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Trust FAQs

Frequently Asked Questions about Living Trusts and other Trust Instruments (Trust FAQs)

The Law Offices of Vincent W. Davis & Associates is dedicated to assisting Southern California residents in dealing with their estate-planning matters – be they simple or complex. Trust FAQs is our way of sharing the most-asked questions we routinely hear from new clients. Trusts have, for the most part, replaced simple Wills as the primary and best estate-planning device to legally transfer one’s “stuff” (an Inheritance) to one’s Heirs. In fact, many published articles touting the value of Trusts and Living Trusts as the modern-day Will refer to “Living Trusts” as “Baby-Boomer Wills.”

In our California Probate and Trust practice, we are often asked the same questions over and over, which means that those questions are on the minds of people doing the homework and research for their upcoming estate plan. Below, is our list of common Trust FAQs to answer some of your questions and concerns. If your question is not addressed in this Trust FAQs section and you have another trust-related –or any estate-planning question– we urge you to contact Vincent W. Davis personally to ask his legal advice regarding your unique matter.

Trust FAQs #1: Trust FAQs #1: What is a Trust?What is a Trust?

A Trust is a legal document that gives instructions for what you want done with “your stuff” (estate) upon your death. You (Grantor) will name a person (Trustee) who will administer the Trust for your Heirs (Beneficiaries). The really power of a Trust, is that while you are still living, you retain full control of the trust. “Your stuff” is ‘essentially’ still your stuff, in the practical reality that you have full access to your home, cars, big-boy toys, bank accounts, and you can use it, enjoy it, add to it, sell it — yet it is held in the name of the Trust (a separate entity) so that, upon your death, all your assets that were legally transferred into that Trust can be smoothly distributed to your spouse and children: quickly, privately, and without government workers in a Probate court deciding who gets what. Trusts have been called the “Baby Boomers Will,” as Wills are now considered outdated and are very rarely a good choice (by themselves) as they tie up your assets and your survivors in Probate from 1 to 2 years following your death. Using a Trust, upon your death, Probate will not be necessary.

Trust FAQs #2: Trust FAQs #2: Isn’t a Living Trust just a tax loophole the government will shut down?Isn’t a Living Trust just a tax loophole the government will shut down?

No – that’s a total myth! A lot of folks new to estate planning express such unfounded concerns. In fact, your Living Trust is a form of ownership with deep and long-established roots in English common law. Trusts have been recognized and completely-accepted for centuries. Most judges and attorneys use trusts for their personal estate planning. Why? Because they see the benefits in of having their lives kept private and in their own control and would never want to have strangers in a courtroom take control of their lives and assets. Moreover, the state governments would PREFER that more citizens would PLEASE GET Living Trusts, as the courts have huge backlogs, insufficient funding, and would appreciate less demands on the overwhelmed courts. This is even more true in the 21st century as the huge wave of Baby Boomers have started passing away in staggering numbers. These baby boomers are creating longer court sessions because “Boomers” have incredibly more assets than all prior generations, resulting in the courts being more backlogged than ever. More assets, more disputes, more court time. These days, Probate Courts are very much like going to the DMV – you are but a number. If you have a choice to avoid Probate court and keep your business in “the family” you’ll be thankful.

Trust FAQs #3: Trust FAQs #3: If I already have a Will, do I also need a Trust?If I already have a Will, do I also need a Trust?

For most people – Yes. Another advantage of a Trust is IF you become incapacitated, your affairs (including your assets) will be managed on your terms according to your wishes; wishes that you set in writing before an accident or disease caused your temporary or permanent incapacity. If you do not have a Trust, a court-appointed “personal representative” will take control, manage your estate, and make decisions on your behalf that may run contrary to what you would have wanted. Moreover, if you replace your Will with a Trust, or add a Trust in combination to your Will, in the event of your death, your estate will not have to go through the painful Probate process.

Trust FAQs #4: Trust FAQs #4: What is Probate and why do I want to avoid it?What is Probate and why do I want to avoid it?

