Revocable Living Trust

Revocable Living Trust California

The revocable living trust in California is also called the Family Trust. It is a legal arrangement or document that allows transfer of assets, property and ownership to a trust. This is called ‘funding’.

There are four components in a revocable living trust in California:

  • The grantor is the one who creates the trust.
  • The trustee is the one who manages and distributes the property according to the regulations mentioned in the trust documents.
  • The beneficiary is the one who will benefit from the trust.
  • Trust assets refer to the assets that are transferred into the trust.

Advantages of the revocable living trust, California

Probate free – the legal process of transfer of property after death with reference to a will is called a probate. The revocable living trust in California is useful in avoiding the expenses of probate and other legal proceedings.

Revocable/changeable – as the name suggests, the revocable living trust in California permits changes or alterations to it during the entire lifetime of the grantor.

Preserves privacy – the transfer of assets is allowed to remain private based on the restrictions provided in the living trust document.

Challenges are eliminated – disputes and challenges to the will arising at death of a family member can be eliminated. The trust allows disinheritance to those who challenge the specifications mentioned in the revocable living trust in California.

Differentiation of assets – the trust allows married couples to segregate individual properties from before marriage from those that are acquired together.

Manage continuously – the revocable living trust in California, allows professional trustees to manage acquired wealth over generations even after the grantors death. The number and amount of withdrawals can be limited to gaurdians and special provisions also provided.

Disadvantages of the revocable living trust in California

revocable living trust californiaMaintenance of books/records – assets bought in the future have to be continuously registered with the trust. The documents for trustee powers and duties have to b constantly reviewed. This task is therefore cumbersome.

Property has to be re-titled – all property has to be renamed in the name of the trust. This takes time and additional processing charges.

Planning expenses – lawyers are required to draft a trust. This is a costly affair and can be as high as $2000, based on the complexity of a situation.

Low asset protection – if ownership is retained by the owner, the trust offers minimal asset protection.

Administrative expenses – if an investment advisory or any other professional is sought out in the process of the living trust, additional charges will have to be paid.

Considering both the advantages and disadvantages of the revocable living trust in California, it is evident that it isn’t full proof. Each person needs to assess his/her own circumstances, and create an appropriate plan for themselves. There is no perfect revocable living trust in California that can be applied to all.

Even if a plan has worked for a close relative, it might not work for the other. Individual personal values and financial objectives should be kept in mind when a living trust is formulated. It is recommended by financial advisors to also draft a will to ensure that in case any asset has not been registered, it might be automatically transferred to the revocable living trust in California.