Estate Planning Through the Use of a Living Trust in California

By Gerald F. Gerstenfeld, Attorney at Law

If you own assets and want your family (spouse, children or parents) to receive the assets at your death without court interference and want to provide for the management of your assets without a court appointed conservator in the event of your incapacity, you should consider estate planning through the use of a living trust. You may also want to encourage other family members to do likewise so that you will not have to deal with the court at their incapacity or death.

Estate planning in California through the use of a living trust avoids probate at death, including multiple probates if you own property in other states. Estate planning through a living trust also prevents court control of assets at your incapacity.

Some of the benefits of doing estate planning through the use of a living trust are to bring all of your assets together under one plan, to provide maximum privacy, to enable quicker distribution of assets to beneficiaries and prevent court control of any minor’s inheritance. Additionally, if you have younger beneficiaries, estate planning through the use of a living trust enables the assets to remain in trust until you want the beneficiaries to inherit the assets. While the assets are in the trust, the trustee can be given great flexibility in distributing assets to take care of support and education of the younger beneficiaries. Also, estate planning through the use of a living trust can reduce or eliminate estate taxes.

Compared to probate in California where the attorneys fees and the fiduciary’s fees are based upon a statutory percentage of the gross value of the assets before any deduction for the unpaid balance of debt secured by a mortgage or deed of trust, a living trust with a pour-over will is comparatively inexpensive and it is easy to set up and maintain the living trust. Additionally, the living trust can be changed or canceled at any time.

Properly set up estate planning through the use of a living trust and a pour-over will is difficult to contest, especially if anti-contest provisions are inserted in both documents.

In circumstances in which any beneficiary has special needs due to a disability, estate planning through the use of a special needs trust in a living trust provides a unique opportunity to take care of that person’s special needs without destroying or lessening that person’s benefits from governmental agencies.

Joint tenancy in California is often thought to be a less expensive way of doing estate planning. Although in certain circumstances joint tenancy works effectively, it sometimes results in unintentional disinheriting arising out of the assets going to the heirs of the surviving joint tenant who may not be the heirs of the joint tenant who is the first to die, and there is no way to plan for what will occur upon the simultaneous death of both joint tenants. Estate planning through the use of a living trust can solve those problems and, with the assistance of an experienced estate planning lawyer, all of those issues can be resolved. Sometimes a blend of a living trust and joint tenancy is appropriate.

In circumstances where it is necessary to use a corporate trustee in order to obtain professional management of the assets, estate planning through the use of a living trust facilitates obtaining such professional management, even during the lifetime of the person(s) who creates the trust.

A well thought out living trust and pour-over will integrated with joint tenancy as to certain assets, a durable power of attorney, an advance health care directive and properly designed IRA, pension plan, profit sharing plan and life insurance beneficiary designations will bring peace of mind to those who want to do estate planning to accomplish the goals described above.

About the Author:

Gerald F. Gerstenfeld
California Estate Planning Attorney at Law
Phone: (818) 990-6190
Fax: (818) 905-1864
Email: jfg@jerryfg.com
Website: www.jerryfg.com