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California Living Trust Forms – Irrevocable & Revocable

A California living trust is a document that enables an individual to manage their assets both during their lifetime and after death while avoiding the probate process. The person establishing the Trust (the Grantor) can place their personal property and real estate within the Trust so that it may be distributed directly to a Beneficiary upon the Grantor’s death. With a Revocable Trust, the Grantor may act as the Trustee and therefore manage their assets during their lifetime. An Irrevocable Trust designates all of the Grantor’s assets to an alternate individual; this type of Trust permits the Grantor no control after the Trust has been created yet offers tax advantages over its counterpart.

LawsCalifornia Probate Code, Division 9 (Trust Law)

Will (Last Will and Testament) – Used to indicate how property and other assets will be distributed after an individual has died. Unlike a Living Trust, a Will is subject to the costly and time consuming probate process.

Types

Irrevocable Living Trust – An Irrevocable Trust may not be altered after it has been created unless permission from the Beneficiary has been received. This Trust shields the Grantor from any estate tax that would normally be implemented and eliminates their liability from the potential income tax that would be generated by their assets.

Revocable Living Trust – The Grantor may alter a Revocable Trust at any point after it has been established. Additionally, the Grantor may act as their own Trustee and gain income accumulated by their assets.

Individual Roles

There are several roles involved in a Living Trust:

Grantor (or “Settlor”) – Person forming the Trust and the owner of all assets placed in the Trust.

Trustee – In charge of managing the trust and distributing the Grantor’s belongings, real estate, and other assets to the Beneficiary. The Grantor often designates him/herself as the Trustee (with a Revocable Trust).

Successor Trustee – Should the initial Trustee die or become incapacitated, the Successor Trustee will have the responsibility of handling the Grantor’s assets.

Beneficiaries – Individual(s) to receive the Grantor’s assets after the Grantor has died.

How to Make a Living Trust

The creation of a trust in California must be done in accordance with the Division 9, Part 2, Chapter 1 which requires that the Grantor of a trust be competent at the time of creation. The form must name the Grantor as well as the Trustee, Successor Trustee, and the Beneficiaries. Following that, an account of the assets placed within the trust should be made. If there is real estate involved in the trust, in accordance with Section 15210, it is not valid unless the title to the property is changed at the County Recorder of Deeds. Although it is not legally mandatory for a trust document to be notarized, but could help prove authenticity should it be challenged.

Motor Vehicles – It’s best to create a Bill of Sale when placing a motor vehicle in a Trust. Note that all parking/toll violations reported to the California DMV must be paid before a vehicle can be transferred to a Trust.

Real Estate – Use a California Deed when placing real estate in a Trust. The Deed will need to be filed with the County Recorder’s Office (see this guide for more information).

Websites – The Grantor must contact their registrar (e.g. GoDaddy) to alter their administration and contact information so that it will be in the name of the trust.

Do I Need a Living Trust?

As stated under Section 13050 of the California Probate Code, if the Grantor has less than $150,000 in personal and real property, the heirs may be able to bypass the probate process with the use of a Small Estate Affidavit (Form DE-310). The difference with a Living Trust is that if the Grantor has less than $150,000 in personal and real property, he or she will be able to specifically define which heirs will receive property. However, those with large estates are still encouraged to create a Living Trust.

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