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What Is a Revocable Trust and How It Works in California

On Behalf of | Dec 13, 2022 | Trust Administration |

Living trusts are a helpful estate planning tool that can allow you to avoid the frustrations and fees associated with probate. Probate is the court process required to distribute a deceased individual’s property if the deceased individual had no trust and no established beneficiaries for certain property. Probate is always public and can often be expensive and lengthy.

If you are considering estate planning and building a trust in California, you may have stumbled across an option known as a revocable living trust. A revocable trust offers several advantages that you can enjoy, but before you make your decision, you should understand how this type of trust works.

To help you determine whether a revocable trust is right for you, we’ve covered the definition of a revocable living trust, the advantages of a revocable trust and how a revocable trust works in California.

What Is a Revocable Living Trust?

A trust refers to a fiduciary relationship that involves a trustor giving a trustee the right to hold an asset’s or property’s title for the benefit of the beneficiary. The trustor’s assets are literally titled, deeded or otherwise assigned to be held in trust, rather than in the trustor’s individual name.

By putting assets in trust, the trustor ensures his or her assets are protected and ultimately distributed as instructed by the trustor. All trusts are revocable or irrevocable, which are trusts that can be changed or cannot be amended, respectively. Beyond these broad categories, there are several different types of trusts that can be used for estate planning.

These are the parties involved in a trust:

  • Trustor: A trustor, also often referred to as a “trustmaker” or a “grantor,” is a party that establishes and opens a trust. Trustors can be individuals, couples or organizations.
  • Trustee: A trustee is a firm or individual who executes a trust. The trustee is the “manager” of trust assets, holding and administering the assets or property for the benefit of the beneficiary or beneficiaries. A trustee has an ethical and legal duty — or a fiduciary duty — to act in the best interest of the trust beneficiaries. A fiduciary is an organization or individual who acts on behalf of another with a duty to preserve trust and good faith.
  • Beneficiary: The beneficiary is the person who benefits from the trust.

Revocable trusts are trusts in which provisions can be canceled or amended according to the grantor’s wishes. An irrevocable trust, on the other hand, cannot be changed and assets cannot be removed for any reason.

If you choose a revocable trust, you can remove assets, change instructions or terminate the trust. Your beneficiaries can also avoid probate court or conservatorship proceedings.

Advantages of a Revocable Trust

Advantages of a Revocable Trust

Establishing a revocable trust can offer you several advantages. Even if you have a smaller estate, you can enjoy these benefits:

  • Privacy: While probate is public, operations under a revocable trust are private. The terms and contents of the trust, as well as the process of passing assets through a trust, are not public. If you want to shield your loved ones from the public eye, you can use a revocable trust to privately pass your assets on to your family or charitable beneficiaries.
  • Flexibility: Since you create, fund and manage your revocable trust while you are living, you are able to amend it. You can change how the trust works and what assets it contains. You even retain access to your assets if you need these funds, and you can dissolve your trust if your life circumstances change.
  • Protection: If you experience health issues or incapacitation occurs, a successor trustee is able to take charge and take on the fiduciary responsibility for managing the trust’s assets for the grantor. Unlike a will, which only becomes relevant at your death, a living trust allows you to protect your assets during your disability.
  • Lack of probate: One of the major advantages of a revocable trust is that you can avoid probate. The probate process can be expensive and time-consuming, and the process may take away from your ability to grieve in peace. Rather than going through probate, the assets in a revocable trust are easily passed to the beneficiaries when the trustor dies. Avoiding probate means your family can save on court fees and access their inheritance more quickly.
  • Limited challenges: The possible grounds and standards used for challenging a trust or a will are similar but not exactly the same. Generally, it tends to be more difficult for a dissatisfied relative to challenge your trust. Because the trust process is private and you can add more customized language to the trust regarding challenges to its terms, you can generally limit the ability of beneficiaries to challenge distributions or the terms of the trust.
  • Asset management: A revocable trust gives you control over your assets. With a will, heirs typically receive their inheritance following the probate process and can do what they wish with their inheritance. A trust, on the other hand, can be written with requirements and conditions that allow the trustee to manage the assets on behalf of the beneficiaries if they experience difficulty handling their own affairs or they are too young. The trust also allows for a certain amount of money to be regularly distributed to a beneficiary.

To get these benefits, a revocable living trust may be the best possible estate planning tool.

Contact Us at Barulich Dugoni & Suttmann Law Group

Contact Us at Barulich Dugoni & Suttmann Law Group

The above benefits apply in California. Those in California looking to tackle estate planning should consider the benefits of a revocable living trust and contact an attorney to help them make an informed decision for their situation.

At Barulich Dugoni & Suttmann Law Group, our team of experienced attorneys specializes in handling cases regarding tax law, real estate laws, estate planning and probate. We can assist you with every aspect of wealth planning and management and take a strategic approach to minimize your risk.

Though our website provides general information, this information cannot constitute legal advice. If you want advice on a specific legal issue, you should reach out to an experienced attorney. Contact us today at Barulich Dugoni & Suttmann Law Group to learn more about estate planning.