Most high-asset couples already have a will in place, and several in California also have living trusts completed so that they can avoid the probate process, transferring assets sooner with smaller legal fees. If you haven’t set up a living trust, or know that your parents have one, you may not realize that living trusts can protect assets and their terms remain private information upon death (which probate does not).
They also are either revocable or irrevocable. But what does that mean? And what are the advantages of selecting a revocable trust versus an irrevocable one? This article will explain both further.
You can change or modify a revocable trust at any time, without a beneficiary’s knowledge. You also can terminate someone as a beneficiary without their permission.
Revocable trusts allow you to name a trustee for your assets, should you become ill or incapacitated. That way the trustee can control your assets without interference of the court.
Finally, revocable trusts do not have any text benefits, nor are they considered a gift to the trustee or an estate tax. They also can become an issue in divorce. Many revocable trusts have language that prevents modifying them in divorce proceedings.
Irrevocable trusts are designed to manage assets for many years and transfer ownership of the assets in the trust to the beneficiary right away. Also, creditors have no access to assets in an irrevocable trust.
In most states, irrevocable trusts cannot be changed. However, in California, they can be in some situations. If a trust’s beneficiaries all agree to modify or terminate the trust, then the court can consider that, if it doesn’t conflict with the original purpose of the trust.
For those with multiple assets, in multiple areas—real estate, investments, retirement, life insurance policies—consulting an experienced attorney can help determine what type of trust will work best for you in your estate planning.