For those just embarking on the road to estate planning in California, the different types of trusts may seem as varied as the species of fish in the sea. In truth, there are not as many trusts as there are fish in the sea, but there are quite a few. When researching the trusts available to California citizens, it can feel overwhelming, but you should know that most people only need concern themselves with a few different trusts.
Below is a brief outline of common types of trusts and what they can do for you.
Revocable trusts: Also known as living trusts, this choice allows the trust-maker to alter or even revoke the trust. Many people choose revocable trusts to help keep their estate out of probate. Any assets that have been transferred to the trust before the trust-maker’s death are protected from probate.
Irrevocable trusts: As one might imagine, an irrevocable trust allows no changes to be made to the document once it is created. Due to its inflexibility, many people pass on this type of trust; however, it might be useful in avoiding estate conflicts as everything is clearly defined and subject to fewer disputes.
Special needs trusts: For families who have children, adults or elders with special needs, this trust provides much-needed protection. Assets held in trust for the disabled person will not interfere with government benefits the person may also need.
Totten trusts: This choice is for financial assets rather than real estate. The trust-maker or grantor deposits funds into a special account to be held in trust for another party such as a family member. Upon the trust-maker’s death, these funds are protected from probate.
This short list can get you started on adding a trust to your estate plan. If you need information about other types of trusts, please reach out to our California-based attorneys. You can also learn more by browsing our website.