Understanding How A Living Trust Works
It might be easier to start with the basic concept of trust law, and then move to the types and their specific benefits. Knowing how it works will be helpful when it comes to finding a professional living trust Fairfield CA attorney who can create rock-solid structures for trusts. This process safeguards a family's wealth and facilitates its transfer to the next generation while reducing the tax burden and other costs in many ways.
Trusts may be set up by a property owner (settlor), who can then appoint a trustee to oversee the affairs of the trust and make financial decisions related to the property and its growth. It's usually a more superior alternative to wills, but the primary intention is the same - transfer of benefits to a named beneficiary or set of beneficiaries. This structure allows separation of benefits from the ownership and control of property.
There are different types of trusts, but the most relevant classification here is whether it becomes active during the settlor lifetime or only after their death. The latter type, which works as nothing more than a vehicle to execute a person's last will and testament, is called a testamentary trust. Consider it as the legal entity that will control part or all of the estate after the settlor's death.
Inter-vivos or living trusts, on the other hand, are active even during the settlor's lifetime. This kind of trust may be set up to be revocable or irrevocable. If it is revocable, the property owner retains a significant amount of control since beneficiaries can be added or removed, and the structure may also be modified.
Irrevocable trusts may not be modified, so the original property owners will not have the ability to change the terms afterwards. One of the biggest advantages of inter-vivos trusts is that they can be used to avoid probate when the settlor dies. The remaining estate will be subjected to the probate process and its attendant costs and delays, while property inside the trust gets a pass because it is technically in the trustee's custody and not owned by the deceased.
It must be obvious by now that these trusts are highly efficient when it comes to handing over an inheritance to beneficiaries without having to pay a large part of the estate in taxes and costs. It's also an excellent way for controlling how property is used without the headache of managing and growing it. The trustees will take care of it all, including investments, tax strategies, benefit distributions, etc.
The original owner of the property does not have to be involved in all this. However, the structure of these trusts ensures that the actions taken are exactly as intended by the settlor. If it is revocable, the owner may also step in to remove or add beneficiaries and further modify the structure.
A lot of people think a living trust is something that only high-wealth individuals require and can afford. That's not really accurate, as any experienced Fairfield CA attorney will be able to explain. It's extremely advantageous even for ordinary couples who just want to pass on a home, a retirement nest egg, life insurance benefits, etc. To their children. There's also the fact that a will may easily be challenged and overturned by a court, but trusts are virtually impossible to negate and will fulfill a person's wishes exactly as intended.
Trusts may be set up by a property owner (settlor), who can then appoint a trustee to oversee the affairs of the trust and make financial decisions related to the property and its growth. It's usually a more superior alternative to wills, but the primary intention is the same - transfer of benefits to a named beneficiary or set of beneficiaries. This structure allows separation of benefits from the ownership and control of property.
There are different types of trusts, but the most relevant classification here is whether it becomes active during the settlor lifetime or only after their death. The latter type, which works as nothing more than a vehicle to execute a person's last will and testament, is called a testamentary trust. Consider it as the legal entity that will control part or all of the estate after the settlor's death.
Inter-vivos or living trusts, on the other hand, are active even during the settlor's lifetime. This kind of trust may be set up to be revocable or irrevocable. If it is revocable, the property owner retains a significant amount of control since beneficiaries can be added or removed, and the structure may also be modified.
Irrevocable trusts may not be modified, so the original property owners will not have the ability to change the terms afterwards. One of the biggest advantages of inter-vivos trusts is that they can be used to avoid probate when the settlor dies. The remaining estate will be subjected to the probate process and its attendant costs and delays, while property inside the trust gets a pass because it is technically in the trustee's custody and not owned by the deceased.
It must be obvious by now that these trusts are highly efficient when it comes to handing over an inheritance to beneficiaries without having to pay a large part of the estate in taxes and costs. It's also an excellent way for controlling how property is used without the headache of managing and growing it. The trustees will take care of it all, including investments, tax strategies, benefit distributions, etc.
The original owner of the property does not have to be involved in all this. However, the structure of these trusts ensures that the actions taken are exactly as intended by the settlor. If it is revocable, the owner may also step in to remove or add beneficiaries and further modify the structure.
A lot of people think a living trust is something that only high-wealth individuals require and can afford. That's not really accurate, as any experienced Fairfield CA attorney will be able to explain. It's extremely advantageous even for ordinary couples who just want to pass on a home, a retirement nest egg, life insurance benefits, etc. To their children. There's also the fact that a will may easily be challenged and overturned by a court, but trusts are virtually impossible to negate and will fulfill a person's wishes exactly as intended.