Price Law Firm APC

When Should You Create a Living Trust?

R. Sam Price, J.D., LL.M. Certified Specialist in Estate Planning, Trust and Probate Law by the State Bar of California Board of Legal Specialization

A living trust is used to pass property from you to your heirs when you die. It avoids the costs, time, and publicity of an open court probate proceeding. But under what circumstances do you need a living trust? I’ve enumerated the life conditions that will make a living trust desirable.

You Own More Than $150,000 in Assets

There is a simplified process in California to pass property to your heirs when your estate is worth less than $150,000. Your heirs don’t even have to go to probate court; they can just sign an affidavit to transfer the property. However, if your assets are worth more than $150,000, then your heirs will have to go through the full probate court process. That’s why, if you have more than $150,000 in assets you’ll want a living trust to pass your assets to your heirs without probate court proceedings.

You Own Your Home or Other Real Estate

When you own your home or other real estate, the property will have to be probated if it is in your own name. And chances are that your assets are going to be more than $150,000. The living trust can pass your home and other real estate to your heirs without the cost, delay and publicity of probate court proceedings.

You Have Children Under the Age of 18

With minor children, you have to provide for their care if you were to pass. Creating a living trust would provide assets for their care and an inheritance once they reach the age of 18, or whenever you want to give them their inheritance. A living trust can provide for your minor children and also set up funds for their education, care, and well being.

You Want Specific Gifts or You Are Distributing Your Assets Unevenly

If you want to give specific gifts of specific property to an heir or you want to distribute your assets unevenly to your three children, then a living trust is for you. Maybe one child has done very well for herself and doesn’t need the inheritance. Maybe one child hasn’t lived the life you wanted him to and you want to give him less of an inheritance. Whatever the reason, you will want to create a living trust to effectuate your wishes.

You Want to Keep Your Assets Private

A probate court proceeding is an open court proceeding that is public record. If you want privacy in your financial affairs, then a living trust avoids probate court proceedings and provides privacy of your assets and distribution scheme.

You Want Flexible Distribution of Assets

Your heirs may benefit from the distribution of their inheritance over time, rather than in one big lump sum. Maybe one child may spend it all if you give it all to him at once. Maybe you want to provide for college over four years for another child. Whatever the reason for delayed distribution, a living trust can provide you with that flexibility.

You Want to Eliminate Family Feuds

If you think that your heirs may argue or fight over your assets when you pass, then a living trust can help to eliminate those family feuds. The no-contest provisions of a trust are stronger than with a will. Specific gifts of specific property can be given to an heir so that the other heirs know that you wanted that heir to receive it.

Help Managing Your Financial Affairs

If you later become unable to manage your financial affairs, a living trust can provide for a successor trustee to provide financial management of your assets for your benefit. A conservatorship may be avoided by using a living trust and give you greater control over your finances.

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