Living Trust 101

Summary Of Estate Planning Documents Included With Your Trust Created By CA Paralegal Services, Inc.


            A living trust is a private agreement where the distribution of assets under the terms of the trust is not subject to the publicity given to wills in probate proceedings.

The complete flexibility of a revocable living trust means that one can be drafted to suit your individual needs and family situation.

            When you create a living trust you can act as your own trustee, so there are no management fees or loss of control. You can change or modify the trust terms at any time, change beneficiaries, add or delete assets held by the trust without tax consequences. 

            A living trust does not complicate the management of your assets. While protecting your property within a living trust, you can do whatever you can do now with your assets and property. You can buy, sell, borrow, make gifts, etc. With a living trust you retain control over all your property and assets during your lifetime, and you determine distribution of your estate after your death. Since a living trust is revocable, it has no income tax consequences during your lifetime; no separate tax return is even filed, and all trust income is reported under your social security number.

            With a living trust, you are also appointing someone else (a professional, a trusted friend, or a family member) to manage the assets in your trust for your benefit in the event of your incapacity (e.g., Alzheimer's, a stroke, an accident, etc.) and, because the assets are in a trust, no court administered conservatorship will be required. Under a living trust, you have the successor trustee of your choice ready to step in and take over your affairs until you recover, or for the remainder of your lifetime.

            For married couples, the estate tax liability which would otherwise be due at the death of the survivor can be greatly reduced or completely eliminated by proper planning. This is particularly important in states that impose their own estate tax, and do not provide the "portability" currently available under federal law. This planning can be accomplished in a living trust (although it can also be accomplished through wills, this would require a separate probate at the death of each spouse). How much can be saved depends on the size of the estate and the estate tax laws at the time of the surviving spouse's death. At the same time, the trust can also insure that the estate of the first spouse to die will ultimately go to his or her children (or heirs) even though the surviving spouse is provided the lifetime economic benefit of all assets and has complete management and control over the entire trust.

            A living trust allows you to AVOID PROBATE.

            Probate is a court procedure that is required if your assets are distributed without a will, under a simple will or under a will with a testamentary trust. In court probate proceedings, the court changes the legal ownership of your property when you die. During probate the court must determine the validity of your will and supervise the payment of all your debts and taxes as well as the distribution of your probate estate to the people you name in your will. This process may take six months to a year or longer and is a matter of public record.

            Assets that you leave to your heirs by a will goes through probate, but property passed through a living trust does not. With a living trust you can avoid the delay in the distribution of your estate entirely; the assets of your estate can be distributed to your designated beneficiaries immediately upon your death.

            With a trust, minor beneficiaries can have a trustee can manage and invest the trust funds free of the costs and restrictions that arise when a court must appoint and supervise a guardian of the property until the beneficiary comes of age.

            Additionally, with a trust, you can continue the management of a beneficiary's assets to whatever age you desire; certainly beyond age 18 (the age at which ALL guardianships must terminate).

            The management of a beneficiary's assets can include disbursement of assets and/or funds in increments, according to the directions you put in the trust (e.g., 1/3 distribution at age 25, 1/3 distribution at age 30, and the balance at age 35). Of course, the trustee can use any or all of the trust principal for the benefit of the beneficiary during this period. Also, if there is any question of management skills or capacity of the beneficiary, or to insure that your estate does not go to a son-in-law or a daughter-in-law, the trust can continue for the child's lifetime and then pass to the child's issue at his or her death. This will also keep your assets in your family rather than having them be subject to attachment by the state for medical treatment. You can protect the assets from any potential of dissipation of the entire estate while providing for the beneficiary's needs, as determined by you. With a living trust these trusts are already in place at the time of your death and will begin immediately for the benefit and protection of your beneficiaries.

            When property passes through probate, you incur executor's fees, attorney's fees and court costs, all of which can be quite substantial depending on the size of your estate. These are fees generally set by state law and are usually based entirely on the size of the estate being probated rather than on the amount of time and work involved. There may also be additional extraordinary expenses of probate (i.e., tax returns, life insurance, etc.).

