What Are the Different Types of Trusts in CA?
Contrary to popular belief, executing a last will and testament is not the only essential part of an estate plan. In many cases, establishing a trust is equally if not more important. Certain trusts can serve the essential function of a will while providing additional benefits, and other types of trusts may be useful, and even vital, depending upon your financial and familial circumstances. Read on for an overview of the different types of trusts in California. If you need assistance with a California estate planning matter, call a seasoned Claremont trusts & estates attorney at Blasser Law for advice and representation.
Revocable vs. Irrevocable Trust
Trusts are established by the trustor, the party that transfers funds or assets to the trust. Trusts can be either irrevocable or revocable. Revocability has a number of consequences, including with regard to taxation and the legal status of trust assets.
A revocable trust is created while the trustor is still alive; it can be modified, amended, terminated, or revoked. The trustor can alter the terms of the instrument or terminate the trust at any time, without the consent of the beneficiary.
An irrevocable trust cannot be altered or terminated. The trustor revokes and nullifies their rights to the trust upon establishment, maintaining no right to change or terminate the trust during their lifetime.
Testamentary vs. Living Trust
A living trust is created and given effect while the trustor is still alive. Typically, upon the death of the trustor, the assets are passed to named beneficiaries. Passing assets via a living trust as opposed to a will can often be used to avoid probate.
A testamentary trust, on the other hand, is created to benefit the trustor’s heirs after the trustor passes away. Testamentary trusts are typically created in conjunction with a will and do not go into effect until the trustor dies.
Special Needs Trust
A special needs trust is a special type of trust created for the benefit of individuals with disabilities. When established correctly, the beneficiary can receive disbursements from the trust without affecting their ability to receive benefits from needs-based governmental programs such as Medicare and Medicaid. Special needs trusts must satisfy certain conditions for disbursements to maintain this special quality.
First-party special needs trusts are established for the benefit of the trustor. Third-party special needs trusts are established for the benefit of another person, such as a child, grandchild, or other family member in need of special care.
Charitable trusts are established to distribute assets to a non-profit organization or charity upon the death of the trustor. A charitable trust can be established to provide interest to the charity for a set period of time and then transfer the trust’s principal assets at the end of the trust term. The ultimate party to receive the assets can be the charity itself, another charity, or another party, such as a family member.
These are only a small sampling of the different kinds of trusts you might benefit from utilizing. Call a knowledgeable California trust & estates attorney at Blasser Law for assistance drafting a will, executing a trust, establishing a guardian, or otherwise for help planning your California estate. The diligent and thorough Claremont estate planning legal team at Blasser Law is ready to assist clients with any trust & estate matters in the San Gabriel Valley or Los Angeles County. Contact our estate planning office at 877-927-2181.