TRUSTS
Trusts are a very important component in creating
an effective and complete Estate Plan.
Revocable Living Trusts
Much like a Will, a Revocable Living Trust ("RLT”) sets forth your wishes as to the disposition of your assets upon your death. However, unlike a Will, a RLT is not a public document, the administration remains completely private and the management of the RLT is handled exclusively by the trustees of the Trust, there is no need the Court to be involved in the Trust administration.
During your lifetime, the RLT becomes effective immediately upon execution, and can be easily amended or even revoked if your wishes change. As the party creating the RLT, you may be referred to as the Settler, Grantor or Trustor of the RLT, and you will most often also be the acting Trustee or Co-Trustees. The Trustee(s) are responsible for the legal management of the RLT, and for transferring assets into the RLT. Once the assets are entitled in the name of the RLT, and under the control of the Trustee(s), there is little to do to maintain and administer the RLT. You continue to use your social security number, and until a death occurs, there should be no need to obtain a tax identification number for the RLT.
Upon the death of a Settler, the Trustee begins the Trust Administration process, determines the allocation of assets to the sub-trusts if required, sends out any notice to the heirs and beneficiaries of the RLT that may be required under the Probate Code, determines the debts and liabilities, of the deceased Settler, and continues the administration as provided in the Trust.
Irrevocable Trusts
Irrevocable Trusts are trusts that cannot be changed after execution, without Probate Court approval. These irrevocable trusts are generally created for a particular purpose, possibly to hold certain assets for gifting purposes, or create special needs or educational trusts for certain beneficiaries. Unlike with a RLT, here the Settlor’s rarely serve as trustees, generally the control and management of the irrevocable trust is with an independent trustee. Some irrevocable trusts are discussed in more detail under Advanced Estate Planning Tools. We will be happy to discuss these in more detail with you.