Trusts are legal documents that make up an estate plan. Within the pages of a trust, the trustee’s assets and final wishes are written out to help the executor carry out the outlined plans upon death or illness. There are currently two popular types of living trusts used in Southern Orange County, each with specific rules, restrictions and purposes.
Revocable Trusts
Mission Viejo CA attorney services often create revocable trusts for clients who want to create a comprehensive estate plan. This type of document is established by the trustee while they are still alive. Since the trustee maintains full control over the trust, they can also change the terms of it at any time. For example, they can change their health directives, asset lists and beneficiaries. They can also dispose of the trust at any time, for any reason. Two downsides of a revocable trust are that it will not necessarily protect assets from creditors or reduce taxes.
Irrevocable Trusts
An irrevocable trust is created when the trustee creates the document and then relinquishes control of it to the named executer right away. Once legally established, the trustee cannot change or dispose of the trust. Some of the reasons for creating this type of trust include reducing taxes, shielding assets from creditors and applying for government assistance. The most common reason to create this trust is to avoid paying taxes on an asset’s income for the duration of the benefactor’s life.
A 2017 study showed that less than half of American adults have a trust or even a will. Nearly 80 percent of Millennials do not have either type of document, potentially complicating a tragic death even further. Without a trust, their estates go into probate, in which a judge decides who will inherit which assets and what will happen to the minor children.
