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Trust maintenance costs factor into California estate plans

On Behalf of | Feb 20, 2014 | Trustees Executors & Fiduciaries |

Trusts can have significant benefits for Los Angeles individuals with defined goals for estate assets. During estate planning, the creation of a trust must be balanced with the costs of establishing the document and maintaining the trust, in the present and the future.

Let’s say you’ve set aside assets in a California trust to fund the education of your grandchildren. The trust may require management for years, even decades after your death. When you calculate the costs of the trust, you must include any fees to carry the trust forward including anticipated trustee, legal and tax professional expenses.

Over time, the trust may be depleted to the point where annual maintenance costs are no longer worth the expense. The California Probate Code contains provisions for terminating trusts with principal values lower than $40,000. By dissolving the trust, the extra expenses are eliminated and beneficiaries receive the maximum benefit of the remaining assets.

All trusts are geared toward the interests of beneficiaries. A living trust is one you draft during your lifetime, as opposed to a trust attached to a will that becomes effective only upon death. The trustee or manager of assets owned by the living trust can be you, although you’re free to name someone else to handle the fiduciary duties.

Trusts can be as custom designed as the trustor, the name for a trust creator, desires. Many people choose to place assets in trusts to reduce estate taxes or to keep the assets from passing through probate. Sometimes, a trust is about controlling assets and the ways beneficiaries receive them.

Trusts are not replacements for wills, which are the foundations of estate plans. Trusts act outside what wills are made to do. Whether or not a trust works to achieve your goals depends upon individual circumstances but if you imagine a unique estate plan, there’s probably a trust to help you realize it.

Source: The Herald, “Ending a trust when principal runs low” Lisa Horvath, Feb. 17, 2014

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