As you develop a comprehensive estate plan, you will likely incorporate a range of legal instruments designed to protect your assets and achieve your planning goals. Among the most common and flexible tools available is a trust. When you choose to include a trust in your estate plan, an important decision will involve selecting the individual or entity that will serve as Trustee. Many individuals considering a revocable trust ask whether they can name themselves as Trustee. The Los Angeles attorneys at Schomer Law Group, APC explain what a revocable trust is, why individuals often choose to act as their own Trustee, and the considerations involved when doing so under California law.
Understanding a Revocable Living Trust
A revocable living trust is a legal arrangement that allows you, as the creator (commonly referred to as the Settlor or Grantor), to maintain significant control over the trust during your lifetime. The key feature of this type of trust is flexibility. You retain the power to amend the trust terms, revoke the trust entirely, remove or add assets, and modify beneficiaries at any time and for any reason. Because of this flexibility, a revocable trust provides an excellent vehicle for organizing your estate while preserving your authority over the trust property during your lifetime.
It is important to understand that this flexibility comes with limitations regarding asset protection. Assets placed in a revocable living trust remain legally associated with you because you can withdraw them or terminate the trust whenever you wish. For this reason, creditors, bankruptcy trustees, or even a spouse in divorce proceedings can typically reach those assets. This is a major distinction between a revocable trust and an irrevocable trust. In an irrevocable trust, assets generally become the legal property of the trust and are no longer owned by you, offering a level of protection against claims and liabilities.
Acting As Your Own Trustee: Is It Allowed?
California law permits you to serve as the Trustee of a trust you create. This is true whether the trust is revocable or irrevocable. That said, doing so with an irrevocable trust would almost always undermine its intended purpose. An irrevocable trust is often created to protect assets, minimize taxes, or qualify for certain benefits. When you serve as both the Settlor and Trustee of an irrevocable trust, you maintain too much control over the assets, which means the trust will likely be disregarded for creditor protection and other legal purposes.
With a revocable living trust, on the other hand, serving as your own Trustee is not only allowed but frequently recommended. Many people establish a revocable trust to simplify estate management, avoid probate, and plan for potential incapacity. By naming yourself as the initial Trustee, you maintain control of your assets during your lifetime without any disruption to your financial management.
Benefits of Serving as Trustee of Your Revocable Trust
One of the greatest advantages of appointing yourself as Trustee is continuity. You do not need to rely on another individual to manage your accounts or make decisions on your behalf while you are healthy and capable. You continue to buy, sell, and invest assets as you always have, simply doing so under the name of the trust rather than your individual name.
In addition, acting as your own Trustee makes the transition in the event of incapacity much smoother. A well-drafted revocable trust includes a provision for a successor Trustee. If you become unable to manage your affairs due to illness or injury, the successor Trustee you selected will step in and take over management of the trust property without court intervention. This process can help avoid the need for a conservatorship and ensure that your financial life remains organized and secure during a difficult time.
Because the trust is revocable, you retain the power to change its terms or replace the successor Trustee if your circumstances or preferences change. You can also add or remove assets from the trust at any point, making this tool both versatile and practical for long-term planning.
Do You Have Questions About Acting as Trustee of Your Revocable Trust in California?
For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about acting as Trustee or your revocable trust in California, contact the experienced Los Angeles estate planning attorneys at Schomer Law Group APCby calling (310) 337-7696 to schedule an appointment.
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