A trust is a legal document that protects individuals in the event of incapacity and death. A trust avoids probate, sets out who will manage your assets in the event of your incapacity, assigns who will inherit assets when you pass away, and can create subtrusts to manage a beneficiary’s inheritance, pursuant to the rules set by the Grantor. The Grantor is the individual or individuals who own the assets and transfer them into the trust to be managed by a Trustee. Since there are different kinds of trusts a Grantor can set up, it’s best to meet with a trust attorney to ensure the right trust is created.

What is a Revocable Trust?

One of the most common trusts, a Revocable Living Trust, is simply a trust that can be revoked by the Grantor. The Grantor/Grantors transfer legal title of their assets including homes and bank accounts to the name of the trust. As long as you, the Grantor, are alive and have capacity, you can manage the trust assets as you always have. The only difference you will notice is that title to the assets will be changed. Instead of owning your home or bank accounts as Jane Smith, title will reflect “Jane Smith, Trustee of the Smith Family Trust”.

You must handle most of the trust funding (transfer of title), with the guidance of a trust attorney. The attorney will often prepare the new deed to transfer your home into the trust but will not be able to do more than advise you on how to transfer your bank accounts and other assets to the trust.

What is a Trust Attorney?

A trust attorney is an attorney who is knowledgeable in probate law that will work to understand your assets and family dynamics, and prepare a trust that will protect your family and legacy.

Married couples whose assets are all or mostly community property will often create a joint trust, transferring both of their assets to a single trust. Married couples can also choose to set up their own separate trusts, which is common when one or both parties own significant separate property.

The Grantor or Grantors typically serve as Trustees as long as they have capacity. If one spouse becomes incapacitated or passes away, the surviving spouse will typically continue to serve as the Trustee. Once both are deceased or incapacitated, the successor trustees the Grantors named in their trust will step in and manage the assets. Sometimes elderly Grantors will voluntarily resign as Trustee when it becomes difficult for them to manage their own finances or to get to the bank, but they will retain the right to amend the trust and remove the serving trustee.

Individuals often struggle with who to name as Trustee, particularly when their children are minors or too young to serve. Family members such as children, parents, and siblings are often named, but some Grantors don’t trust their family to serve or don’t want to place that burden on them. In that case, Professional Fiduciaries, licensed and bonded individuals, can serve as a Trustee and bill either hourly or by a percentage of the total assets managed.

What Does a Trust Provide?

A trust allows you to retain some control over how the inheritance you leave behind can be spent. This is vital if you have minor children, family members with special needs, family members receiving public benefits, want to provide for an elderly parent, or have a family member struggling with substance abuse. Unless you create a substrust to hold the inheritance, upon your death, the beneficiary will receive the entire inheritance outright.

A subtrust allows you to limit distributions as you wish. Typically distributions will be limited to health, education, maintenance and support. The trust can also completely restrict the beneficiary from receiving cash directly in the case of substance abuse or special needs, but permit the Trustee to make payments on behalf of the beneficiary so that you can be sure your family is protected and provided for.

Why Should I Have a Trust?

Trusts are incredibly valuable tools to protect you upon incapacity, and protect your family and legacy when you are no longer here to do so. It is imperative that you work with a trust attorney who is knowledgeable in the intricacies of trust law. It’s important to know that not all trust lawyers are created equally, so make sure you work with the best trust attorney in San Diego.

Having many years of experience drafting trusts and litigating trust disputes, Kam Law Firm is well-versed in trust law. The attorneys here will work tirelessly to make sure you are happy and well protected when it comes to your trust and future.  For more information on trusts, wills, and estate planning, please call us today for a free consultation at (619) 535-1405.