There are many tools available to Californians for estate planning, each with its own designated purpose. Those who are crafting an estate plan often choose to employ one or more types of trust, depending on the goals of the individual forming the trust. For Californians who desire to avoid having their property go through the probate process, the revocable living trust is a very popular option.
Revocable living trusts are a form of trust that allows the creator of the trust to still alter some of the terms of the trust after it has been created (unlike other trusts, which cannot have their terms altered subsequent to creation). The essential structure of any trust applies to a revocable living trust, consisting of the grantor or creator of the trust, the trustee who is charged with managing the underlying assets and the beneficiary or beneficiaries who will receive the assets once the grantor passes away.
Those who choose to create revocable living trusts are taking assets that would normally be subject to the probate process and divesting themselves of officially owning those assets. In this way, as with any trust, the value of the trust creator's personal property is decreased below the threshold that triggers probate, which is $150,000 in California. It is important to note that avoiding probate is not the same as avoiding estate tax, which must be dealt with separately.
Living trusts are an excellent option for those who are creating an estate plan but still want to leave flexibility in their plan for significant life changes or change of heart regarding certain provisions in the estate plan itself. If you believe that creating a trust may be the right choice for you and your goals, an experienced estate planning attorney can assist you with creating the perfect estate plan document to meet your needs, while ensuring that all the potential legal pitfalls of creating this important document are avoided.
Source: Findlaw, "Revocable Living Trusts in California," accessed Oct. 14, 2016