete the process in California is two years and assets are locked up and unproductive for that period, and;
(d) Last, but certainly not least, is the cost involved. Statues provide for large fees for executor or administrator, the attorney or attorneys involved, and long lists or court costs and fees: For example, the California Probate Code provides for approximately $8,000.00 in fees for a $100,000.00 estate, fees of nearly $15,000.00 for a $200,000.00 estate, plus more for “extraordinary ” services rendered, etc., etc.

For the typical estate, this means months or years of delay and the loss of tens of thousands of dollars just to use the court system to “give it to the kids”. Plus, without even knowing the above information, all you have to do is to read the newspaper or watch TV to know that you do not want to make your family go through the court system for anything, let alone something as private adn a improtant as settling your estate.

In contrast, here is what happens when someone dies who has a Revocable Living Trust:

What a Living Trust allows you to do is to do what you had intended to do all along – transfer your estate simply and directly:
(a) NO documents are submitted to cour, therefore, there is no public record – everything is private;
(b) The paperwork is a simple as closing out back accounts and transferring stock, etc.
(c) There is no delay because the person you selected to settle your estate has access to all assets starting immediately.
(d) The “probate” process involved typically is only a mere formality with a minimum of costs and no delays.

A living trust settles your estate the way you thought a Will should settle your estate. A person or couple establish the trust while they are living (that is the “living” in LIving Trusts) and serve as both the owner(s) of the Trust, as well as the Trustee(s) who operate the Trust. In the Trust document, you list who your heirs are and what they will receive. One or more Successor Trustees are appointed to execute your Trust if you become disabled or deceased.

During your lifetime and capacity, the Trust is like an Umbrella in your closet. As long as it does not rain, that is, as long as you and/or your spouse (if any) are able to manage your affairs, it is as if the Trust is not even there. However, when it rains – there is a crisis such as incapacity or death, both the umbrella and the Trust are there for your protection.

The title to all major assets are changed to the name of the Trust. This is done by deed for real property and by simply change the name of savings accounts, etc., from, for example, “John and Martha Smith” to “The John and Martha Smith Trust”.

Your retain the right to change the Trust at any time (that is the “Revocable” part}. Beneficiaries and/or Trustees may be changed at any time. As a result, no property tax changes are triggered, all ncome is still reported under your own name and social security number and there is no change in how you report your income tax.

Lastly, and most importantly (because this is what allows the trust to keep you, your heirs and your estate out of the court system) your Trust then executes automatically to allow the Trustee you named to care for ou, if you become incapacitated (see below) or to allow the Trustee to distribute your estate upon your death.

One added feature of a Revocable Living Trust that is often overlooked (becuase although we all know that we die, we never expect to find ourselves incapacitated or incompetent), is that your Trust will save you and your estate from the costs of a Conservatorship. If incapacitated, no conservatorship is required, typically saving your estate at least $10,000.00 plus annual costs and the burden of miles of paperwork. Just like most people naturally assume that at their death, their estate will simply pass to their heirs, most people find it incredible that without a Trust, in order to legally care for your spouse’s affairs, the demeaning puglic process of having your spouse declared incompetent and court approval of you becoming your spouse’s conservator, is required in many circumstances. With a Trust, no legal process is required because there are provisions in the Trust that allow the well spouse (or successor Trustee) to act in the same capacity as a conservator, only without any cost or court procedure.

Living Trust’sin:

Alpine, San Diego Oceanside, San Diego
Bonita, San Diego Pacific Beach, San Diego
Bonsall, San Diego Point Loma, San Diego
Bostonia, San Diego Poway, San Diego
Boulevard, San Diego Rancho Bernardo, San Diego
Campo, San Diego Rancho Santa Fe, San Diego
Cardiff, San Diego San Marcos, San Diego
Carlsbad, San Diego Santee, San Diego
Clairemont, San Diego Solana Beach, San Diego
Chula Vista, San Diego Spring Valley, San Diego
Coronado, San Diego University City, San Diego
Del Mar, San Diego Vista, San Diego
El Cajon, San Diego
Encinitas, San Diego
Escondido, San Diego
Fallbrook, San Diego
Hillcrest, San Diego
Imperial Beach, San Diego
Jamul, San Diego
Julian, San Diego
Kearney Mesa, San Diego
Kensington, San Diego
La Jolla, San Diego
La Mesa, San Diego
Lake San Marcos, San Diego
Lakeside, San Diego
Lemon Grove, San Diego
Leucadia, San Diego
Mira Mesa, San Diego
National City, San Diego
North Park, San Diego
Ocean Beach, San Diego

For more information, please contact:
Craig J. Bauman Attorney at Law – Local to San Diego, California
email cjb@californialawpractice.com or call (858) 488-1497

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