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When is it time to start a trust?

On Behalf of | Jun 15, 2020 | Trust Administration |

Trusts are not something you only have to think about when you’re drafting an estate plan. A trust can be a practical tool for managing how you use your money. If you’ve accrued a certain amount of capital, you may want to think about how you can use that money to make the lives of your loved ones a bit easier and to take care of those needs in the most financially secure way.

Deciding the best timing for you and your family

If you know what people in your life you want to place as beneficiaries to your estate, it may be better to start sooner rather than later. A trust is typically more expensive to set up and manage than a last will and testament, but it can provide numerous benefits for you and your loved ones. Living trusts (also called revocable trusts) are those that you create while you’re living and can be effective tools for ensuring your money is used as you see fit. Here are some of the ways in which a trust can help you manage your estate:

  • Living trusts: Living trusts allow you to distribute and manage your money while you’re still alive, as well as after you die. By creating a trust now, you have the option of adjusting it later. 
  • Trust management: While you’re alive, you can remain both the grantor of the trust (the person who creates and then places assets into the trust) and the trustee (the manager of the trust). After your death, a trust can provide specific instructions for how its beneficiaries can receive and use that money.
  • Probate: One advantage of a living trust, as it relates to estate plans, is that it circumvents the probate process for your heirs. Though there isn’t any inheritance tax in California, a trust can reduce the size of your estate with certain tax benefits depending on your situation. In California, estates over $150,000 may be subject to the probate process regardless of a trust being present.
  • Privacy: By avoiding the probate process, the parts of your estate (and its distribution) that might be publicly disclosed remain private and protected.

Timing is critical, but not without support

Even a modest estate can create many legal complications when it comes to distributing your assets to beneficiaries. If you’re considering making a trust for the benefit of your family and other love ones, you need to contact an attorney with experience in setting up living trusts.