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Trusts Lawyers in Pleasanton, California Helping Clients Set up Trusts
When going through the estate planning process, there are many different options to choose from and it can all seem overwhelming. Attorney Debra DeCarli is an experienced estate planning lawyer, helping many different families through the estate planning process and can help you decide if a trust is right for you. She especially works with people in circumstances such as:
- Blended families with children from a previous marriage
- Non-traditional families
- Families with children who are minors
- Homeowners or those who own other real estates
DeCarli Law has offices in both Mendocino and Pleasanton, CA but also gladly accepts clients who prefer to meet virtually or by phone to discuss our estate planning services. Our talented Pleasanton estate planning attorneys are ready to talk to you today about your estate plan and set up an appointment for a initial consultation, so reach out to us at (925) 568-2350.
What is the Definition of a Trust?
A trust is a legally appointed document that sets up a financial account and gives instructions on how the funds are to be used. A trust must indicate a person to be a trustee who has the responsibility of distributing the money according to the document. Beneficiaries are the people or institutions who receive the trust. Trustees must be very reliable and fulfill their obligations in exactness because of the fiduciary nature of their responsibilities. Finally, the grantor is the individual who set up the trust in the first place. Depending on the type of trust they have chosen, they may or may not have the power to alter the trust while they are living.
Setting up a trust can make all the difference for the financial stability of your loved ones both during your life and after you pass on. With so much at stake, you don’t want to take any chances establishing your estate plans. Contact DeCarli Law for any needs in regards to estate planning documents and especially if you think you may want to set up a trust.
What Are Some Common Types of Trusts in California?
Everyone who sets up a trust has unique needs, and your situation is no different. In choosing what trust you will use, it can be helpful to know what options you have. Here are some common trust types we see at DeCarli Law:
Revocable Trusts
Trusts generally fall into two categories: revocable and irrevocable. Revocable trusts can be changed by the grantor as long as they are alive. In some cases, a grantor chooses to terminate the trust completely. As long as it is a revocable trust, this can be done legally in California.
Irrevocable Trusts
As the name suggests, irrevocable trusts cannot ever be changed, revoked, or terminated. Generally speaking, revocable trusts may become irrevocable after the death of the grantor.
Living Trust
Most people have at least heard of a living trust, also called an inter vivos trust. These trusts are usually created in conjunction with a will. They are appealing to many individuals because the assets held in this type of trust are not subject to probate at the death of the grantor. This saves the family time and money as they avoid needing the court to decide how to handle the funds within the trust.
A living trust is a form of a revocable trust, and as stated above, this means it can be changed or ended by the grantor but becomes irrevocable when he or she dies. A grantor of a living trust commonly names him or herself trustee. A successor trustee will typically be named within the documentation who will administer the assets after the grantor’s death.
Testamentary Trust
Testamentary trusts are established by the grantor’s will. When they die, they become irrevocable.
A-B Trusts
These kinds of trusts are intended to be used by married couples so they minimize the taxes to be paid by both spouses. They are also known by several different names including AB trusts, QTIP trusts, marital trusts, bypass trusts, marital deduction trusts, or family trusts. They may be established in conjunction with a will.
Special Needs Trust
When a special needs trust is established, the grantor does so for the benefit of someone else with disabilities or special needs. The beneficiary’s government benefits are not affected by receiving these trust funds. Many special needs trusts are irrevocable, but they can be set up as revocable trusts.
Charitable Trust
In a charitable trust, the beneficiary is one or more charitable institutions. Charitable trusts can have different variations, including being set up during the grantor’s life but taking effect after his or her death.
Is Using a Trust Right for Me?
A trust might be advantageous in your estate planning if you would like to avoid probate and additional estate taxes for your loved ones. Having a trust can also mean more privacy as your estate information is released when it goes through the probate process. Talking to experienced California estate planning attorneys is a great first step as you make estate planning decisions on whether to use a trust. We can help figure out what course is best for you, so contact an estate planning lawyer from DeCarli Law today.
What Kind of Trust Fits Your Needs?
This is a common question we hear and at Decarli Law we can help. Continue reading for information to help determine whether you need a trust and, if so, what kind fits your specific situation.
For example, maybe you have a disabled child and you want a trust to permit that child to inherit without losing government benefits. Maybe your own or your spouse’s health is heading into difficulties, and you can foresee eventually needing long-term care benefits. Trusts can avoid an expensive, public, and lengthy probate process before your beneficiaries can inherit after you pass. Or, you might be in the classic “trust fund” situation, where you’re concerned that your children won’t be able to manage money wisely.
All these are excellent reasons to consider a trust. But what kind of trust? A quick count shows there are at least thirteen different varieties. Which one is best suited to your needs? Call us.
Here’s the basic idea behind trusts, to help you understand why you might or might not need one.
