For estate planning in California, trust property is a potentially important tool that can help reduce the tax burden on some assets and make sure that they go to the right people upon death. There are many ways to use trust to protect property for the purposes of estate planning.
The importance of using trust property is under-appreciated among people planning their estates. The process is straightforward. The person who owns the property places that asset into a trust and names a trustee and beneficiaries. That trustee must manage and control the asset in the best interest of the beneficiaries. The original owner is no longer responsible for paying taxes on the asset or assets– the trust itself now holds that liability. Moreover, when the original owner passes away, the asset will immediately be owned by the beneficiaries without having to go through probate.
There are several types of trusts that can be employed for this strategy. The two major categories are revocable and irrevocable trusts. In a revocable trust, the original owner keeps ownership and control, and they also retain tax liability. In an irrevocable trust, the original owner gives up the asset completely and also loses control of parts of the estate agreement, but there are tax benefits.
Trusts are powerful tools for estate planning, and trust property is one of the best ways to reduce tax burdens and speed up the process of asset transfer upon death. There are many ways to take advantage of trusts to aid in the estate planning process and make them part of the overall strategy for when the time comes.