The Most Common Types Of Trust In California
There are several ways to protect your assets. You only need to choose which option works for you, your current circumstances, and possible future situation.
Using trusts is one option. These can be a smart way to save money on taxes while also protecting your assets from creditors.
This post will talk about the different kinds of trusts in California, as often handled by our prescreened Laguna Beach Estate Planning Lawyers.
It can be tough to know which sorts of trusts are best for you because there are so many. However, the trusts listed below have brief summaries that you may want to consider:
An RLT is created during the trust maker's lifetime and can be changed or revoked at any moment.
Unlike a standalone will, a trust is not subject to probate, which is advantageous because probate takes time, costs money, and is a public record.
This allows you to make preparations for estate planning while giving you the freedom to change your mind should your circumstances change.
2. Irrevocable Living Trust
An IRT, unlike a Revocable Living Trust, cannot be changed or revoked once it has been established.
Depending on your current circumstance, an IRT might be the better option for you. This is especially if you're worried about possibly becoming incapable of making decisions as you age.
To know which of the two is your best option, contact a Laguna Beach Estate Planning Lawyer to advise you.
3. Marital Share (A Trust)
A Revocable Living Trust (RLT) can be split into two trust shares once the first trust maker dies.
The "A trust" represents the surviving spouse's share for the rest of their life.
4. Non-Marital Share (B Trust)
The "B Trust," sometimes known as a Bypass Trust, is the surviving spouse's part of the inheritance.
Because this trust is irreversible, it is shielded from creditors and predators. This share's assets grow tax-free and are passed down to the eventual beneficiaries.
For more details on the technicalities of A and B Trust, consult with one of our Laguna Beach Estate Planning Attorneys to help you.
5. Charitable Remainder Trust
Looking to give a portion of your assets to charity? You can.
Individuals can also decrease their taxes by distributing assets to beneficiaries and donating the remaining to charity through a charitable remainder trust.
6. Domestic Asset Protection Trust
This is an irrevocable agreement that protects assets from creditors. The trust maker can be the trust's beneficiary, and the funds will still be safe from creditors.
These are frequently used in combination with corporate entities such as limited liability companies (LLCs).
7. Grantor Retained Annuity Trust
A GRAT is an irrevocable trust. The trust maker transfers certain assets to the trust for the benefit of the trust maker's children or close relatives.
The trust should receive annual annuity payments, and the trust assets are nearly tax-free to the beneficiaries of a GRAT.
For more info on filing a GRAT, consult with one of our Laguna Beach Estate Planning Lawyers.
8. Irrevocable Life Insurance Trust
An Irrevocable Life Insurance Trust (ILIT) is an irrevocable trust that owns and is the principal beneficiary of life insurance policies.
Under the present annual estate tax exclusion rate, this can be beneficial for tax efficiency.
9. Qualified Personal Residence Trust
This type of trust is used to hold residential property (whether it be a primary or secondary home).
A QPRT can be used by individuals or families who want to lower the amount of gift tax they pay when transferring assets to a beneficiary.
Bottom-line
There's more to asset protection and estate planning than your last will and testament. All of the trusts listed above have their own advantages and disadvantages, and it's up to you to decide which asset protection strategy works best for you (and your future beneficiaries).
To help you make this crucial (and life-changing) decision, you might need to help of a Laguna Beach Estate Planning Lawyer. An attorney will know the ins and outs of asset protection and will be able to advise you on the best asset protection and planning route to take.
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