Estate planning in San Diego, California, helps a person control how their assets get handled before and after their death. Most people think of estate planning as only wills, but it can include trusts as well. There are several types of trusts, and a popular type is the revocable trust.
Overview of a revocable trust
A revocable trust commonly involves three parties: the grantor or creator of the will, the beneficiary and the trustee. Revocable trusts allow the grantor to sell, add or remove assets placed in them and name beneficiaries, which may include businesses or charities. Items placed in a trust usually include houses, money, small business interests, valuable heirlooms such as antiques, patents, life insurance, vehicles and bank accounts.
The grantor often assigns a trustee to oversee the trust and a successor after the grantor’s death or if they can no longer manage it. The trustee is responsible for keeping up with taxes on income generated from the trust and distributing assets to beneficiaries.
Pros of revocable trusts
A primary benefit of revocable trusts for estate planning is it helps beneficiaries avoid lengthy probate. If the grantor has out-of-state assets, it would require an even longer process. Not only does probate make records public, but it can decrease a beneficiary’s inheritance.
Unlike irrevocable trusts, which cannot be changed, revocable trusts provide more flexibility. Amending instructions or assets in a trust is less complicated than changing a will.
A revocable trust also allows the grantor to include beneficiaries from other countries or other states. If a beneficiary is a minor, the grantor may request that the trust hold assets until the beneficiary reaches a certain age, or the trustee can distribute assets in increments.
Trusts aren’t just for the wealthy, but they do take some knowledge and experience to set up. Grantors should seek legal advice when creating a trust, especially if they have out-of-state assets.