Estate planning has its own vocabulary that consists of words like wills, living wills, medical directives, probate and trusts, just to name a few. Trusts allow one to keep the details of an estate private and can simplify the process of transferring assets in California. Understanding trust preparation and probate and the impact on the transfer of one's estate can be key to successful estate planning.
Probate is done in the courts and, as such, becomes a matter of public record. It is a process involving the validation of a will, a possible search for additional beneficiaries, the payment of taxes and other issues to resolve the estate. It can be particularly onerous if there is no will. A trust allows one to be very specific about who will receive what and can eliminate the need for probate. Depending on how it is done, it can also reduce the estate's tax liability.
There are different types of trusts, and each one has different characteristics. A revocable trust, or living trust, allows one to designate funds, but the owner retains control until death, at which time the trust becomes an irrevocable trust. Creating an irrevocable trust while one is still alive can be a way to reduce estate taxes as the funds are not under one's control and so are not part of the taxable estate.
Trust preparation can be very complex but can be a powerful tool in creating an estate plan in California. A professional can review one's financial situation and go over possible scenarios to help establish a plan that accomplishes one's estate goals. Having such a plan in place can provide great peace of mind knowing one has done his or her best to provide for loved ones.