“Probate” comes from Latin. In a nutshell, “Probate” means “to prove.” Probate” is the Judicial procedure by which a decedent’s Estate is administered and overseen by the California Probate Courts. The Probate Courts were established to supervise probates, establish that your Will is valid (if there is a Will), to make sure that the decedent’s assets are properly accounted for, that all valid creditors get paid (if there are outstanding debts), and that the balance of the decedent’s Estate will be distributed fairly to the Estate’s Beneficiaries. The Probate process is governed by the California Probate Code. Avoiding Probate, for most estates, will save considerable money that will otherwise be paid out in fees, appraisals, court costs, and all manner of little expenses. Avoiding Probate will save a whole lot of time and court appearances as well. A typical Probate will often drag out from 12 to 24 months.

Trust FAQs #5: Trust FAQs #5: Will I lose control over my assets if I have a Trust?Will I lose control over my assets if I have a Trust?

Since you will name yourself as BOTH the Trustee and the Beneficiary of your Living Trust you will have TOTAL CONTROL. Sure…, your assets will belong to the trust, but you are the Administrator of the Trust, thus you retain total control.

Trust FAQs #6: Trust FAQs #6: Can I change the terms or Beneficiaries of my Trust?Can I change the terms of my trust?

The answer depends on what type of Trust you have. If you have a very common Living Revocable Trust, YES! So long as you are “competent,” you can change the terms of your Living Trust in any way and at any time. You might be surprised that you can also completely revoke it without penalty. Trusts are very cool, very potent, and ultimately can be rearranged to address our ever changing life-circumstances. On the other hand, an Irrevocable Trust does not allow changes to be made to the Trust – but people who choose an Irrevocable Trust, are usually facing big medical problems, want to take advantage of some government programs that might then reward them with in-home nursing care that would otherwise cost $8,000 per month and willingly choose to draft an Irrevocable Trust that they understand that they cannot change.

Trust FAQs #7: Trust FAQs #7: Is a Living Trust the only document I need to handle my estate?Is a Living Trust the only document I need to handle my estate?

No. Even if you have a really well-drafted Living Trust, you really need a special kind of Will called a “Pour-Over Will.” That specialized Will instructs your Executor to transfer to the trust any assets you missed int the “Trust Funding.” If the assets are transferred to the trust, they can then be governed by the provisions of the trust. A Will is also necessary to name guardians for minor children.

In addition to a “Pour-Over Will” you should also have a “Durable Power of Attorney” for financial matters —sometimes called a “Financial Power of Attorney,” and a “Durable Power of Attorney for Health Care” —sometimes called a “Medical Power of Attorney” or “Health Care Proxy.”

Trust FAQs #8: Trust FAQs #8: Is my Living Trust valid if I move to a different state?Is my Living Trust valid if I move to a different state?

Yes. Living Trusts are long-established, solid legal documents and they are valid in all fifty states, regardless of the state where it was originally drafted.

Trust FAQs #9: Trust FAQs #9: Can I name Trustees and Beneficiaries who live out of state?Can I name Trustees and Beneficiaries who live out of state?

Yes. Trusts are extremely flexible and encouraged by statue, law, and courts. There are NO limitations on where your trustees or beneficiaries must reside. Trusts are encouraged as they benefit individuals/families AND they help lessen the overwhelming burdens on state’s backlogged Probate courts.

Trust FAQs #10: Trust FAQs #10: Are there other advantages of Revocable Living Trusts?Are there other advantages of Revocable Living Trusts?

Yes. Several actually. Trusts allow tremendous flexibility in having your wishes carried out exactly as you choose. For instance, you can specify what type of nursing facility you would want, which Beneficiary gets the vacation home, who gets the 1966 Corvette, how your gun collection is divided between your two adult boys. A Trust usually contains your detailed instructions on exactly HOW your affairs are to be handled if you should become incapacitated. Your “Successor Trustee” or “Co-Trustee” can step up, step in, and take over for you until (hopefully) you are better. Living Revocable Trusts are private documents, whereas old-fashioned Wills become public record when filed in the county courthouse. If that vacation home (mentioned above) is in Bullhead City, Arizona, and you have 20 acres in Montana transferring those two out-of-state assets will save your survivors the expense, cost, and huge frustration of opening one primary Probate here in California and two additional Probates – one in Arizona and one in Montana! Your Revocable Trust makes ALL of that go away.

