Estate law can be nerve-racking for some, but it is a crucial step toward securing your estate for your family. Trust administration is a necessary part of the estate planning process. However, it can be confusing for those unfamiliar with the realm of estate law. Understanding this process as both a guarantor and a trustee is crucial for streamlining the process and making sure that your wishes are respected in this lifetime and afterward.
What Is a Trust?
A trust is a formal written agreement that lets a trustee handle financial matters on behalf of the trust’s beneficiaries. The settlor is the person who established the trust. The trustee(s) is/are the person(s) in charge of managing the trust’s assets. Beneficiaries are those who will be given the trust’s property. Depending on the kind of trust that the settlor established, assets may be transferred. Settlors have a wide range of options on how to set up their trust. The timing and methods by which beneficiaries may access the trust’s assets are completely under the control of the settlor.
Differences Between an Irrevocable and Revocable Trust
In estate planning, revocable living trusts are one of the more common forms of trusts used to solidify one’s estate while they are alive. The terms “family trusts” and “living trusts” are frequently used to describe these kinds of trusts. When the settlor of a revocable trust dies, the trust’s assets are transferred to the new owner. During their lifetime, the settlor normally has the authority to alter the trust and transfer assets in and out of it. The settlor also has the right to revoke or terminate the trust at any moment before passing away. With revocable trusts, the settlor has flexibility in how they can modify the trust in case they choose to change or add new terms and conditions.
Trusts that cannot be revoked and are intended for long-term asset management, on the other hand, are referred to as irrevocable trusts. In an irrevocable trust, the trust’s creator assigns another individual to serve as the trustee with control or ownership of the trust’s assets. This gives settlors the advantage of asset protection while also excluding the trust assets from the taxable estate of the settlor. Child support, federal taxes, alimony, and California state tax claims are still possible against irrevocable trusts.
What Assets Can Be Placed in a Trust?
The assets that go into your trust can vary but are similar to those that can go into a will. The most common assets included in your trust can be:
- Bank Accounts: By transferring financial accounts to your trust, you can control how your beneficiaries will receive these assets. Each bank or financial institution will have its own rules, so make sure that your trust is compatible with their guidelines before including them.
- Real Estate: If you hold the deed to any real estate property, such as a home or piece of land, you might want to think about putting it into a trust. When you possess property in more than one state, ancillary probate, a separate probate procedure, is frequently necessary when transferring these assets.
- Insurance Plans: The death benefits of your life insurance policy can safeguard your loved ones and give them financial support when you pass away, making it a crucial component of your estate plan.
- Investments: You can transfer investment property to a living trust, including mutual funds, stocks, and bonds. You must either execute a transfer document or reissue the certificates for these assets in the trustee’s name to accomplish this.
- Personal Property: Personal property can be added to your trust. Outlining which recipients you would like to leave your belongings to is essential for making sure that your property reaches your intended heirs.
What you include in your trust can vary, but speaking to an estate planning lawyer before solidifying anything is the best way to craft a trust that can serve your wishes after your passing.
Q: What Is Trust Administration?
A: The procedure the trustee will use to manage the trust following the settlor’s passing is known as trust administration. This role is assigned before a settlor passes away, and once they pass, the trustee is in charge of dealing with the trust. Multiple tasks are involved in administering a trust, so it is crucial to seek the guidance of an accomplished trust lawyer.
Q: How Long Does It Take to Administer a Trust in California?
A: Most trusts settle and distribute assets to beneficiaries and heirs over the course of 12 to 18 months. The intricacy of the estate, and whether properties and other assets need to be sold before distribution to the beneficiaries, will decide how much time a trustee needs to close the estate. As a result, the total administration time may vary.
Q: What Is the Difference Between a Trustee and an Administrator?
A: The person in charge of a trust is a trustee. This person is given a trust by the settlor, or original owner of the assets, before their passing, and tasks them with dividing their estate to give to any named heirs. When there is no will, the probate court appoints an administrator to manage the decedent’s estate, and this person takes the place of a named trustee.
Q: How Does a Trust Work in California?
A: A trust is a tool used by the grantor or settlor of the trust to benefit the designated beneficiaries. Ownership of the assets is transferred from the grantor to the trustee, who oversees the trust. The trustee allocates funds to beneficiaries and makes sure the provisions of the trust are adhered to.
Finding a Trust Lawyer for Your Estate
Trust administration may seem like a complicated process, but with the right legal team, the process of creating a trust can be simple. At The Flanigan Law Group, our legal team can help you through the probate process and make sure that your trust is legally sound. For more information on our practices, visit our website and contact us today.