Trusts might seem like a complicated estate planning tool for some California residents. Even though they sound complicated, living trusts can make the estate planning process go more smoothly.
How does a living trust work?
Anything placed into a living trust is managed by a trustee. The trustee will manage the trusts on behalf of the trust beneficiaries, acting in their best interest.
Trusts can also give you more control over how the assets are passed down to beneficiaries or how much of the trust can be accessed at one time. Living trusts are also a great option for beneficiaries who are minors or otherwise unable to make their own financial decisions.
What’s the main benefit of a living trust?
Generally, you don’t have to pay estate taxes on assets that are passed down from a living trust. And any assets that are in the trust don’t have to go through probate court before they can be accessed by the beneficiary or trustee.
Setting up a living trust can add some security to the process, easing the transition process for your beneficiaries. While a living trust won’t be able to hold all of your assets, it can still be a great estate planning tool.
What assets go into a living trust?
Bank savings accounts, certificates of deposit, mutual funds, stocks, bonds, and other investment accounts are perfect assets to place into a living trust. You’ll also want to consider placing real estate, such as the family home, into the living trust as well.
However, assets like retirement accounts or medical savings accounts should not go into your living trust. It’s also smarter to just leave behind vehicles in wills rather than try to put them in the trust.
It can be hard to know how to set up your living trust or if it’s the right move for you. But it’s important to not rule it out completely just because it’s intimidating.