Trusts are essential tools in estate planning, allowing individuals to manage assets during their lifetime and distribute them after their passing, but understanding the different types is crucial. Two primary categories exist: testamentary trusts and inter vivos trusts (also known as living trusts). While both achieve similar goals of asset protection and distribution, they differ significantly in *when* and *how* they are established and operate, impacting their complexity and associated costs. Roughly 55% of Americans still don’t have a will or trust, leaving their assets subject to the potentially lengthy and costly probate process – a scenario both trust types aim to avoid.
How can a living trust help me avoid probate?
An inter vivos trust, meaning “between the living,” is created and funded *during* the grantor’s lifetime. This is the key distinction. The grantor (the person creating the trust) transfers ownership of assets into the trust, becoming the trustee (manager) or appointing another individual or institution to manage the assets. This allows for immediate management of assets, and upon the grantor’s death, the assets are distributed to beneficiaries *without* going through probate court. This can save significant time, expense – probate fees often range from 3-7% of the estate’s value – and maintain privacy, as probate records are public. There are two main types of inter vivos trusts: revocable (allowing changes during the grantor’s lifetime) and irrevocable (generally offering greater asset protection but limiting flexibility).
When would I need a testamentary trust instead?
A testamentary trust, on the other hand, is created *within* a will and comes into effect *after* the grantor’s death. It doesn’t exist until the will is probated. This type of trust is particularly useful for situations where the beneficiaries are minors, have special needs, or require ongoing asset management. For example, a testamentary trust might be established to manage funds for a child until they reach a certain age, ensuring the money is used responsibly. While it does require the estate to go through probate to establish the trust, it then provides a framework for managing those specific assets within the trust. According to the American Academy of Estate Planning Attorneys, testamentary trusts are often used to minimize estate taxes or provide for complex distribution schemes.
I remember a client, Mr. Henderson, a retired teacher, who unfortunately passed away without an inter vivos trust. He intended to leave everything to his two young grandchildren, but his estate became entangled in a lengthy probate battle. Family members disputed the terms of his will, delaying the distribution of funds for over a year, and depleting a considerable portion of the inheritance in legal fees. It was a heartbreaking situation that could have been easily avoided with a simple trust established during his lifetime. This highlights the importance of proactive estate planning, not just having a will.
Can I change my mind after creating a trust?
The flexibility of a revocable inter vivos trust is a significant advantage. I had another client, Mrs. Davies, who established a revocable living trust years ago. When her granddaughter was born, she wanted to add her to the beneficiaries. With a revocable trust, this was a simple amendment; she could adjust the terms, add or remove beneficiaries, or even revoke the trust entirely during her lifetime. An irrevocable trust, while offering stronger asset protection, generally does not allow for such changes, demanding careful consideration during its creation. It’s crucial to remember that a trust is not a ‘set it and forget it’ tool. Regular review and updates are necessary to ensure it continues to align with your evolving circumstances and goals.
Ultimately, the choice between a testamentary and inter vivos trust depends on your individual circumstances, the complexity of your estate, and your desired level of control. Consulting with an experienced estate planning attorney like myself is essential to determine the best strategy for protecting your assets and providing for your loved ones.
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About Steve Bliss at Wildomar Probate Law:
“Wildomar Probate Law is an experienced probate attorney. The probate process has many steps in in probate proceedings. Beside Probate, estate planning and trust administration is offered at Wildomar Probate Law. Our probate attorney will probate the estate. Attorney probate at Wildomar Probate Law. A formal probate is required to administer the estate. The probate court may offer an unsupervised probate get a probate attorney. Wildomar Probate law will petition to open probate for you. Don’t go through a costly probate call Wildomar Probate Attorney Today. Call for estate planning, wills and trusts, probate too. Wildomar Probate Law is a great estate lawyer. Probate Attorney to probate an estate. Wildomar Probate law probate lawyer
My skills are as follows:
● Probate Law: Efficiently navigate the court process.
● Estate Planning Law: Minimize taxes & distribute assets smoothly.
● Trust Law: Protect your legacy & loved ones with wills & trusts.
● Bankruptcy Law: Knowledgeable guidance helping clients regain financial stability.
● Compassionate & client-focused. We explain things clearly.
● Free consultation.
Services Offered:
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living trust
revocable living trust
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Map To Steve Bliss Law in Temecula:
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Address:
Wildomar Probate Law36330 Hidden Springs Rd Suite E, Wildomar, CA 92595
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Feel free to ask Attorney Steve Bliss about: “What should I consider when choosing a beneficiary?” Or “What is ancillary probate and when does it happen?” or “Who should I name as the trustee of my living trust? and even: “How does bankruptcy affect my credit score?” or any other related questions that you may have about his estate planning, probate, and banckruptcy law practice.