With the insights and advice of an Orange County trust attorney, you can prepare an estate plan that eliminates uncertainty about your estate’s future. If you’re an adult in California, whether your finances are affluent or modest, you should begin planning your estate as soon as you can.
Should you prepare a last will and testament, a revocable trust, or an irrevocable trust? How are wills and trusts different? How are revocable trusts and irrevocable trusts different? What does the estate planning process entail? Do you need more than a will or a trust?
If you will keep reading this brief discussion of revocable and irrevocable trusts, you’ll find some of the answers you may need. To learn more, or to set up a trust, you will need the personalized estate planning advice that a Newport Beach trust lawyer provides.
What is a Trust?
Trusts are similar to wills in some ways, but trusts accomplish more. If you own significant properties and assets, a properly-prepared and properly-funded trust ensures that your properties and assets are managed – and when the time comes, distributed – in accord with your wishes.
There’s no single strategy for planning estates, but a Newport Beach trust attorney can prepare the trust document that’s right for you. As long as you’re alive, you may act as the trustee of your trust, and you’ll name a successor trustee who will administer the trust upon your death.
A trust provides your estate with substantial legal protection and ensures that your properties and assets transfer easily to your beneficiaries. Your trust allows your beneficiaries and your estate to avoid probate. An irrevocable trust also protects your beneficiaries and estate from estate taxes.
How Does a Trust Work?
Consider some of the reasons why so many people choose to establish a trust rather than a last will and testament:
- Wills make estates subject to probate, but a trust can protect your estate from probate.
- Over time, a trust may cost less than a last will and testament.
- A trust provides confidentiality. A last will and testament does not.
- With a trust, your estate is managed by a trustee you’ve named – not by a probate court.
After you establish the trust, you transfer your properties and assets to the trust. Upon your death, your properties and assets will be transferred by your successor trustee to your beneficiaries. A successor trustee’s duties are comparable to the duties of a will’s executor.
It’s a formidable task, but by consulting a California trust attorney, your successor trustee can receive practical legal advice for managing the trust whenever such advice may be needed.
Should You Establish an Irrevocable Trust?
What kind of trust should you establish? Should you set up a revocable trust or an irrevocable trust? How do they differ? One difference is that a revocable trust can be amended or rewritten – or even dissolved – after it takes effect, but irrevocable trusts may not be changed.
If asset protection is your overriding concern, you should consider setting up an irrevocable trust. Creditors can “go after” your assets if those assets are in a revocable trust because those assets are still in your control. Creditors cannot access assets that are owned by an irrevocable trust.
While the assets in your irrevocable trust are still yours for all practical purposes, the trust legally owns those assets, so they are not considered part of your probatable estate, and creditors cannot “go after” those properties or assets.
An irrevocable trust may help you lower your taxes, protect your assets from creditors, and maintain your personal and financial privacy, along with allowing your estate to avoid probate. You relinquish control of the assets and properties that you transfer into an irrevocable trust.
Is a Revocable Trust Better for You?
Although a revocable trust may not fully protect your assets from creditors, if creditors are not a concern, a revocable trust may be right for you. You give up control of your properties and assets when they are transferred to an irrevocable trust, but a revocable trust:
- lets you keep control of your properties and assets
- gives loved ones directions for managing your affairs if you become incapacitated
- allows your beneficiaries and your estate to avoid the probate process
If you do online research, you may find blank trust forms and do-it-yourself “kits” for creating a trust. Avoid these and work instead with an estate planning attorney, because your trust should be customized for your own needs and circumstances, and a mistake might be disastrous.
Everyone’s circumstances are different. Revocable trusts may be right for many people, but for many others, an irrevocable trust will be the better option. Ask a Newport Beach trust lawyer to explain all of the estate planning alternatives that are available to you.
Should You Consider a Comprehensive Estate Plan?
Whether you prepare a revocable trust or an irrevocable trust, that trust may be only one element of the estate plan you need. If you haven’t established a comprehensive estate plan, the IRS or a California probate court could control a sizable portion of your assets after you pass away.
Additionally, your family and health care providers may not know what steps to take if you become incapacitated or comatose. A court could name someone as the guardian of your children or the administrator of your estate – possibly someone you don’t know or wouldn’t name.
When Should You Contact an Estate Planning Attorney?
You want your family and health care providers to be informed, and you want your children and assets to be protected. That is why you should have an Orange County estate planning lawyer discuss your many estate planning alternatives.
Ask that attorney to answer all of your questions and address all of your concerns. You must be certain that the estate plan you set up will work when your loved ones need it. No one can predict tomorrow, and effective estate planning cannot be done in haste, but the time to start is now.
After reviewing your financial and personal situation and your goals, an Orange County and Southern California estate planning lawyer can prepare a revocable trust, an irrevocable trust, or a comprehensive estate plan that offers full legal protection for your assets and long-term security to the people you love.