A revocable living trust is one of several estate planning options that are available to you. This type of trust allows you to manage and protect your assets as you, the grantor, or owner, ages. “Revocable” means that you can amend or even revoke the trust during your lifetime.
All of the assets placed into the trust make up the trust fund. The principal of the trust can change during the lifetime of the grantor due to appreciation or depreciation of assets as well as any expenses that are needed to maintain the trust.
Upon creating a revocable living trust, you will need to name a representative called a “successor trustee” who will manage the trust if you should become mentally incapacitated or when you die. This provides for the protection of the assets and other property contained in the trust. In addition, you’ll also need to designate the person or persons benefiting from the trust upon your death. These are your beneficiaries and are usually members of your family, but can be a charity or other persons of your choosing.
There are advantages to setting up a revocable living trust.It allows your beneficiaries to avoid probate court which can be time-consuming and costly. In addition, having a living trust allows for a faster transfer of assets to your beneficiaries, and those assets will be distributed in private.
So, what can and what can’t go in a living trust?While there are a lot of assets that can be used to fund a living trust, there are some assets you shouldn’t put in a living trust.
The list
Assets that should not be used to fund your living trust include:
- Qualified retirement accounts – 401ks, IRAs, 403(b)s, qualified annuities
- Health saving accounts (HSAs)
- Medical saving accounts (MSAs)
- Uniform Transfers to Minors (UTMAs)
- Uniform Gifts to Minors (UGMAs)
- Life insurance
- Motor vehicles
However, if you have minor children, you may want to include these assets in the distribution of your trust.
You should always seek the advice of an experienced estate planning attorney to make sure that you understand how to handle these types of assets in order to prevent potential problems down the road and to make sure that your assets are distributed per your wishes.
What can go in your living trust?
Even if you have established a revocable living trust, what happens to property not in the trust when you die? Having a pour-over will take care of any assets or property that you may have forgotten to include in your trust. However, these assets are subject to probate.
If you have questions about setting up a living trust in California, what to put in your living trust, or creating a pour-over will, you should consult a professional who is well-versed in estate planning. At the Law Office of David W. Foley, located in San Diego, we specialize in creating revocable living trusts as part of an estate plan for our clients.
Contact our office to schedule a virtual appointment; we are open and here for you.
I am an estate planning enthusiast with a deep understanding of the intricacies surrounding revocable living trusts and the broader field of estate planning. Having extensively researched and engaged with legal experts in the domain, I am well-versed in the nuances of creating and managing trusts to safeguard assets and ensure the seamless transfer of wealth to beneficiaries.
In the realm of estate planning, a revocable living trust stands out as a versatile tool, allowing individuals to retain control over their assets while planning for the future. The term "revocable" is crucial, signifying the grantor's ability to modify or revoke the trust during their lifetime. This flexibility is a cornerstone of its appeal.
The trust fund, comprising all assets placed into the trust, serves as the focal point. The principal of the trust is dynamic, subject to changes due to asset appreciation, depreciation, and necessary expenses for trust maintenance. Crucially, a successor trustee plays a pivotal role, stepping in to manage the trust in case of the grantor's mental incapacity or demise.
Furthermore, the designation of beneficiaries is a critical step, encompassing family members, charities, or other chosen individuals. The advantages of a revocable living trust are evident, notably in the avoidance of probate court, ensuring a quicker and private transfer of assets to beneficiaries.
However, not all assets are suitable for inclusion in a living trust. Qualified retirement accounts, health and medical savings accounts, and certain financial instruments like UTMAs and UGMAs, among others, should not be funded into the trust. The intricacies of managing these assets necessitate professional advice from an experienced estate planning attorney to align with the grantor's wishes and prevent potential complications.
The article also touches upon the importance of a pour-over will to address any assets inadvertently omitted from the living trust. While this provides a safety net, it is crucial to understand that pour-over assets are subject to probate.
In conclusion, the information provided underscores the complexities of estate planning and the need for professional guidance. The article encourages consultation with experienced estate planning attorneys, exemplified by the Law Office of David W. Foley in San Diego, specializing in crafting revocable living trusts as part of comprehensive estate plans. The mention of a virtual appointment option reflects a commitment to adaptability and accessibility for clients. For anyone considering a living trust in California or facing questions about its implementation, seeking professional advice is paramount to ensure a well-structured and effective estate plan.
