Probate court can prove stressful for family members who have recently experienced loss, as it is often a drawn-out, expensive, and highly public process within the courts. If you are seeking an answer to estate planning issues that eliminates the need for your family to go through probate when you pass away, trusts are likely the best option. Choosing a trust avoids the probate process and instead utilizes another process referred to as trust administration. Trust administration offers flexibility and privacy and is also much cheaper than probate. As you plan for your family in the event of an unexpected loss, seeking the services of a well-established Palm Springs, California trust drafting attorney is essential.
How Does a Trust Work?
When you draft a trust, one of your first decisions is to designate an individual to act as the “trustee.” After your death, this person holds legal title of the property you place in the trust for your beneficiaries. In many cases, the person who drafts the trust will take the role of trustee. In addition, most individuals choose a secondary trustee to ensure that a trustee is in place in the event that the original trustee becomes incapacitated or passes away. This individual may be a personal fiduciary, a trusted friend, or an adult dependent.
Once you create your trust and designate your trustee, you must fund the trust. However, many people are unaware of what funding a trust truly means. To fund a trust, essentially, you simply change the name on the title of the various trust properties from your own name to the name of the trust.
Many individuals who have minor children choose a trust as the best way to provide for their offspring in the event of their unexpected death. A trust allows you to set aside trust funds or properties for children and other beneficiaries and nominate guardians to provide any necessary support. In this way, establishing a trust provides both financial stability and consistency for dependents and other beneficiaries after your death.
Additional Benefits of a Trust
In addition to the benefits provided by the advance structuring of assets to avoid probate, many wise individuals choose to draft a trust for other reasons. One of the most appealing is the fact that assets you place in your trust are no longer part of your personal property. As a result, assets in a trust do not qualify for estate taxes, as they would have if included in a traditional will.
Another reason some individuals choose to utilize a trust is that trusts offer they are able to dictate the distribution schedule utilized to divide assets among their heirs. In some cases, as with minor children, you may wish to keep the bulk of a financial inheritance in the trust until the child reaches a certain age, often 18 or 21. A will does not offer you the same distribution control.
What Are the Different Types of Trusts?
Every individual has different goals when it comes to determining the distribution of assets according to their end-of-life wishes. Your Palm Springs trust drafting lawyer will work with you to create a trust that allows the transfer of your assets to your beneficiaries according to your desired schedule. As mentioned, a trust is a direct means of provisioning your assets and does not require your loved ones to go through the probate process.
There are several types of trusts you can choose to employ depending on your needs. The most common trust options include:
- Testamentary trusts. These trusts are often created in association with a will and become effective upon the death of the trustor. Testamentary trusts outline which assets the trust will distribute to the beneficiaries you name and may outline a distribution schedule. If you have young children, testamentary trusts may be an ideal choice because you can arrange for distribution when children reach a specified age, graduate, or get married.
- Living trusts, or revocable trusts. This type of trust allows the trustor to retain ownership and control of their assets and make any changes they see fit during their lifetime. Living trusts are an attractive option for many due to the superior flexibility of being able to change or alter the trust at any time. This type of trust can replace a living will; instead of directing your assets to the courts for distribution, a trust is a private entity that directly distributes the assets without intervention. Upon your death, living trusts become irrevocable.
- Irrevocable trusts. These trusts hold control and title of assets, which means that when you transfer your assets into an irrevocable trust, you are relinquishing control. The trust becomes the owner of the assets, and you register or retitle them into the trust’s name. Since these assets are no longer your own, they have no bearing on your tax liability, the value of your estate, or your personal wealth. The primary difference between revocable and irrevocable trusts is that you may not make changes without the permission of the beneficiaries. Since irrevocable trusts are governed by the trust document and have their own tax ID number, the trustee is solely responsible for using the funds in the trust to pay the taxes owed by the trust.
You may also find that your unique circumstances require a trust that is customized to meet your specific needs. If this is the case, you may wish to consult with a Palm Springs trust drafting attorney to determine whether a Special Needs Trust, Spendthrift Trust, or Charitable trust is more fitting.
Why Hire a Trust Attorney?
When you choose to establish a trust, it is vital to access the knowledge and experience of an attorney who can ensure your trust will distribute your assets according to your wishes. However, a trust drafting attorney does much more than simply help you create and administer the trust. Hiring an attorney with valuable experience in this area ensures that your attorney will draft the details of your trust according to your wishes. A well-crafted trust will effectively protect and distribute the properties placed in the trust in a way that maximizes the benefits to your beneficiaries. Perhaps most importantly, your trust drafting attorney will create specific documents that protect your assets against taxes and legal action.
Your Palm Springs trust drafting attorney will make a plan that is tailored to your specific needs. A trust drafting plan is based on your financial circumstances, as assessed by yourself and your trust attorney. A skilled trust drafting lawyer will take many factors into consideration, including your marital status, how many children you have, and any issues related to incapacity that may affect the conditions and terms of your trust. Then, your attorney should work one-on-one with you to establish any additional details that dictate the distribution of your trust.
What Documents Do Trust Drafting Attorneys Prepare?
After your Palm Springs trust drafting attorney has worked with you to establish the unique details of your estate, they can create four documents that play a vital role in addressing your end-of-life needs. These essential documents include power of attorney, living will and advance directives, last will and testament, and other various trusts.
- Power of attorney. A lawyer can draft a power of attorney to allow an individual you designate to make decisions regarding your assets. Powers of attorney apply when you are incapacitated and can no longer make financial decisions for yourself. Your trust lawyer must show evidence of your incapacitation before enacting a power of attorney.
- Living will and advance directive. One of the most important documents your lawyer will prepare for you is your living will. This document details your intentions regarding the type of care and medical procedures you wish to receive in the event that you are incapacitated.
- Last will and testament. Your trust lawyer will handle all of the formalities required to compile a valid will, which dictates the distribution of any assets not included in your trust. A trust drafting attorney should review the document thoroughly to ensure that your will properly addresses your concerns regarding your property and the distribution of your assets.
- Trust drafting and execution. When you work with a knowledgeable trust drafting attorney, your legal representative will help you to determine the best type of trust for your unique needs. Helping you to choose the correct trust to suit your needs is a crucial step, as there needs to be a balance between your objectives and the statutory provisions that govern trusts in the state of California. This often becomes quite complex when you have a large estate, but a trusted attorney can make the process much easier. Finally, it is your trust drafting attorney’s job to execute the trust according to the rules that you specify.
Choosing a Palm Springs, California Trust Drafting Attorney
Making decisions that affect the welfare of your family after your death is a difficult undertaking that many find uncomfortable. Fortunately, the process is significantly easier when you have the skills of a knowledgeable trust drafting attorney on your side. If you are considering a trust or wish to know more about what a Palm Springs trust drafting lawyer can do for you, reach out to the professionals at Bochnewich Law Offices today.