Created while you are alive, a revocable living trust lets you control the distribution of your estate. Ownership of your property and assets is transferred into the trust. You can serve as trustee or you can appoint another to serve as trustee. If you serve as trustee, you must appoint a successor to serve as trustee upon your death.

Properly drafted and executed, a revocable living trust can avoid probate and delays as the trust owns the assets not the deceased. Consult with your attorney and/or CPA before deciding a revocable living trust is the right choice for you.

• A husband and wife can establish a joint revocable living trust.
• While the trustor serves as a trustee or a co-trustee, a separate tax return is not required for the trust.
• The revocable living trust allows the trustee to buy, sell and finance assets just as before.
• In the event of incapacitation, management of the living trust passes to the successor trustee without the necessity of a court-appointed conservator.
• The living trust can be cancelled or changed at any time before death or incapacitation.
• Probate - including multi-state probate - is avoided when assets are held in a living trust. (Often probate takes 9 to 12 months.)
• Privacy. When a decedent dies with a living trust, the provisions of that trust usually do not become public.
• Litigation is discouraged by a living trust.
• A married couple with a living trust can reduce or eliminate federal estate taxes by setting up an Exemption Trust. While both are alive the assets remain in the revocable living trust. Upon the death of a spouse, the trust is split into two trusts: the survivors trust and an exemption trust. (For tax purposes, the surviving spouse and the exemption trust are two separate taxpayers.)

• A living trust will cost more to set-up than an estate plan with only a will.
• A trust agreement with a new will must be set-up.
• Transferring assets into the living trust will require paperwork and incur costs not encountered with a less elaborate estate plan.
• Handling an Exemption Trust may require extra effort from the surviving spouse.
• Some lenders may require property held in a living trust be removed from the living trust to refinance the property.

Common Terms

Trustor: Creates the revocable living trust and transfers major assets into it. (A husband and wife can have a joint living trust or each can have their own living trust.)
Trustee: Manages the living trust's assets.
Beneficiary: Receives the assets of the living trust.
* Initially the trustor, trustee and beneficiary are the same person(s).

Law Office of Karen A. Stevenson
13122 Stern Avenue
La Mirada, California 90630
Office: 562-947-8997
 

The information provided is not intended as legal or tax advice and may not be relied on for purposes of avoiding federal tax penalties.  All individuals, including those involved in a real estate transaction, are advised to meet with their tax and legal professionals.

Charlie Dunn, CRS
Prudential California Realty
11306 183rd Street, Cerritos, CA 90703
Direct Line: 562-430-4007
Make Yours a "DunnDeal" 

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