Trust FAQs #11: Trust FAQs #11: Are Living Trusts difficult to set up?Are Living Trusts difficult to set up?

Yes. A Living Trust takes more effort to set up and properly-draft than an old-fashioned Will because you have to take some additional time to legally-transfer assets to the Trust. That is why many people who set up Living Trusts transfer the home, the cars, the bank account, and then “drop the ball” and put off or forget to transfer the jewelry, the gun collection, the jet ski, etc. That is also why a knowledgeable and competent estate-planning attorney will create for you a “Pour-Over Will” as a companion document to your Living Trust. It will catch all the little stuff. Frankly, most of the little stuff is worked out by the survivors and there are rarely disputes that rise to the level of a need to involve the Probate process on those “smaller assets” that were never properly transferred. If there were a significant asset overlooked, and there is a dispute between/amongst the Heirs, the Pour-Over Will would push just that small contest into the Probate court where the outcome will be resolved. The Living Will will have taken care of all the heavy lifting however.

Trust FAQs #12: Trust FAQs #12: Who should be named as Trustee and the Beneficiaries?Who should be named as Trustee and the Beneficiaries?

Typically, you will serve as your own Trustee. Another common selection is a “Co-Trustee” set up with your spouse or adult child/ren. If you are setting up a Living Trust you should retain control of your own assets as long as you are medically and mentally able to manage your own affairs. When the years catch up with you to where you become unable to manage your own affairs, you will choose another Trustee, known as the “Successor Trustee,” who will take over for you. As to the Beneficiaries, that too is usually pretty straight-forward. You and your spouse are almost always the FIRST choice as the primary Beneficiaries of your Living Trust with your children and grandchildren as Beneficiaries following your passing. While you are still “mentally capable” you may change who is or shall become the “Trustee” and/or the Terms, and/or the Beneficiaries. Very Flexible. Remember, however, a “Revocable Trust” becomes an “Irrevocable Trust” when you die (as it should!), and the Trustee distributes the assets as the Trust document (that you created) specifies or keeps them in Trust for the Beneficiaries, if that is what you have previously decided.

Trust FAQs #13: Trust FAQs #13: Who should I hire to draft a Living Revocable Trust?Who should I hire to draft a Living Revocable Trust?

A well-prepared, custom-drafted, Living Revocable Trust should be drafted by a skilled estate planning lawyer –not the guy who prepared your 1040 short form at the strip mall; not a website that charges $69.95 where you are compelled to fill in the blanks in a 20-minute online session. You need to get a complete confidential review of your finances, your assets, even the dynamics of your family. You need to take advantage of that attorney-client relationship where you can share concerns about finances and health issues, and freely brainstorm “what-ifs” with an attorney who takes the time to make sure he or she has your back. If you die, you won’t be around to dig out that boiler-plate Trust for a professional “do over.” While drafting a Living Trust isn’t brain surgery, a lawyer’s legal experience and attention to detail will go a long way to getting your life-and-death documents properly “dialed-in.” A couple hours of your time will turn out to be time “well-invested.” You will end up with a trust instrument that will be custom-tailored for you and your loved ones and may be more valuable that the title to your home or vehicles. Do it right. Not to be corny, but a Living Trust is like a “Living Document.” As your life-situations change, you will want to pick up the phone and have your “estate-expert” make the confidential changes you need to reflect those life changes. Working with a shrewd lawyer is especially critical if you have a complex estate or if you have more than one marriage with children from each marriage: you absolutely want an expert estate planning attorney to draft your Trust.

Trust FAQs #14: Trust FAQs #14: Is a Will more likely to be contested than a Living Revocable Trust?Is a Will more likely to be contested than a Living Revocable Trust?

You bet it is. A Will is far more likely to be contested than a Living Revocable Trust because a Will goes into effect only when a person dies, whereas a Revocable Living Trust goes into effect the minute the Trust document is signed. Moreover, most trusts are kept “alive” for some years after the Grantor’s death because it can prove to be useful to a surviving spouse and/or children. Contesting Wills is as easy (and potentially as lucrative) as playing the Lotto. It costs absolutely nothing to contest a will. All a disgruntled family member has to do is to “object” when the decedent’s Will is presented for Probate and then hire an attorney on a contingent-basis and hope for a windfall.

