Perhaps you have some pieces for your estate plan—like a will—or you may have nothing in the way of an estate plan. In either situation, you may have wondered whether a trust could be integral to your estate plan. Unfortunately, although only about 35-40 percent of American adults have a will or any estate plan, far fewer have a trust. This is likely because many believe trusts are only for those with considerable wealth or because trusts may seem more complex than wills. But, in fact, most people—regardless of their level of assets—can benefit from having a trust as a part of their estate plan.
There are different types of trusts to handle different situations. The most common type of trust is known as a Revocable Living Trust. Some situations warrant using an Irrevocable Living Trust, although many people shy away from irrevocable trusts because they cannot be altered or canceled. The experienced San Jose trust attorneys from Steburg Law Firm will assess your situation, goals, and wishes, then help you choose the type of trust that will provide you with the desired results.
What is a Trust, and Which California Statutes Govern Trusts?
A trust is a fiduciary arrangement that allows a third-party (trustee) to hold assets on behalf of beneficiaries. Trusts can be structured in many ways to specify how and when assets will be passed to beneficiaries. Unlike a will, a trust does not have to go through probate. Therefore it saves time and money and is private. As a result, an irrevocable trust may have significant tax advantages, along with creditor and lien protections. California trust laws are found in the Probate Code, Division 9, Trust Law, 15200-16336.
What Are the Consequences of Not Having a Trust as Part of Your Estate Plan?
If you only have a will, your estate must go through probate. Probate can be a lengthy process and cost a lot of money. In addition, the process is public to anyone with an interest. On the other hand, a trust avoids probate, usually allowing your heirs to receive their inheritances quicker. There are particular types of trusts for special situations, such as a special needs trust for an adult child with special needs. It is essential that you speak to knowledgeable San Jose trust attorneys from Steburg Law Firm to determine how a trust can best benefit you and your loved ones.
How Do Trust Attorneys Secure Your Legacy and Provide Trust Benefits?
The role of a trust attorney is not confined to creating and administrating a trust, although this is undoubtedly a significant part of the job. Your trust attorney is also responsible for drafting an effective plan that protects and distributes your assets following your death, maximizing those assets for the benefit of your heirs. In addition, trust attorneys prepare documents to protect assets from undue taxes or lawsuits while making a comprehensive plan based on your needs and circumstances.
After evaluating your marital status, how many children you have, and any potential incapacity issues, these items will go into the terms and conditions of the trust. Upon your death or incapacitation, your trust attorney can help your named successor trustee execute the trust according to your wishes. Perhaps most importantly, your San Jose trust attorneys will help you choose the proper trust for your circumstances. These things go into securing your legacy and ensuring your trust provides the necessary benefits.
Are There Any Negative Aspects of Having a Trust?
If you choose an irrevocable trust for tax benefits and asset protection, the downside is that the trust cannot be altered or terminated. Further, you have a certain level of loss of control over the assets placed in an irrevocable trust. This relinquishment of control prevents many individuals from adding a trust to their estate plan, despite the many benefits. A revocable trust offers much more flexibility and can be altered or revoked entirely. However, there are few tax advantages and little or no asset protection from creditors. Discuss your concerns regarding a trust with the San Jose trust attorneys from Steburg Law Firm.
What Are the Different Types of California Trusts?
There are many different types of California trusts, including the following:
- Revocable Living Trust—This is the most common type of living trust and is created during your lifetime, providing flexibility and control over your assets. You can act as your own trustee when you set up a revocable living trust, allowing you to maintain control over your assets during your lifetime. Assets can be freely transferred in and out of a revocable living trust and can be altered or revoked as you choose.
- Irrevocable Living Trust—An irrevocable trust moves assets from your control and name into a beneficiary’s name, reducing the value of your estate and thus lowering estate taxes. Irrevocable trusts also offer asset protection against creditors. An irrevocable trust cannot be modified, amended, or terminated without permission from the named beneficiary or by order of the court.
