A comprehensive estate plan will typically incorporate a wide variety of estate planning tools and strategies into the plan to accomplish the plan’s goals and objectives. Among the most popular of those tools is a living trust. Only your estate planning attorney can help you decide if a living trust would be a beneficial addition to your estate plan; however, to give you an idea of how one might fit into your estate plan, the Los Angeles trust attorneys at Schomer Law Group, APC explain the top five living trust benefits.
- Probate avoidance. Assets held in a trust are non-probate assets. One popular strategy that can significantly decrease your estate’s exposure to probate is to create a revocable living trust and transfer most of your assets into the trust. By naming yourself as the Trustee, you continue to control all the trust assets while you are alive; however, upon your death, those assets are handled outside of the probate process. You can use the trust terms that you create to determine what happens to the trust assets after your death.
- Incapacity planning. A revocable living trust is a commonly used incapacity planning tool. As the Settlor of the trust, you name yourself as the Trustee and name someone you wish to take over control of your assets in the event of your incapacity as the Successor Trustee. Major assets are then transferred into the trust. Because it is a revocable trust, assets can easily be transferred in and out as needed. As the Trustee, you control those assets while you can do so; however, if you become incapacitated, control over the trust assets automatically shifts to the Successor Trustee without the need for court intervention.
- Parents with minor children. A trust can provide several benefits to the parents of minor children. As the Settlor of the trust, you appoint the Trustee, and any successor Trustees, allowing you to decide who will protect and manage the inheritance you leave your children. In addition, a trust lets you stagger the inheritance you leave your children instead of giving them a lump sum and lets you decide when they receive those distributions. Handing an 18-year-old a large lump sum inheritance is rarely a wise idea. A trust allows you to stagger the distributions over several years.
- Special needs planning. Eligibility for most government assistance programs, such as SSI and Medicaid, is dependent on the participant’s income and assets. Consequently, you must be careful about gifting assets directly to a beneficiary with special needs, both while you are alive and upon your death. A Special Needs Trust, also referred to as a “supplemental” needs trust, is a specialized irrevocable living trust that can help you gift to a beneficiary with special needs. It allows you (and other family members) to designate assets to be used to supplement the care provided by other programs, such as Medicaid and SSI, without those assets counting against the beneficiary when determining eligibility for assistance. It also allows you to appoint a Trustee to manage and protect those assets after you are gone.
- Asset protection. A trust can be an effective asset protection tool if the right type of trust is created. Assets transferred into an irrevocable living trust become the property of the trust once the transfer is complete. As such, the Settlor no longer has a legal interest in the assets held in the trust which means that the assets are not accessible by creditors of the Settlor, a spouse in a divorce, or others who might threaten the assets. That does not mean, however, that you cannot continue to benefit from the trust.
Contact Los Angeles Trust Attorneys
For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about incorporating a living trust into your estate plan, contact the experienced Los Angeles trust attorneys at Schomer Law Group APCby calling (310) 337-7696 to schedule an appointment.
A graduate of Boston University School of Law, Scott P. Schomer is a frequent lecturer on estate planning and elder law issues, having discussed these important issues on local and national television. A seasoned courtroom advocate, Scott has obtained combined judgments and verdicts in excess of twenty-five million dollars for his clients. Scott has served as a member of the Los Angeles Superior Court Probate Volunteer Panel (PVP Attorney), Probate Settlement Panel and a Judge Pro Tempore. Scott's expertise has been recognized by his peers with such accolades as a life-time membership in the Multi-Million Dollar Advocates Forum, the Five Star Wealth Manager designation, and repeated nominations as California Super Lawyer.
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