Should You Consider Creating a California Living Trust?
The answer to that question is, well it depends. The questions to ask yourself in order to determine whether a California Living Trust could be helpful for you are fairly simple. The two most important questions to ask yourself are whether you own a home (real estate) in the State of California or have underage children. If the answer to either of those two questions were “yes,” then creating a California Living Trust would be extremely beneficial for you. If your answers were “no,” but you have significant assets (more than $150,000) then a Living Trust would also be extremely beneficial for you. Simply put, the higher the value of your assets, the more benefits you gain by creating a California Living Trust.
What is a California Living Trust?
In the simplest of terms, a living trust is a set of instructions put into a document that allows you to name the people that will inherit your money, property and possessions after your death. Isn’t that what a Will does you may ask? The answer to that is yes, but it comes at a drastic cost, both monetary and time-wise, for your estate and those people you’ve selected to inherit from you. The most significant difference between a having a Will and seeking the advice of a Living Trust Attorney is that by using a California Living Trust your estate will avoid probate court. If you leave only a Will behind, your estate will not be shielded from probate and the State of California will scrutinize your Will as well as the contents of the Will in terms of who will inherit from you and how. The probate court will also retain a percentage of your estate.
I Do Have Underage Children, How Does a California Living Trust Help Me?
Let’s assume that you have two children (12 and 15), and you pass away with your estate valued at $500,000, with a California Living Trust you can with detail state how and when you wish for your children to receive their inheritance. For example, most people if they had the choice would not want their 18-year-old children receiving $250,000 or a similar substantial amount at such a young age and all at once. With a trust you could instruct your successor trustee (the person you elect to manage and control the assets that you leave behind) to issue your children separate payments of any amount you decide at whatever age you decide. This can help ensure that young children don’t squander their inheritance and that they have access to financial help into their 20’s, 30’s, 40’s, etc.
A full estate plan, that includes a Living Trust, can provide the additional benefit of allowing you to select the person(s) that you wish to become the guardians of your underage children should you pass away when they are still underage.
FREQUENTLY ASKED QUESTIONS:
Does a California Living Trust go to probate?
California Living Trusts adequately prepared by a qualified Living Trust Attorney are not subject to probate proceedings. Simply setting up a Trust can avoid the time it takes for your estate to go through probate (the current average duration is two years) and save your estate and your beneficiaries tens of thousands and even hundredths of thousands depending on the size of the estate that you leave behind.
What is the typical cost of a Trust and a full estate plan?
A properly drafted California Living Trust can differ depending on each person’s specific situation so generally it is difficult to precisely figure out what the price will be without first speaking to a qualified living trust attorney. Costs also differ depending on whether only a California Living Trust is what a person is looking for or a full estate plan and whether the full estate plan is being done for a single person or two spouses. The following is what is traditionally included in a full estate plan:
- California Living Trust
- Pour Over Will (for each spouse)
- Durable Power of Attorney (for each spouse)
- Advanced Health Care Directive (for each spouse)
- Living Will (for each spouse)
- HIPPA Authorization (for each spouse)
- Real Property Deed Transfer Document
Typically, you can expect to pay anywhere from $1,500 to $1,900 for a full single estate plan, and anywhere from $2,000 to $3,000 for a married estate plan, both depending on each individual’s or couple’s circumstances.
What are the other documents that come with a California Living Trust and what do they do?
What is a Pour Over Will?
A Pour Over Will is a certain type of will, most commonly used along with a trust. In the Will, you make your California Living Trust the beneficiary of all of your assets including those assets that you may have forgotten to put in the name of your trust. Your assets are then distributed in accordance to your specific instructions included in your trust and thereby avoiding probate.
What is a Durable Power of Attorney?
A Durable Power of Attorney is a written document that enables an individual (yourself) to designate another person (agent) to act on your behalf for all financial matters you designate. This very important document can be customized to either come into effect when you become incapacitated or immediately depending on what your current situation is. For example, an elderly individual who routinely has her children help her with her finances either because it is easier or because she no longer can deal with the finances herself might wish to make her Durable Power of Attorney effective immediately.
What is an Advanced Health Care Directive?
An Advanced Health Care Directive is a written legal document that allows you to specify what actions should be taken with regards to your health if you are unable to make decisions for yourself because of incapacity or illness. An Advanced Health Care Directive also ensures that the person you select as your health care agent will have access to your medical records in order to make necessary medical care decisions on your behalf.
An added benefit of a Health Care Directive is that it allows you to name a conservator as well as a Guardian in order to avoid the costly and time consuming process of going through the court system for a conservatorship or guardianship if you should become physically or mentally incompetent before your death.
What is a Living Will and How Does it Help Me?
A Living Will is a written statement that allows you to dictate the type of medical care you wish or don’t wish to have should you become incapacitated and can’t make those types of decisions in that moment. Remember Terri Schiavo? For those that don’t, Terri Schiavo was a young woman in Florida who’s medical condition became a national debate. In 1990, Terri Schiavo, suffered a cardiac arrest that left her with massive brain damage and in an irreversible persistent vegetative state. She did not have a Living Will in place. Her husband argued that Terri would not have wanted to be kept alive by artificial means. Her parents disagreed. A long an painful legal dispute then arose that resulted in over 14 appeals in the Florida courts, five suits in federal court, four requests to be heard by the United States Supreme Court, involvement by then President George W. Bush, and much more. Terri’s feeding tube was finally removed 15 years later.