Trusts are legal vehicles that allow a third party, or trustee, to hold assets on behalf of a beneficiary or beneficiaries. All trusts have three main aspects including the grantor, the beneficiary, and the trustee. The grantor is the person or entity that created the trust, the beneficiary receives or benefits from the assets held in trust, and the trustee manages the assets of the trust and distributes them to beneficiaries according to the grantor’s wishes.
A revocable trust, often called a “living” trust, may be amended or revoked. This includes naming different beneficiaries or trustee(s) and having the option of transferring assets out of the trust. Revocable trusts are primarily used to avoid court-supervised probate proceedings after the grantor passes away. If you, the grantor, can no longer manage your finances due to incapacity or death, your trustee takes over and manages assets according to the terms of the trust, and the trust becomes irrevocable.
Beyond strictly an estate planning tool, irrevocable trusts can be a tax planning tool. Since some irrevocable trusts remove all incidents of ownership of the assets from the grantor, the transfer thereby can effectively remove the trust's assets from your taxable estate. Tax rules vary by jurisdiction, but generally the grantor can't receive those benefits if they are the trustee, which means the grantor won’t effectively have control of the assets. The assets held in the trust can include business interests, investment assets, cash, life insurance policies, cryptocurrencies, and more.
Tresp Law, APC has two locations in Southern California and a team of experienced attorneys with exceptional knowledge about estate planning, estate administration, and trust and probate litigation. Contact Tresp Law, APC today for a free consultation by calling us at 858-248-2779 or email us here.
