Southern California Trust Attorneys
A living trust is a legal mechanism under which a trustee holds property
for the benefit of another. In one, you can create specific instructions
regarding the distribution of your assets, including who gets your property
and when. This mechanism allows you to maintain some control even after
your death. Although legal title must pass to the mechanism, you may set
it up so that you maintain control over the assets during your lifetime.
The trustee acts as a fiduciary and oversees all administration. In some
cases, you (the “grantor” or “trustor”) may also
serve as the trustee. In other cases, a relative, friend, or institution
may serve as the trustee. This entity holds the property in trust for
the benefit of whomever the grantor designates, known as the “beneficiaries.”
There are two types of this legal mechanism: revocable and irrevocable.
This designation refers to your ability to make changes during your lifetime.
The simple distinction, however, can have extreme tax consequences. Thus,
it is imperative that you work with an experienced attorney.
Why Have One?
One benefit is that it can be used to bypass probate. In probate, the court
oversees the process of distributing your assets and ensures that your
debts are paid. The probate process may cost significant attorney’s
fees and result in a delay of payment to your loved ones.
Properly Distribute Assets
This mechanism is beneficial to ensure that your assets are distributed
to your loved ones in the manner that you desire. It allows you to specific
exactly who you would like to receive you property and when. You may even
designate events that trigger the property distribution, such as college
graduation or marriage. If you do not have any testamentary document,
your property will be distributed based on your state’s predetermined
distribution scheme, known as the rules of intestacy.
Maximize Tax Benefits
If you have a large estate, a trust can be used to ensure that you are
minimizing the amount your estate will be taxed. Because tax laws are
complex and ever-changing, it is important to consult an experienced attorney
to ensure that your testamentary instrument maximizes the possible tax benefits.
A will goes through probate and, as such, becomes public record. A living
trust, however, is private and allows you to shield your affairs from
the public eye. For example, any person may go down to the records archives
at the Los Angeles Superior Courthouse in downtown Los Angeles and view
all wills that were probated at that court. However, it is highly unlikely
that someone spend the time to do so.
Do I Need One?
Maybe. If you have minor children or own real property, then having an
estate plan of one form or another is highly recommended. Our attorneys
are very experienced and will consider your entire situation before recommending
a course of action. If it is right for you, we will carefully craft a
trust that fully meets your needs and carries out your wishes. If one
is not right for you, we can create a will for you or offer suggestions
on how to handle your affairs.
At Wadhwani & Shanfeld, we will work with you to draft a package that
completely meets your needs and properly outlines your wishes. This includes
all essential legal documents. Unlike many law firms or form-preparers,
we do not use boilerplate documents. Instead, we customize the solution
to suit each client.
If you are unsure about what is right for you, one of our attorneys will
happily discuss your options with you. We have clients with a large range
of estate sizes from all over Southern California, everywhere from Lancaster
to Los Angeles to San Diego. Please give our office a call to begin your
free consultation and get your estate plan started. It is never too soon
to consider your family’s future.
Recent Changes in Estate Tax Law
In 2013, Congress passed the American Taxpayer Relief Act of 2013. This
raised the effective exemption to $5.25 million, meaning that a single
person could give away up to $5.25 million worth of assets without owing
gift or estate tax. In 2014, this number went up to $5.34 million. Thus,
only very few estates are subject to the estate tax. For those estates
that wind up exceeding the effective exemption, the tax rate is 40%. To
read the American Taxpayer relief Act, please visit the
United States Senate Committee on Finance’s website.