For estate planning in California, trusts are a powerful tool for managing asset transfers, avoiding probate, and reducing taxes. However, they can be a little tricky to manage for those who are not fully prepared.
A revocable trust can be set up to take ownership of a grantor’s assets when they die or become incapacitated. Assets in a will do not need to go through probate court. The grantor names one or more successor trustees to manage the trust after they die, as well as beneficiaries, who will receive the assets in the trust according to the plan. The successor is in charge of handling any outstanding legal matters or debts and distributing the right assets to the right beneficiaries. This can take anywhere from months to years.
The complexity of the trust affects how long it takes to unwind. For example, having more than one beneficiary means more paperwork and tasks, extending the time. It also provides more opportunities for disputes with the trust or its distribution, which can add a lot of time. Taxes add time as well, if they apply, and especially if there are taxes due in multiple states. The underlying assets themselves can also take time to manage if they are complex or hard to value, like a business. The bottom line is that the more complex the trust is, the longer it will take to settle all of it.
Successor trustees have to be ready to take on the responsibility of unwinding a trust and taking care of the outstanding tasks associated with transferring all the assets to the right final owners.