A trust can be an effective estate planning tool for California residents. However, it is important to choose the trust that best fits an individual’s needs. For those who want to keep control over assets, a revocable living trust may be best as settlors can name themselves as the trustee and change its terms at any time.
Those who are interested in reducing their estate tax may wish to look into a qualified personal residence trust. This allows an individual to leave his or her home to a beneficiary at a predetermined future date. Until that time, the owner of the home retains the right to live there. After the house passes to its beneficiary, that person will only pay tax on the value of the home at the time it was placed in the trust.
A credit shelter trust has been a popular option among wealthier couples, but its usefulness for some may be diminished by portability laws. This type of trust allows individuals to pass assets to a beneficiary, but a surviving spouse retains the right to use the asset until he or she passes on. Essentially, it reduces the value of the estate without the original owner losing the ability to benefit from certain assets.
Those who have complicated estate planning needs or anyone else who wants to learn more about protecting their assets may wish to consult with an attorney. Legal counsel may be able to explain the benefits of different trusts available to individuals. Trusts may help individuals lower their estate tax, ensure that children or others get an inheritance in a controlled manner or provide for those with special needs. Attorneys may be helpful in creating new documents or simply reviewing any that already exist.