California law gives you the freedom to decide how you want your loved ones to inherit your assets after you pass. You can choose to use a will, which would set forth your wishes in a document that becomes effective after your death. Or you may use a revocable living trust as an estate planning tool to manage your assets during your lifetime and provide for loved ones upon your passing. Here’s how the latter works.
Funded revocable trust explained
A funded revocable trust is a legal entity that allows an individual (known as the grantor or settlor) to place their assets into the trust while still retaining control over them during their lifetime. This means that the grantor can add or remove assets from the trust at any time and can also change the terms of the trust as they see fit.
Funding the revocable trust
A crucial aspect of estate planning is ensuring that it functions as intended. Creating a revocable trust doesn’t mean much if it has no assets to manage. To fully benefit from a revocable living trust, you, the grantor, must transfer ownership of your assets into the trust. You do this by re-titling your assets, such as bank accounts, investments, real estate and other property, into the name of the trust.
Benefits of a funded revocable trust
The main benefit of a funded revocable trust in California is that it allows for the avoidance of probate. Probate is the legal process of distributing assets after a person’s death, and can be lengthy and expensive. When someone else takes ownership of your assets, such as a trustee in this case, the court doesn’t have to get involved. This means that your beneficiaries can receive their inheritance quicker and with less hassle.
Moreover, avoiding probate makes the asset distribution process private. Unlike a will, which becomes a public record after your passing, a funded revocable trust keeps the details of your assets and beneficiaries confidential.
A revocable trust is an appealing estate planning tool for many individuals, thanks to the remarkable level of flexibility it provides. If it seems like the right option for you, it’s important to note that properly funding it is as important as creating it. When done right, this trust can take care of your loved ones for generations to come.