When it comes to planning an estate, people have a multitude of options and strategies and various legal documents and instruments available in order to achieve their estate planning goals. With so many options available, it can be confusing to many people in California on how best to proceed. For instance many people may be confused about what exactly a trust is and in what situation a trust can be a useful estate planning tool.
Trusts fall into two basic types for estate planning purposes. One type of trust is known as a living or inter-vivos trust. This type of trust is created while a person is still alive. The other type of trust is known as a testamentary trust, which is established after a person’s death.
A trust is a separate legal entity which is used to hold assets to accomplish various estate planning goals. One common aim of a trust is to reduce estate tax liabilities. Trusts may also allow for more efficient management of assets and cash in the case of someone becoming disabled. Sometimes people use trusts to ensure a certain amount of funds or assets are donated to specific philanthropic causes.
On the other hand, a trust is only one legal instrument available for estate planning in California. What other estate planning documents a person utilizes will depend upon his or her situation. Also, everyone’s goals are different and will require varying estate planning tools to achieve those goals. Therefore, understanding estate planning rules and regulations thoroughly will be essential in implementing a successful estate plan.
Source: insideselfstorage.com, “Financial Planning for Self-Storage Owners: Using a Trust to Guarantee Your Legacy“, Steven C. Anderson and Jerry Jones, May 27, 2015