What is a Trust?
Think of a trust like a treasure chest. You originally bought property or earned money in your own name. You then transfer those assets into the trust’s name – into your treasure chest, in other words. The trust treasure chest becomes a legal entity separate from you, which now holds your property in it’s, and no longer in your, name.
Then you identify people who will occupy the three roles involved in managing trust property. First, you are the grantor, or settlor, or trustmaker – all those words mean the same thing, the “you” in this case. Second, you appoint a trustee. That person or entity is responsible for your trust administration, including managing trust assets and following directions contained in the trust document. Third, you decide whom you want to receive trust assets – your beneficiary or beneficiaries, in other words.
In legal terms, a trust is a fiduciary agreement among you the original property-owner, your trustee, and your beneficiary. The trust document contains instructions for what you want done with trust property, both for how you want it invested and, also, for how you want trust assets to be distributed when you pass. Trusts are, thus, a highly efficient hybrid between a power of attorney, an asset-management vehicle, and a last will and testament, all rolled into one legal entity and document.
There are two basic kinds of trusts to understand, before they split off into their thirteen-or-more different flavors: revocable or irrevocable trusts.
The Revocable Trust
A revocable trust can be thought of like the treasure chest with the open lid. As grantor/settlor/trustmaker of a revocable trust, you can get at trust assets freely.
You yourself can also occupy all three roles in a revocable trust – grantor, trustee, and beneficiary. If need be, you can also tinker with trust terms, by freely amending them to change the directions, beneficiaries, or trustees. Or, you can revoke the whole thing. Before that point, though, the trust document will be there to take care of everything you want it to.
If you should meet with an accident and lose capacity, the terms of your trust will designate a person to step in on your behalf and, thus, avoid the need to go to court to get a guardian for you. The trust will also direct who inherits, thus keeping your affairs private and out of probate court. This feature is especially important if you (formerly) and then the trust (after you created it) owns real property in various states. The savings in court costs in that situation could be significant.
The Irrevocable Trust
This is the trust for you if you’re seeing the need for Medicaid long-term care benefits in your future, or you work in a field where suits are common, such as owning a small business or in the construction industry.
The disadvantage to an irrevocable trust, however, is that you will be sacrificing all or almost all control over trust assets, unlike in the revocable-trust situation. Once an irrevocable trust is established, you as grantor/settlor/trustmaker cannot directly alter the terms and, generally speaking, your access to trust money is restricted or entirely precluded – as is required in order to enjoy the potent benefits of this kind of trust.
Think of an irrevocable trust as being like the treasure chest with the locked lid. Your trustee – who generally cannot be you – is the one with the key. You yourself can no longer reach your assets. This relinquishment of control is necessary to shelter your assets from creditors, or to protect your assets when entitlement to government benefits would otherwise require you to spend almost all you own first.
There are ways to draft an irrevocable trust carefully, so you can still exert your will over how assets are to be used. Just as in the revocable situation, you can impose conditions that must be met before a beneficiary can receive funds. You can designate how trust income is to be used for specific purposes like college tuition, business start-up, or travel. You can also authorize a person or entity as “trust protector,” who can alter trust language, correct drafting errors, or create a new similar trust if the law changes.
And there you have the basics. Now you’re ready to decide whether you need a credit shelter trust, or a charitable trust, or a qualified terminable interest trust, or a blind trust, or – just come see us to figure out all the rest!
Trust Caveats
Some sophisticated trusts do convey tax benefits, but, for the most part, IRS considers revocable trusts to be invisible. You as grantor/settlor/trustmaker will still pay tax on the revocable-trust income, albeit at your individual rate and not at the prohibitive trust rate.
As for estate taxes, trusts have no effect – but, at least regarding federal estate taxes, those are currently moot for most people. They are not incurred until the value of the estate exceeds $11.4 million as of 2019.
Also, keep in mind that revocable trusts provide no protection against creditors. If you lose a legal action, a judge can force you to change the beneficiary of your trust to the winner. Irrevocable trusts are from that kind of interference.
Still, irrevocable trusts must be established long before you run into that kind of trouble. If you create such a trust while credit problems are looming or have already arrived, you risk that your trust will be undone as a fraudulent conveyance.
How Can A Pleasanton Estate Planning Attorney Help You?
Our estate planning lawyers have many years of experience helping clients. We know how to assess your situation and determine if a trust is the right choice for you, as well as what type of trust will work the best with your circumstances. Our law firm also takes pride in listening to our clients to make sure their wishes are met in regard to their estate planning.
Attorney Debra DeCarli has offices in Pleasanton, CA but is also happy to offer services virtually for anyone unable to come in person. Please reach out to us today by using the DeCarli Law online contact form or by calling (925) 568-2350 to schedule a initial consultation.
