A trust document is prepared that identifies the following: the trustors (the persons who are setting up the trust as the trustees of the trust); the trustees (those who are responsible for managing the trust and its assets); and, the successor trustee (the person or entity who will take over management of the trust after the death, resignation, or incompetency of the original trustee).
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A California trust is established when a settlor transfers into trust property for a trustee to administer. The first objective is to determine the purpose of your California trust. After that, you will need to decide what property or assets you want to put into trust, who will benefit, and who will administer the trust.
A California trust is an instrument created to distribute the estate of the trustor or settlor. The process to establish a California trust is very similar to establishing a California Will. The difference being that a trust is effective immediately whereas a Will is not effective until death of the testator. Depending on the size of the estate, there may be tax advantages to establishing a trust that will reduce or eliminate federal estate taxes.
After the trustor (settlor) executes the trust, they transfer their assets to the trust. If this is not done, additional legal work, possibly including a probate of these assets, will be required after the death of the trustor.
Advantages of a California Living Trust
Any assets held in the name of the trust will not need to be probated. Legal fees for probating an estate are usually much higher than fees for administering a trust. Probate can also take a year or longer to complete while administration of a trust can usually be completed in a much shorter time.
If a trustor becomes mentally incompetent, the successor trustee can take control of the trust. This avoid the costs associated with establishing a conservatorship. Conservatorships are often used in situations where someone can no longer manage their own financial affairs or personal care. A conservatorship is a court-supervised proceeding that can involve substantial legal fees.
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