Marin Elder Law Attoneys Explain Trusts and Suggest Actions to Take

A trust is a legal entity like a partnership or a corporation.  The "operating instructions" for it are in the Trust Agreement.  You set up a living trust by signing a Trust Agreement and transferring assets to the Trustee of the trust. 

"Living trust" refers to a trust that goes into effect while the Trustor is living.  Usually it is revocable.

Living Trust Definitions:

  • An individual who sets up the trust is called the Trustor or the Settlor or the Grantor (these are interchangeable)
  • The person or institution that administers the trust and manages the trust assets is called the Trustee.
    • In California, the individual who sets up a living trust, the Trustor, can and usually does serve as initial Trustee. 
  • Banks and trust companies that act as Trustees are referred to as "corporate Trustees." 

Living Trusts let grandparents transfer assests to their family"Revocable Trust" means that the Trustor can change the provisions of the Trust Agreement or terminate the trust at any time during his or her lifetime.  At death, it serves as your Will.

An irrevocable trust cannot be terminated or amended except under very unusual circumstances.. 

A revocable trust usually becomes "irrevocable" at the Trustor's death. 

A trust terminates once all trust assets are distributed, all the instructions have been followed.

Setting Up A Living Trust:

A revocable living trust is usually set up by an attorney or lawyer after a lengthy conversation with the Trustor.  The conversation is NECESSARY to setting up a trust that actually does what the Trustor wants done. 

Good estate planning lawyers take care to understand the goals and intentions of the
Trustor(s) and accurately reflect these in the operating instructions that are the Trust Agreement.  They also make suggestions such as giving ideas that the clients had not considered or did not know about.

The Trust Agreement provides for the time while the Trustor(s) are living, and what happens at the Trustor's or Trustors' death. 

  • For the period during life and while the Trustor (you) is the Trustee (you) and is competent, the Trust is virtually invisible.  You retitle your assets so they are owned by you as Trustee.  The Trustor (you) have total control of your assets, how they are invested, how they are spent, to whom they are given.  Your income tax filing requirements are unaffected. Putting real property into the Trust does not increase your property taxes.
  • For the period after death, the Trust Agreement operates like a Will. It says who gets what. 
    Here is an example:

    At the trustor's death, the trustee shall distribute the trustor's piano to his nephew, Samuel Barber, and all his other musical instruments to his alma mater, the University of California. 

    At the trustor's death, the trustee shall distribute the remainder of his estate to his son, Leo Nolan Andersen, outright and free of trust, but if Leo does not survive the Trustor, to California University and the California Academy of Science, in equal shares.

As setting up a living trust can have such a profound effect on your property rights and tax obligations, it is imperative to work with an experienced estate planning attorney.

When you are ready to plan for your living trust, please call
The Law Offices of Julia P. Wald