Why do you need a Trust in California?

Executing a Trust can be one of the most important estate planning decisions any person or family can make.  Funding a Trust changes ownership of assets in ways that allows for ease of management and transfer upon the passing of the people involved in the Trust.  

When most people open bank accounts or purchase homes, they title them in their own names.  For example, when Joe Smith buys a house, the title on the deed might state “Joe Smith, an unmarried man.”  If Joe Smith wants to sell or transfer the house, he needs to sign a new deed.

However, if Joe Smith has passed away or become legally incapacitated, then he can not sign this document or any other needed to manage or transfer assets.  In those situations, another person will need to petition the Court to be appointed as a Personal Representative for the Estate Of Joe Smith, either through Probate or Conservatorship.  Then, the Personal Representative can sign any documents needed to manage or transfer a house or other assets.  This process is lengthy and expensive.

However, if Joe Smith has executed the Joe Smith Trust, then this process can go much smoother.  First, Joe Smith signs documents transferring the house and any other assets into the trust.  Now, instead of having the titling on the assets be just “Joe Smith,” the owner is listed as “Joe Smith, Trustee of the Joe Smith Trust.”  This slight language change might seem minimal, but it makes all the difference in the world.

Now, the Trust owns the assets.  The Trustee is managing the assets on behalf of the Trust.  In most situations, people who create Trusts appoint themselves as initial Trustees.  As such, they are managing the assets for their Trust on their behalf.  It makes minimal real world difference.  However, if Joe Smith has passed away or become legally incapacitated, managing or transferring the assets is much easier.  

The Trust would list a new Trustee (named the Successor Trustee).  This person can assume control over Trust assets by re-titling the assets in their name per the Trust’s instructions.  If the Successor Trustee is Jill Smith, the assets would now be titled as “Jill Smith, Successor Trustee of the Joe Smith Trust.”  Jill Smith can then execute documents to transfer or manage assets.  This process is much more efficient and less costly than having to go to Court.  

Trust law can be complicated.  The Law Offices Of Matthew B. Talbot is here to help assist you during what can be a trying time.  Please call us at 925 322 1763 to set up a free 30 minute consultation.