At the Law Offices of Alice A. Salvo, we help clients throughout Southern California understand their estate planning needs. We are an experienced estate planning attorney who can help you set up a trust in California. We can help you determine when it makes the most sense to establish a trust.

We will communicate carefully throughout the process. Our ultimate goal is to take the stress and confusion out of building a trust, so you understand every step.

Understanding Revocable Living Trusts

Revocable living trusts (also known as grantor trusts) can be created to hold any asset. Most commonly, though, trusts are established to hold real estate. Because of this, revocable living trusts have many benefits for homeowners.

These include:

• Avoiding probate: Stopping costly probate procedures is often the main purpose of a revocable living trust.
• Privacy: trust documents do not have to be filed with any court of public records
• Tax benefits: because a revocable trust is not a legal entity, you do not need to pay taxes on profits generated by assets within the trust
• Flexibility: Revocable living trusts can be altered even after they’ve been made. In addition, the grantor (person carrying the trust) may be the trustee as well as a beneficiary.

Please note, assets in the trust are not protected in the event of a lawsuit against the grantor.

Ultimately, the purpose of a revocable trust is to reduce the size of your probate estate. It does not protect your assets from lawsuits, creditor claims, or other risks to your wealth.

What is the Advantage of Reducing Assets with a Revocable Trust?

If your will and assets are worth over $184,500 at the time of your death, your loved ones must go through probate court. If you reduce the size of your assets using a revocable trust, your loved ones can avoid costly probate proceedings.

Benefits of Establishing a Trust

Let’s look at the benefits of establishing a revocable living trust in California in more detail.

What happens to my assets without a trust?

Let’s assume your home is valued at $700,000 when you pass. Without a trust, probate court will intervene, determining how your assets are distributed after you die. Even if you have a last will and testament in place, probate still occurs.

This is because the court needs to make sure your wishes are carried out and your estate is distributed. Unfortunately, probate court is extremely expensive. If minor children are involved, expect the cost to increase even more. Typically, probate court costs are around 5 percent of your estate. So, in this example, expect to pay about $35,000 in probate court fees. The more a home and real estate is worth, the higher the probate fees. If stocks and savings are in the estate, they are counted in the estate value. Probate fees, administrator and attorney, for many cases we have seen run in the $40,000 to $140,000 range. Having a trust will avoid the fees.

Probate court is also time-consuming. Typically, it takes at least a year to adjudicate. Your beneficiaries will not actually be able to inherit your assets until the probate court process is complete.

What happens to my assets with a trust?

Let’s assume again your home is worth $700,000 when you pass. But this time, you were smart in setting up a living trust using an estate planning attorney.

In this case, you do not need to attend probate court, and your probate costs are reduced from $35,000 to zero. Your family members are spared the hassle of lengthy Los Angeles court procedures. Your assets are quickly passed on to your beneficiaries, as you intended.

Because you are the trustee of your revocable living trust, while you are alive you maintain sole and total control of the assets within that trust. You can make changes to your trust at any time.

Please note that any tax consequences of profits generated by assets in your trust remain your responsibility. Bear in mind, too, that with a revocable trust the assets in it are not protected against creditor claims. In essence, a revocable living trust is a pass-through entity.

Setting up a trust, establishing a trust, or creating a trust, typically refers to a family trust, living trust, or revocable trust.

Living Trust vs. Revocable Trust

You may not know that a ‘living trust’ is the same as a ‘revocable trust’. Both types of trust can be altered once they have been created. Both trusts allow a trust owner to place their assets into a trust, to be managed by a trustee.

In both cases, the trustee distributes assets once the trust owner has passed. And in both cases, the trustee must adhere to the guidelines put in place by the trust owner when the trust is formed.

Put simply, a revocable trust is a living trust, and vice versa. It may help you to think of it as a revocable living trust.

An irrevocable trust, however, is different to a revocable living trust. In the case of an irrevocable trust, the trust owner cannot make changes to the trust once the trust has been put in place. An irrevocable trust does not offer the same flexibility as a revocable living trust.

Setting up a Trust Now will Save You Later

Do you want a court full of strangers involved in your personal affairs after you pass?

The reality is that establishing a trust is extremely complex. Creating a trust the “right way” requires you and your attorney take time to identify your assets and how to allocate them.

This type of analysis involves a serious conversation. An attorney can help review your specific situation and ensure your wishes are legally implemented.

A trust is an investment in the future. Taking time to establish a trust will not only give you peace of mind but can save you and your loved ones time and money down the line.

We Can Help You Create a Trust

Your Los Angeles estate planning firm is ready to help you. Attorney Alice Salvo or one of her excellent lawyers will guide you smoothly through the process of creating a trust. With our help, you can avoid probate court.

We know you want to lay out the terms of your estate, at a reasonable cost, without burdening your loved ones. We can help with that.

Use our online contact form or call 818-676-9572 for a free initial consultation to discuss your estate planning needs.