Posted by When we began to consider passing on property and wealth to children or family members, "Living trust"It may inevitably be mentioned. In the last course of insurGuru©️ Wealth Inheritance Academy, we explained it in conjunction with the materials from the Bar Association"What is a living trust?How much will it cost?". Today we will answer that while we are alive, set upWhat is the use of a living trust?What are the benefits for me?What is the biggest difference between a will and a will?
What is the use of living trust for me?
After setting up a lifetime trust, even if we unfortunately lose our ability to take care of ourselves,Living trustThis contract can also guarantee asset management,Will indeed proceed according to our wishes.When setting up a lifetime trust, we can either let us act as trustees or appoint others to act as trustees.
If we unfortunately lose our capacity or do not intend to take care of the assets in this trust ourselves, we can appoint a trustee to manage the trust fund for us.
After our death, the trustee (similar to the executor) will count our assets, pay off debts, claim debts and pay taxes, and distribute and manage assets in accordance with our instructions.
The biggest difference between a living trust and a will is thatThe lifetime trust does not need to be executed under the supervision of the court, let alone the permission of the court.
When we lose our ability to take care of ourselves, what is the use of a lifetime trust for me?
If we ourselves areLiving trustThe trustee, if we unfortunately lose our mental capacity, then the successor trustee appointed by us will manage the trust assets for us.
If our assets have not been put intoLiving trustHere, other people need to manage our assets.How to manage our assets depends on whether our assets belong to common assets or separate assets.
Marriage and exclusive property situation
If we are married or complete the registration of cohabitation, the assets earned by you and me or your spouse or common-law partner while living in California will be regarded as common property.
*(Note: According to the Federal Income Tax Regulations, income earned during the cohabitation period is not regarded as common property).
On the other hand, the property we owned before marriage or registration of cohabitation, orThe gifts or inheritance we receive during marriage or cohabitation are our exclusive property.
In California, as long as our spouse or common-law partner has the ability to manage common property, they can manage it.If we own individual property (for example, we are unmarried, or have not completed the registration of cohabitation), when we unfortunately lose the ability to take care of ourselves, the agent designated by the power of attorney (also known as the trusted agent) can manage our assets.
If we do not make any prior planning at this time, such as setting up a living trust, our respective assets will enter the Probate Court's estate protection (ConservatorShip) process.
Guardian procedures for probate
In the guardian process, the judge may rule that we have lost the ability to manage finances or fight the effects of fraud or misconduct, and will appoint a guardian to manage our assets.
The guardian will report to the court regularly.
The guardian may be someone we previously designated.If we do not specify it, it may be our spouse, registered common-law partner, or other family member.
If no one of the above-mentioned related persons can serve as our guardian, the public guardian will manage our assets.
When we have difficulty or inability to manage our assets, the guardian will manage the assets for us. This is the main purpose of the guardian program.
However, the guardian procedure is a public matter in nature, and because the court has actually intervened, it may have to pay a large amount of money.
In addition, and well-managedLiving trustIn contrast, the guardianship procedure may be less flexible in the management of real estate or other rights and interests.
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