You have to decide how you want to transfer assets when you are planning your estate, and you have multiple options. If you simply assume that you should use a last will as a vehicle of asset transfer, you may be overlooking more useful solutions.
Most people have heard of trusts, but misconceptions about them circulate. Many individuals are under the impression that you surrender control of assets that you convey into any type of trust. This is not the case.
Revocable Living Trusts
Revocable living trusts can be very useful for a wide range of people. You do not have to be wealthy to benefit from the creation of a revocable living trust.
When you create a revocable living trust, you are called the grantor, trustor or settlor of the trust. The trustee handles the trust administration tasks, and the beneficiary can receive monetary distributions from the trust.
The grantor of the trust can act as the trustee and the beneficiary at first. Because of this arrangement, you do not lose control of the trust while you are alive and of sound mind. You are the trustee, so you direct the actions of the trust, and you can take monetary distributions if you choose to do so.
Look at the name of the trust: it is revocable. You can revoke or rescind the trust at any time, and it would no longer exist. The property in the trust would once again become your direct personal property. This is certainly a great deal of control.
You create a trust agreement at the outset, and in this agreement you name a successor trustee to take over the trust administration tasks after your passing. You also name a successor beneficiary.
After your passing, the successor trustee will follow instructions that you leave behind in the trust agreement and distribute assets to the beneficiary.
These distributions would take place in an efficient and timely manner, because they would not be subject to the legal process of probate.
To provide clarity, we should share some information about irrevocable trusts as well. With this type of trust you do surrender direct personal control of the property, because you cannot dissolve the trust.
These trusts are useful for people who have estate tax concerns, and some types of irrevocable trusts are used for asset protection purposes.
You could also use this type of trust to divest yourself of assets if you are aiming toward Medi-Cal eligibility. Medi-Cal is a need-based government health insurance program that pays for long-term care. Medicare does not pay for long-term care, so many seniors seek Medi-Cal eligibility late in their lives.
Learn More About Revocable Living Trusts
If you would like to learn more about revocable living trusts, ask for our special report. This report is free and can be obtained through the Reports section of this web site.