Estate planning comprises a number of different topics that all have a common goal. In addition to wills, powers of attorney and estate administration directives, many California residents find that trusts offer a convenient method to transfer assets. Although there are many different types of trusts, the two most common are revocable trusts and irrevocable trusts.
Revocable trusts are executed during the lifetime of the property owner. With this type of trust, title to the property is transferred to the trust while the individual is still living. Additionally, the individual transferring the property remains as the trustee and has the ability to discontinue the property’s inclusion in the trust at will. The benefit of this type of trust is that, upon the individual’s death, the property is not subject to probate because it is owned by the trust.
An irrevocable trust is one in which the property owner transfers title of the property to the trust. However, this trust is set up so that no one, including the original property owner, has the ability to discontinue the property’s inclusion in the trust. In other words, once the property becomes a part of the trust, it remains a part of the trust.
A large part of estate planning is deciding which method to transfer assets will offer the most protection in a given situation. In deciding which, if any, type of trust is appropriate, the California resident will want to consider issues such as beneficiaries, estate administration and probate. In many instances, creation of a trust will make the estate planning and administration process easier.
Source: FindLaw, “Types of Trusts“, Accessed on Nov. 28, 2016