California estate planning often includes creating a living trust. You might choose a living trust so your family can avoid probate court when you die. The probate court leaves the distribution of your assets in the hands of the state. But a living trust puts you in control.
How does a living trust work?
A living trust is a document legally recognized by the state of California. It provides instructions on asset distribution to your beneficiaries upon your death. A trustee of your choosing manages the assets for you and your beneficiaries.
You choose between an irrevocable and a revocable living trust. The difference is that an irrevocable living trust is permanent and doesn’t allow changes. On the other hand, you can modify a revocable trust based on changes to your estate planning needs. There are several steps to creating any type of living trust.
Choose assets
You decide which assets to include in your trust. You might have commercial real estate, bank accounts, artwork or other valuables to include.
Choose a trustee
A trustee is a person or organization that manages and distributes your assets based on the instructions in the trust. Carefully weigh the choices before choosing a trustee.
Create the trust
A trust is a legally binding document that names your beneficiaries and includes instructions for asset distribution. To avoid mistakes that might invalidate the trust, you might speak with an estate planning professional beforehand.
Transfer assets
You have to fund the trust, which means transferring assets into the trust. For example, a piece of real estate will need a new deed that transfers the property title into the trust’s name.
Finalize the trust
The living trust becomes valid once you sign in front of a notary public. The trust isn’t valid unless it’s notarized.
The steps above might differ, depending on the complexity of your circumstances. You might consider getting professional advice to help make sure you create a valid California trust.