There are a variety of different ways a person can set up their estate plan in the state of California. This can depend on what the individual wants and needs out of their plan. One way that a plan can be prepared is with the creation of a trust. In order to understand how to do this properly, it is important to retain the services of an experienced California estate planning attorney for assistance.
What is a Trust?
The individual who creates a trust is known as a trustor. The person that receives the assets within a trust is known as a beneficiary. However, there is a third-party who handles the management of the trust for the beneficiary. This person is known as a trustee. Simply put, a trust is an arrangement that allows a trustee the right to manage the assets within it on behalf of the beneficiary.
Types of Trusts
When a person wants to create a trust, it is important to be aware of the different types of trusts. Each one has its own purpose in order to better suit certain situations. This allows a trustor to create one that is geared towards the person or entity that will inherit it in the future. The types of trusts that can be created in California can include:
- Revocable Trust: This is a popular choice, as it can be modified, changed, or terminated at any moment without the permission of the beneficiary.
- Irrevocable Trust: This requires a trustor to nullify their rights when it is created, meaning they have no more rights to the trust and cannot change or terminate it at all.
- Irrevocable Life Insurance Trust: This allows a trustor to remove their life insurance from their estate so that a beneficiary is free from any taxes placed on the policy.
- Testamentary Trust: This is created as part of a will and only becomes effective after the trustor passes away.
- Charitable Trust: There are two types of charitable trusts. A charitable leads trust allows the individual’s choice of charity to receive interest from their financial gift for a period of time. When it ends, the remaining may go to family or other beneficiaries. A charitable remainder trust allows charities to receive the trust’s assets at the end of its term. Until the end, the donor will receive interest on the gift.
- Special Needs Trust: This can be created for a loved one with a disability to ensure they receive the financial support they need throughout their life.
Contact our Firm
Working with an experienced estate planning attorney, such as Jaci Feldman of the Woodland Hills, California, Law Office of Yacoba Ann Feldman, will ensure that you are taken care of when you need it most. Contact The Law Offices of Yacoba Ann Feldman to schedule a consultation today.