Types of Trusts in California

A trust can help you manage your assets and give you peace of mind. But which type of trust is right for you? To help answer this question, here is an overview of the main types of trusts we have in California.

What Is a Trust?

A trust is a legal arrangement set up to manage assets, or property, in a certain way. There are always at least three parties involved:

• The trustor, who creates the trust.
• The beneficiary, who benefits from the property in the trust.
• The trustee, who manages the trust and the assets within.

Creating a Trust in California

There are four main steps to creating any type of trust. To create a legally valid trust, you must:

• Choose the assets you wish to place in the trust
• Name a trustee(s) to manage the trust
• Transfer assets to the trustee(s) in the trust
• Name the beneficiaries who will, eventually, receive the assets
• Write and sign the trust document

Types of Trusts in California

While there are many types of trusts in CA, the four most common are as follows.

Living Trust

California living trusts are created while you are still alive. This is the opposite of a testamentary trust, which takes effect when you pass away.

Upon your death, assets pass to the beneficiaries. Living trusts can help your loved ones avoid a lengthy probate process.

Revocable Trust

Revocable trusts can be changed or revoked at any point until you die. This flexibility means you can change assets, or even beneficiaries, at will. You remain in complete control of the assets until your passing – only then does the trust take effect.

Revocable trusts in California are very common.

Irrevocable Trust

An irrevocable trust helps you shelter assets from certain tax liabilities. For example, there’s no estate tax payable on these assets when you pass away.

However, they are irrevocable, so you can’t normally change these trusts once they are created. They are designed for long-term tax planning.

Special Needs Trust

Physically or mentally disabled individuals often receive government benefits, such as Medicare. A special needs trust lets you benefit a disabled loved one without risking their public benefits entitlement.

Choosing the Right Trust for Your Needs

Ultimately, every estate is unique. What works for one family may not work for you. While we recommend calling our team to discuss your options, you should consider:

• Your financial priorities
• Who you wish to manage your trust
• Who you wish to benefit from the trust
• Your loved ones’ needs

You must consider factors, such as tax implications, carefully. Our trust lawyers can explain how trust tax laws might affect you, based on your assets and goals.

Experienced California Trust Attorney

Choosing the right type of trust is complex. But at the Law Offices of Alice A. Salvo, we simplify the process. We will explain your options and help you make the right choice for you and your family’s future.

To schedule a free first consultation, contact our trust attorneys in California online or by phone.