Like many Americans, you may think that trust funds are mostly for people with substantial wealth. However, if you own a home or other real estate in California, a trust may benefit you and your family even if you only have a modest estate.
Financial planners often recommend living trusts for middle-class families. This type of revocable trust allows you to maintain control of assets in the fund during your life while ensuring that property passes more easily to beneficiaries after your death.
1. Avoiding probate
One of the biggest benefits of setting up a living trust is avoiding a potentially lengthy and expensive probate process. Assets in a living trust do not have to go through probate. In addition to allowing for an easier transfer of property to loved ones, avoiding probate can mean avoiding court fees, executor pay and other probate costs that can add up to a significant amount.
2. Maintaining family privacy
When an estate passes through probate, specifics about assets and gifts to beneficiaries become part of the public record. By contrast, transferring assets through a living trust keeps details about your finances private.
3. Protecting against incapacity
At some point in the future, you may no longer have the capacity to manage your finances on your own. A living trust allows you to name a trustee and/or backup trustee who can administer your assets according to the terms you outline when you create the trust.
Finally, a living trust keeps your future options open. Whether you want to remove assets from the fund, change the trust’s terms or choose a new trustee to manage your assets, you can do so whenever you choose.