Estate planning in California often consists of creating a trust. A trust is a formal agreement between you, a trustee and the beneficiary you name. The trustee manages the assets of your trust to eventually administer the assets of the trust to your beneficiary. Estate owners choose this arrangement to protect their assets until someone is ready to inherit them. Trusts are private and can’t be accessed without your permission.
Fundamentally, there are two types of trusts. There is a living trust, which is created and active while you’re alive. The testamentary trust, however, is an instrument used in the event of your death. The testamentary trust works through a will specifically. Common trusts are, instead, written up in separate trust papers, which are privately held. The testamentary trust, being that it’s devised by a will, however, is technically activated during a public court hearing.
Whether you choose to write a living or testamentary trust, you have the choice of making the trust revocable. A revocable trust is one that you can rearrange, which includes the assets, beneficiary or trustee. The control you have over your assets is important to consider when estate planning. A revocable trust keeps you as the sole owner of your assets.
The moment you sign an irrevocable trust, the contents therein are no longer yours. Those assets aren’t released until certain conditions are met, but you can’t revise the conditions that have been set. Due to this immovable status, the irrevocable trust is often your best shelter against taxes.
You ultimately decide on how your assets are managed and then disbursed after you die. Trusts are reliable and binding once you sign them. You can use them to build wealth for your heirs or extra money for your retirement.