- Special Needs Trust—This type of trust allows a parent or grandparent to set up a trust for a special needs child or adult child. As a result, the special needs individual remains eligible for government benefits while still being allowed to benefit from an inheritance. There are several types of special needs trusts, so you can choose one that fits your situation.
- Medicaid Asset Protection Trust—A MAPT is a trust designed to protect assets from being counted for Medicaid eligibility, allowing you to qualify for long-term care benefits from Medicaid.
- Irrevocable Life Insurance Trust—An irrevocable life insurance trust allows you to ensure the benefits from a life insurance policy are not subject to estate taxes while protecting your interests and the interests of your life insurance beneficiaries. An ILIT cannot be altered or revoked after its creation.
- Family LLP Trust—A family limited liability partnership is an arrangement in which family members pool money to run a business project, with each family member purchasing shares of the business, then profit in proportion to the number of shares owned. A family LLP trust considers this limited liability partnership, set up with the goal of financial benefits and protection for you and your family members. For example, a family trust may help your loved ones avoid probate while delaying or reducing tax liability and protecting family assets.
- Charitable Trust—A charitable trust allows you to set up your assets so that your beneficiaries, you, and your chosen charities all benefit. A charitable trust offers various financial advantages, especially for those with “non-essential” assets like real estate or stocks. There are two primary types of charitable trusts—charitable remainder trusts and charitable lead trusts. While these two types of trusts are similar, they serve different needs. Therefore, the IRS must qualify the charity for both charitable trusts to receive the deductions.
- QPRT Trust—A qualified personal residence trust is a specific type of irrevocable trust that allows you to remove a personal home from your estate to reduce the amount of gift tax incurred when transferring assets to beneficiaries. As the owner, you are allowed to continue to reside on the property for a period of time with a “retained interest” in the house. Once that period is over, the remaining interest in the home is transferred to the beneficiaries. Since you retain only a fraction of the home’s value, the gift value of the home is lower than fair market value—thus lowering incurred gift tax.
- SLAT Trust—A Spousal Lifetime Access Trust is an irrevocable trust that transfers wealth outside an estate. SLAT trusts provide an opportunity to take advantage of the current federal exclusion before it expires on December 31, 2025. In addition, when a SLAT Trust is properly structured, it can provide you with limited, indirect access to the trust assets.
What Are the Primary Benefits of Having a Trust as a Part of Your Estate Plan?
Most people considering a trust do so for a handful of reasons. They may want to protect their assets if they require long-term care or are protected from creditors. Many tax benefits are garnered from specific types of trusts, particularly irrevocable trusts. Probate can be avoided through a trust and many trusts can be explicitly structured for risk mitigation. For example, a special needs trust can protect an adult special needs child or grandchild, while a charitable trust can be structured to benefit you, your heirs, and your chosen charities. Because there are so many types of trusts, it is imperative that you speak to the skilled San Jose trust attorneys at Steburg Law Firm.
How Do You Select the Best San Jose Trust Attorneys for Your Current Situation and Future Needs?
You want to feel comfortable with your chosen trust attorney, knowing they will always work hard on your behalf to ensure your estate plan accurately reflects your wishes and goals. When you choose San Jose trust attorneys from Steburg Law Firm, you will always receive open, honest communication as well as stellar client care from start to finish. We are responsive to your needs, working with clients across the financial spectrum—from those that have millions of dollars to clients with limited resources. We are ready to incorporate trusts that accurately reflect your needs into your estate plan and believe in the overall value of estate planning.
Why Should You Contact the San Jose Trust Attorneys at Steburg Law Firm?
At Steburg Law Firm, we are wholly dedicated to each of our clients. Whether your trust needs are simple or more complex, our highly trained attorneys can guide you through the process after helping you choose the best trust for your needs. We are trusted professionals with experience in all trust aspects as well as in every aspect of estate planning. Our attention to detail is unparalleled, and we always go the extra mile to ensure your legacy is secured. The Steburg Law Firm provides you with highly capable attorneys who are willing to work closely with you to ensure your questions are answered and your loved ones are protected throughout the process. Contact Steburg Law Firm today.