Upshot?  The cost to contest a Will?   No cost.   Burden of proof?   Minuscule.  “He said vs. She said.” That disgruntled family member has nothing to lose. But if there is a Revocable Trust in place instead of a Will, contesting a Revocable Trust requires a substantial commitment of finances and time. Whereas a “Will Contest” is heard in Probate court, a Revocable Trust Contest must takes place in civil court where it can be very, very expensive to attempt a frivolous case on the long shot of an diverting an Inheritance for personal gain.

Trust FAQs #15: Trust FAQs #15: Is a Trust more resistant to being Contested than a Will?Is a Trust more resistant to being Contested than a Will?

Burden of proof – Will. If a free-loader or disgruntled potential Beneficiary chooses to contest a will, it is not much more difficult than playing the Lotto. There is little if any cost, and all he or she has to do is level charges that the Testator (Grantor) was either incompetent or under “undue influence” at the exact moment the Will was signed.

Burden of proof – Trust. On the other hand, in order to contest a Revocable Trust, not only does he or she have to prove that the Grantor was incompetent or under undue influence at the exact moment the trust documents were signed, but also when each and every asset was “Funded” (or transferred) into the trust, when each and every investment decision was made, and when each and every distribution was made to the Grantor or anyone else. Do you see the difference? Striving to meet such an impossible “burden of proof” at the very last minute (following the Grantor’s death) would be a “Hail Mary” play reserved for a Howard Hughes drug-store fantasy novel. A Trust will always “trump” a Will as to the possibility of any successful court challenge.

Trust FAQs #16: Trust FAQs #16: What's the Big Deal about protecting Privacy using a Living Trust?What’s the Big Deal about protecting Privacy using a Living Trust?

Probate is a public process. Anyone can go into a probate court when a person dies and look through the estate file. You can read the Will; you can see who the relatives and Beneficiaries are; you can get a list of creditors and their claims; you can get the entire list of the estate’s assets; you can even get all the phone numbers and addresses of the Beneficiaries. Unethical sales peddlers often go through estate files to locate grieving Heirs on which to prey. Devious “friends” and nosy neighbors can get the “low-down” on a grieving family and start gossiping to people in your sleect network. There is ZERO privacy in a Probate. Now, with the advent of the Internet, any or all of these snoops don’t even have leave their easy chairs. All anyone has to do turn on a laptop and there you are.

Rich and Famous people have made the mistakes of not taking a few hours to have a Living Trust drafted. Their lives are laid bare for all of us to gawk at. Their Wills are available online just as yours will be if you rely on a simple Will or have no Will at all. An affordable Revocable Living Trust can prevent your families’ privacy from being invaded and then emailed around by people who know you. Revocable Living Trusts are private. They are not filed with the Probate court in the county where you live. No one gets to look at your private information and confidential family squabbles and interactions. Many people value their privacy and consider that aspect of a Trust to be very important, others don’t “give a rip.” It is our duty to let our clients decide about such invasions of their privacy and the potential fallout. That said, Privacy is just ONE reason why a simple Living Trust might make more sense than an archaic Will. The cost to draft a Living Trust makes it available to virtually anyone who owns a home and a vehicle or two and wants to do the right thing by their spouse and children.

At Vincent W. Davis & Associates, we can detail all of the different types of trusts for you so that you can make an informed decision about what is best for your family.

If you need questions answered concerning estate planning, trusts. wills, or probate, contact a Southern California Trust Attorney without delay.

Experienced Trust Accounting Disputes Lawyers in Southern California

Vincent W. Davis and Associates have 60+ years of combined legal experience to help clients throughout Southern California.  If you are considering a trust or need assistance any other estate-planning matter, Mr. Davis would be pleased to personally speak with you in total confidence, evaluate your situation and recommend a proper course of action to resolve your estate matter.

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Contact The Law Offices of Vincent W. Davis & Associates in Southern California for a complimentary consultation. Consultations are available in Los Angeles, Orange County, Inland Empire including Riverside or San Bernardino Counties. We also handle California Probate, Trust, and Estate matters for out of state individuals. Mr. Davis will personally make time to share his legal advice with you and your loved ones.

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