Why Everyone Should Have a Trust (especially in California)
If you're a California resident and haven’t set up a revocable living trust, now is the time to seriously consider it. While many people think estate planning is only for the wealthy, a living trust is one of the smartest legal tools you can have, no matter your net worth. It’s especially important in California, where probate laws can make the transfer of assets after death a costly and time-consuming process.
Avoiding Probate (especially in California)
California is known for its beautiful beaches, great weather, but unfortunately it’s lengthy and expensive probate process. Probate is the court-supervised procedure for distributing a deceased person's estate. If you only have a will (or no estate plan at all), your assets will go through probate.
In California, probate fees are statutory, meaning the cost is based on the gross value of your estate—not the equity. For example, a $1 million home with a $900,000 mortgage is still considered a $1 million asset in probate, even though there's only $100,000 in equity. Attorney and executor fees for that estate could exceed $40,000 or more, and that doesn’t include court costs and delays, which can tie up assets for 9 to 18 months or longer.
A revocable living trust avoids probate entirely. Your designated successor trustee can step in immediately upon your passing and distribute your assets to your beneficiaries quickly and privately.
Protecting Privacy
Unlike a will, which becomes a public record once it enters probate, a revocable living trust remains private. This can be a huge advantage if you have privacy concerns or simply want to avoid public scrutiny over your finances and personal affairs.
Protecting Your Business Succession
If you’re a business owner, your living trust can also play a critical role in ensuring a smooth transition of your company. By placing your business interests into your trust, you can designate who will take over operations or manage the business after your death or incapacity. Without this clear direction, your business could be tied up in probate or fall into the hands of someone unprepared to run it. A well-structured trust helps preserve the value of your business and provides continuity for your clients, employees, and family.
Planning for Incapacity
A revocable living trust also allows you to plan for the possibility of becoming incapacitated. If you're ever unable to manage your affairs due to illness or injury, your named successor trustee can step in and manage your finances according to the instructions you've laid out in your trust—without needing court intervention.
This is a crucial benefit not only for aging individuals but also for anyone who wants to ensure their affairs are in trusted hands in case of unexpected events.
Flexibility and Control
As the name suggests, a revocable living trust is revocable, meaning you can change or cancel it at any time while you're alive and competent. You retain full control over your assets and can amend your trust to reflect life changes—such as marriage, divorce, birth of children, or a change in beneficiaries.
Benefiting Your Loved Ones
Setting up a trust isn’t just about you—it’s about making things easier for your loved ones. Losing a family member is already difficult; the last thing your family needs is to get bogged down in court processes, paperwork, and delays. A well-drafted living trust provides a clear roadmap for managing and distributing your estate, reducing confusion and family conflict.
Final Thoughts
It’s never too early to plan—and doing so can save your family time, money, and unnecessary stress. If you're ready to take the next step or want to learn more about how a living trust can benefit your specific situation, reach out to us at Hello@LegacyArtsLaw.com.