Nobody likes to think about what arrangements should be in place when they are no longer here. But the reality is that if we don’t take this responsibility seriously it can lead to more stress to our likely already distressed loved ones.
But with 68% of Americans not having any estate planning in place, the consequences of not getting your house in order are all too commonplace.
One option for protecting our assets is to have a trust. But what is a trust? And what are the benefits of having one?
Our deep-dive will fill you in on all you need to know.
Table of Contents
What Is a Trust?
A trust is a legal means to transfer all or some of the control of your estate into the hands of a person or an organization.
For many asking “What is a trust?” they may be surprised to know that you can be the main trustee for your own estate. People often do this and appoint a successor trustee to look after their affairs if they are unable to for health reasons, etc. Yet, in most cases, it is common for people to choose a bank or even a legal firm for this weighty responsibility.
Once a trust becomes official it comes into effect. This is unlike a will that comes into effect after death. For this reason, it is important for the trustor to transfer all assets included in the legal documentation into the name of the trust. If this step is not completed it can lead to further complications down the road.
What Are the Responsibilities of a Trustee?
The main responsibility of a trustee is to ensure that any beneficiaries receive what has been stated by the trustor, the person to whom the trust belongs, should they pass away.
In addition, it is their responsibility to manage and maintain what is included in the trust. While the trustor is alive this is not always necessary. But a trustee needs to be ready to fulfill this role should it be required.
This may seem like a small task, but having possessions in a trust adds an additional layer of challenges that those involved should be aware of.
Take, for example, selling a house that is in a trust. As you can imagine, it is slightly more complicated than the usual procedure. If you would like to learn more about that in particular you can find more details about how to do this on SellersAdvantage.com
For this reason, you should give much consideration to who to appoint as a trustee. Whoever you choose needs to be responsible, proactive, and be able to demonstrate complete dedication to instructions found in the trust.
The Advantages of Having a Trust
So why would someone choose to have a trust in California over a will?
Privacy is one reason. According to California law, if an estate has assets of more than $166,250 a court will need to oversee the execution of the will, known as probate. Once this happens the details are on public record.
For those of us who prefer to keep our financial matters private, this is a major disadvantage.
Trusts also allow for the added comfort of knowing that your affairs are in order should you become incapacitated in any way.
Trusts Provide Peace of Mind
As we have seen regardless of whether a trust is for you or not, they provide a vital We hope our run-through of the in’s and outs have answered any lingering questions for those of you who were wondering “What is a trust?”.
For more comprehensive breakdowns be sure to check out the other great content we have on our site!