Many California residents know that a will is needed in order to dispose of their property upon death. However, this might not be the most efficient, cost effective or desirable way to transfer their property to heirs and beneficiaries due to a variety of factors that are unique to each individual. Trusts can accomplish many of the estate-planning goals that wills cannot.
When a trust is created, all or a portion of a California resident’s property is transferred into it. It is held by the trust on behalf of the beneficiary or beneficiaries. A trustee is appointed to take care of the assets and make distributions to the beneficiaries in accordance with the instructions outlined in the trust. The creator of the trust (the grantor) can specify how and when a beneficiary receives the assets in the trust. For example, distributions can be made at certain ages or upon certain events. What the assets are used for (such as education and/or living expenses) can also be outlined.
Trusts can either be created during life or in a will. The assets in a trust created during life do not need to go through probate and are immediately available to the beneficiary. A “living trust” can also be revocable, which means that it can be changed during the grantor’s lifetime. In contrast, an irrevocable trust cannot be changed.
The type of trust that would work best for an individual depends on several factors. Fortunately, these documents can be customized to fit a person’s wishes and family dynamics. Whatever the estate planning goals are, there will most likely be a trust that can help accomplish them.