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Living Trusts: A Great Tool, Even When You're Not Rich - Werner Law Firm

Why Living Trusts Are a Great Estate Planning Tool, Even If You’re Not Rich

Troy Werner and his family

Written by Troy Werner

Troy Werner has been an indispensable asset to The Werner Law Firm since joining in 2009, providing exceptional legal service to its clients.

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POSTED ON: June 15, 2019

Death is a difficult subject, and every loved one’s passing is marked by a long period of mourning and remembrance – but when that period is mired by financial and legal complications in the form of lengthy, unnecessary, and intrusive probate issues, then the memory and legacy of a loved one can feel tarnished or […]

Death is a difficult subject, and every loved one’s passing is marked by a long period of mourning and remembrance – but when that period is mired by financial and legal complications in the form of lengthy, unnecessary, and intrusive probate issues, then the memory and legacy of a loved one can feel tarnished or tainted. You don’t have to be rich to consider looking for ways, specifically investing in a living trust, to avoid the annoyances and difficulties of probate.

In California especially, the difficulties of probate don’t only complicate estate planning, but can lead to much grief and unnecessary costs in the wake of a loved one’s passing. While we are at our most vulnerable, we may be expected to deal with decisions and choices that should not be made at the time and face an uncaring and cold interpretation of the tragedy we’re still far from successfully recovering from.

This is a different experience from state to state, with some states greatly simplifying the probate process. But if your loved one (or you, for that matter) have anything of financial value to pass onto the next generation, it’s critical to consider the worth a living trust can have in greatly simplifying the inheritance process, and avoiding the complications and difficulties of the probate process.

What Are Living Trusts?

Among the different ways probate may be avoided in California is the living trust, or a living revocable/irrevocable trust. While many estate planning tools – trusts in particular – are often used by the wealthy avoid some of the additional costs tied to passing on an inheritance after death, each living trust is being increasingly made use of among different income brackets to avoid the costs and delays associated with the lengthy probate process.

Living trusts are set up between the grantor, the trustee, and the beneficiary/beneficiaries. A grantor or settlor is the trust’s original creator, typically someone with some wealth or valuable assets/property, wishing to set up a simple estate plan in case anything ever happens. The trustee oversees maintaining the living trust after the grantor has died or become permanently incapacitated (e.g. brain death after a major injury), until the trust is dissolved once all of its contents are successfully under the control and ownership of the trust’s beneficiaries.

Trusts in general are irrevocable or revocable and rely upon proper documentation and a sense of fiduciary duty to be executed in an appropriate time frame. Revocable trusts are different from irrevocable trusts in that they may be reversed, and in that the grantor may be the trustee for as long as they live, before passing the role onto an elected second trustee. In this sense, a revocable trust allows a grantor to continue controlling the wealth and assets within the trust for as long as they are alive.

Meanwhile, in an irrevocable trust, the grantor loses certain rights but no longer has to worry about estate taxes for the contents of their irrevocable trust, at least insofar as the estate tax is concerned. That does not mean they are completely exempt from taxation for their wealth. Furthermore, irrevocable trusts may be used as a form of asset protection when creditors are taken into consideration.

For most people, revocable trusts are the easier of the two to execute and manage. Each living trust carry a certain cost, as there is a considerable amount of paperwork to file, and the trust must be maintained by a trustee after the grantor has passed away. Amending a living trust involves:

    • Filing an additional piece of paperwork that details your intention to make an amendment.
    • Locating and identifying the portion of your trust that shows that you have the power to amend your trust.
    • Clearly stating which portion of the living trust you have chosen to amend (either by deleting paragraphs, adding paragraphs, or doing both).

Estate Planning Matters (Even for the Middle Class)

The main purpose of living trusts are to continue to own and manage your property while having a plan in place for your property to pass onto your children and next of kin without going through California’s probate process.

Estate planning is about more than just trusts. Sometimes, the probate process can be expedited in cases of very small estates – but doing so still requires knowledge of the estate planning process and the ways in which California’s probate process can be made quicker. Furthermore, there are a couple of different tools that need to be considered in conjunction with a living estate to ensure that there’s no unnecessary delay or cost in the inheritance process.

Many choose to write and create pour-over wills that help ensure that any property still left in their estate after passing is signed into their trust upon death. Anything that isn’t explicitly in a living trust, gifted prior to death, or has otherwise changed ownership goes through the probate process. Without a will, the probate process may take longer than expected, so it’s always a wise idea to have a last will and testament, especially if any of your surviving family members have a complicated history.

There Is No Valid One-Size-Fits-All Approach

When it comes to planning a living trust and dealing with the logistics of a loved one’s passing – or your own, for that matter – it’s important to recognize that no one estate planning tool is going to fit every single situation or circumstance. Living trusts can be a complicated beast, with rules that only apply to certain states, and considerations that can only be made after pouring over every minute detail.

The best way to ensure that your financial legacy survives into the next generation as smoothly as possible is by working with a living trust professional and devising a plan that is both cost-effective and time-efficient for your needs and circumstances. Don’t let the initial costs fool you – there are plenty of ways to cheaply deal with estate planning matters, but they’re more likely to cost you in the long-term, while not doing anything leaves you open to suffering unnecessary costs and having your assets be placed in the wrong hands after your death.

For many families, even without an excess of wealth, a simple and discrete estate plan can not only save headaches, but avoid disputes, fights, and arguments that can transcend generations. In California, sound living trusts are most often going to be worth the investment.

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Founded in 1975 by L. Rob Werner and serving California for over 48 years, our dedicated attorneys are available for clients, friends, and family members to receive the legal help they need and deserve. You can trust in our experience and reputation to help navigate you through your unique legal matters.

Whether you need help creating a living trust or navigating probate, our living trust law firm's compassionate team of estate planning lawyers and probate lawyers are here to help you and ready to answer your questions.

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