Guide to Creating a Living Trust in California

It is estimated that less than half of all Americans have documents in place for directing how affairs are to be conducted following their death. Even though death is a certainty in life, many of us somehow manage to push the idea aside, and continue to act as though the event is forever far away.

For some, there may be the idea that there isn’t enough material wealth to be concerned about. For yet others, there can exist the notion that our loving family members will have no problems taking care of dividing up what remains.

The reality is that things rarely go smoothly in cases where the deceased have not put proper directives into place. The grief of loss that is experienced by those who remain can cloud judgments, and the potential for gain can cause even a normally easy-going person to become greedy.

There is also stress that is placed on loved ones who are left to sort through the affairs, as they struggle to gather resources, determine distributions, and pay off applicable debts. In such cases, the dreaded process of probate can drag on and on. In California, particularly, Uniform Probate Code has not been adopted, meaning that the laws surrounding probate can become tedious and lengthy.

Benefits of a Living Trust

For those wishing to avoid the pitfalls associated with a non-planned death, establishment of a living trust is a viable option. A living trust not only provides directions for those who remain, but it also allows us to establish boundaries and parameters surrounding our own, end of life, care.

Unlike a will, a living trust is designed to be flexible and modifiable. The specifications are able to be changed with the addition of an amendment to the existing document. This provides for a trail of decision making that can leave little in the way of questioning the intent of the deceased.

A living trust can be a way to save money on expenses through avoiding probate. It can also protect your privacy from the scrutiny of the courts, and can provide personal comfort in the case that the inability to provide for your own needs becomes an issue. Finally, it can provide peace of mind that nothing has been left out of your final wishes, and that loved ones are cared for in the way that you desire.

Where to Start

The first step in designing your living will is to make some decisions regarding who will be involved. For those who are married, there is the option of creating a solo trust, or of forming a joint trust with your spouse. Forming a solo trust as a married person can be a bit tricky in California, as it is a community property state.

What this basically means is that, even though you may make some stipulations regarding assets within your solo living trust, community property laws will supersede them. It is advised to consult with an experienced attorney when deciding whether to pursue a solo living trust while married.

After this determination is made, the next step is to take stock of your assets. Gather together any legal forms; retirement and life insurance statements; and property deeds, and create a list of tangible property items that you wish to include in your eventual disbursement.

There is no need to worry about forgetting something, as the beauty in a living trust lies in the fact that you can modify it, later, should you obtain something new or remember something that you failed to add, previously.

A third step involves deciding how to distribute responsibilities and assets. As long as you are still living, you are the trustee for your own account. This enables you to make the ongoing changes to the document at your whim. Once you have passed on from this life, a successor trustee will take over the execution of the account.

This person will be responsible for paying your remaining debts and distributing the assets according to your plan. Assets can be distributed to family, friends, and charitable organizations. You will want to ensure that the named beneficiaries on other documents – such as your retirement and life insurance forms – do not conflict with those whom you name as beneficiaries in the trust.

The final steps in the creation process are putting your wishes into the document, signing it, and having it notarized. There are options for completing the documents on your own, but an experienced attorney can help you to avoid any conflicts or potential problems with the specifications. Some common problems that are encountered involve desires to leave people out of the trust, and failing to account for adequate funding.

Options to Consider When Creating a Living Trust

A robust living trust will include some type of healthcare directive. In these documents, you can specify what type of healthcare treatment and services you would like to receive in the event that you become severely ill or incapacitated. In California, this document is known as an Advanced Health Care Directive, or AHCD. Instructions for physicians and caretakers can be included, and a primary agent can be named as the person to make healthcare decisions for you once you are unable.

Another aspect that can be included in a living trust is that of plans for the long-term care of a disabled dependent. Adding a special needs trust to your living trust can ensure that funds are regularly dispersed to cover the needs of your loved ones, while simultaneously avoiding the negative effect on state funding that their receiving a lump sum would have.

In this case, funds distributed are specified as being a supplement to other funding sources, and the oversight is handled by a person whom you name as trustee for the estate. It is imperative that this trustee be someone who will faithfully carry out your wishes for your dependent. In the case that such a person is not available to you, utilizing a corporate trustee for the task is an option.