There are several types of trusts available, but one of the most common is a living trust. A living trust is a simple contract between a settlor (the person who created the trust) and a trustee (the person who holds the assets). The trustee holds the assets for the beneficiaries (the people the assets will belong to in the future). Typically, one or two trustees are listed in the contract, and there’s another trustee – the successor trustee – listed, as well. The successor takes over if the original trustee dies or becomes incapacitated.

Trust Information: What You Need to Know

The trustee remains in control of the assets until he or she dies. When that happens, the successor steps up and takes control. The new trustee can divide the assets in the trust among beneficiaries or retain control, keeping the assets in the trust as long as he or she wishes.

If you have a living trust, your beneficiaries don’t have to deal with probate. The living trust itself is an enforceable contract, so the courts have no reason to become involved. Assets in a trust are safe from creditors and beneficiaries’ spouses, as well – they are essentially untouchable.

Funded and Unfunded Trusts

California Probate Code 15200 requires some assets to be transferred into a trust – otherwise, it’s considered unfunded and is invalid. In order for the trust to be valid, some assets need to be in it. From a real estate perspective, the homeowners must ensure the name of the living trust is on the grant deed.

Pour-Over Wills

A pour-over will ensures that assets that pass through at a person’s death go straight into a living trust. The assets are then distributed according to the living trust’s terms. (It’s kind-of a safety net in case some assets get left behind.)

Living Trusts and Taxes

Putting your house in a living trust will not change its ownership for tax assessment purposes. If you give your home to beneficiaries in a living trust, the beneficiaries will get a full stepped-up basis; as a result, they will not have to pay capital gains when they sell the house.

Businesses and Living Trusts

If you are a business owner, you can continue to manage your company while it is in a living trust. As long as you name a successor trustee in your living trust who can manage the business, operations can continue if you die or become incapacitated.

Durable Powers of Attorney

A durable power of attorney lets someone you assign take charge of the trust if you are unable to do so. If you don’t have a durable power of attorney, the person you want to take charge must get the court’s approval to do so.

A Complete Living Trust Package

To create a complete living trust package, you must have:

  • The revocable living trust
  • A pour-over will
  • Durable powers of attorney
  • Advance healthcare directives
  • A trust transfer deed

Do You Need to Talk to a Real Estate Broker About a Home in a Living Trust?

If you need to talk to a real estate agent about a home in a living trust, we can help.

Call us right away at 800-804-0540 to talk to an experienced, knowledgeable broker who can help you today.

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2510, 2018

VA Benefits: Planning Options For Surviving Spouses Of Veterans

October 25th, 2018|Categories: Probate, Probate Attorneys / Lawyers, Trust|Tags: , , |

  Did you know that the VA looks at the claimant's total net worth, income, expenses and even life expectancy to determine if they should qualify for a monthly pension benefit? Sometimes, a veteran or surviving spouse will exceed the limit on assets. This doesn't mean the benefit is out of reach though. [...]

2209, 2018

What Assets Don’t Generally Go Through Probate?

September 22nd, 2018|Categories: California, Probate, Probate Attorneys / Lawyers, Probate FAQ's, The Courtroom, Trust|Tags: , |

When someone dies and the estate lands in probate court, not all assets have to go through the probate process. When something is in your name only, that's an obvious asset that would go through probate. Bank accounts, vehicles, and real estate with only your name as the owner generally are subjected to [...]

3007, 2018

What Does “Tenancy By The Entirety” Mean?

July 30th, 2018|Categories: California, Homes, Real Estate, Real Estate, Trust|Tags: , , |

  If you live in California, “tenancy by the entirety” isn't really something you need to think about. It's something that exists in other states. It doesn't apply to us here in California. In states that recognize a "tenancy by the entirety" see it kind of like a joint tenancy with the right of survivorship. [...]