California residents who want to distribute their assets to family members and other beneficiaries after they die have several tools at their disposal. Proper estate planning can often include much more than the creation of a will. Creating a trust be an effective way of carrying out the grantor's wishes while instituting a degree of control over how and when the assets are distributed. A properly-drafted trust can also avoid the time and expense of probate and in some cases can be used as a means of avoiding or reducing the estate tax burden.
Trusts can protect the legacy from creditors and overspending by the heirs. Spendthrift clauses can in many instances shield the trust's assets from claims made by creditors of the beneficiary, although they will not protect distributions that have already been made. In a similar fashion, the grantor of a trust may have some concerns over whether the beneficiary is too young or unsophisticated to be able to handle an outright bequest, and the trust can contain provisions putting guidelines on the amount and timing of distributions.
Several different types of trusts have been established to accommodate the needs and desires of the benefactors wishing to protect their financial legacy. Properly constructed trusts may also be of great value to blended families composed of various spouses and children from different marriages.
While estate planning has often been thought of as purely the province of the old and wealthy, it is never too late to start preparations. An estate planning attorney can help a client in listing goals and determining what types of documents can best achieve them.
Source: Forbes, "How The Right Trust Could Protect Your Assets And Cut Your Tax Bill", April 10, 2014