When looking into options regarding areas of estate planning, you may wonder whether setting up a trust could fit your needs. Many individuals benefit from creating various types of trusts, especially if they have certain goals they wish to achieve. Creating a trust could help you work toward avoiding probate proceedings for your surviving family or possibly reduce estate taxes that may be leveled against your estate after your death.
A variety of trust types exist, and, depending on your circumstances, any of them could help you carry out the actions you desire. However, you may first wish to determine whether you would like to create a revocable or irrevocable trust. These distinctions could apply to the more specific type of trust you decide to create; therefore, you may wish to understand the difference between revocable and irrevocable trusts.
A revocable trust could help you exempt certain items from the probate process, if you hope to achieve such an action. Additionally, a revocable trust allows you to remain in control of the assets you place into that trust. Therefore, if you change your mind regarding any of the terms of the trust or any assets held within that trust, you could make your desired changes at any point during your life.
As you will likely want someone else to take over the trust at the time of your death, you can name a co-trustee in addition to yourself, or you could appoint a successor trustee who would take over once your control ends upon your death.
Estate taxes typically still affect the items in a revocable trust, which you may wish to take into account when making your decisions.
With an irrevocable trust, your assets are also protected from probate as you typically relinquish control of the assets you place into the trust, and your named trustee takes over. Once the trust goes into effect, however, you cannot make any changes to or terminate the trust.
If you consider it a goal to reduce the amount of estate taxes your family may face, an irrevocable trust could prove immensely beneficial. Because you place certain assets out of your control, the assets no longer count as part of your estate. Therefore, they cannot face taxation as other aspects of your estate might.
Additionally, if someone levels a lawsuit against you during your life and gains awards from your estate, the trust protects assets placed in it from any settlement. This information may also play into your considerations during the estate planning process.
Because you will likely need to explore a variety of options and how each type of trust could affect your situation, you may wish to gain advice on which type could most benefit you and your estate. Speaking with an experienced California attorney could provide you with valuable information.