            All of these fees and expenses can significantly reduce the estate to be distributed to your beneficiaries.

            With a living trust these fees and costs can be greatly reduced. Your assets are transferred immediately to your designated beneficiaries outside the court system and in accordance with the directions specified by you in the trust agreement. Costs of administration of a living trust are minimal and are generally based on the actual time and/or services required.

            With a living trust you should create a "pour-over" provision in your will which adds other assets to the trust at your death. Thus, all of your assets will be in one vehicle managed by one trustee under a single trust agreement.

            When an estate goes through probate, the court freezes the assets and asks anyone to come forward and contest the will if they please. Creditors are invited to come forward with their claims and heirs may challenge certain bequests under the will if they are disappointed because they received less than they had anticipated.

            With a living trust, however, assets are not frozen and can be distributed to your designated beneficiaries immediately without the highly technical requirements of probate disposition.

            The disgruntled heir would have to hire an attorney and file a civil suit against each beneficiary. The trust assets can also be protected from judgment creditor's claims and/or lawsuits filed against you or your beneficiaries. In addition, you can protect a distribution to a beneficiary from being reached by the beneficiary's creditors, from alimony attachments, from Medi-Aid spenddown requirements, and even from the beneficiary him/herself.

            Creating a living trust can furnish needed attention to your assets. A living trust permits you and/or your appointed trustee to take timely advantage of investment opportunities and. conversely, to dispose of investments no longer desirable. With a living trust, you set up the machinery to provide a continuity of management at death and the immediate shift of income from yourself to your beneficiaries at your death.

            If you own real property in another state, that property will have to go through probate in that state (known as an "ancillary probate"), in addition to a probate in California of residency. With a living trust you can avoid these additional probate proceedings and have that property pass to your beneficiaries immediately according to the terms of your trust.

            The many benefits that you will experience with a living trust should not be ignored or put off; they are too valuable to you and to your beneficiaries.


Your revocable living trust is an agreement between the “Trustor” and the “Trustee” to hold the trust assets for the benefit of the beneficiary of the trust. The Trustor is the person setting up the trust and the Trustee is the person who manages the trust. In order to form the trust, the Trustor transfers property to the Trustee to hold in the name of the trust. Since this is your trust, you are the Trustor and you are the initial Trustee of the trust. The trust provides that, for your lifetime, you are also the sole beneficiary of the trust. These points are covered in the Recitals and in Article I of the trust.


Under certain, very limited circumstances, this Declaration could possibly be helpful after your death if you neglected to transfer a valuable asset to your Trust; it merely confirms that you intended to include all of your assets within your Trust. This Declaration is not a substitute for the requirement that you must transfer (“title”) your assets into the name of your Trust in order to avoid a potential probate of those non-Trust assets.


The Certification sets forth the existence of your Trust and your unlimited right as Trustee to deal with any account or asset held in the Trust. The Certification acts as a short version of the Trust Agreement and gives any third party all the information required from the Trust without getting into the dispositive provisions, which are (and should remain) confidential.


This Assignment acts as the method of transferring all of your tangible personal property assets (generally such assets do not have a title or an ownership document) to your Trust (thereby avoiding the necessity or possibility of having to probate these assets); this Assignment also transfers your digital assets and/or rights (including any “social media”, on-line accounts and/or email accounts) to the Trust.


This is an optional form and can be completed at any time (you should make copies of it for future use). This is where you can designate specific items of your tangible personal property (i.e., your “things”) to go to certain people at your death. For example, “I give my diamond engagement ring to my daughter MARY”; “I give my stamp collection to my grandson MICHAEL SMITH”; etc. You should NOT, however, use this form to designate cash gifts or specific trust assets. You can add to or change this form as often as you wish without having to amend your trust or execute a codicil to your Will; if you do add or delete a distribution, you should date and initial the addition or deletion (or complete a new form and destroy the old one).

6.     WILL

Your Will is commonly referred to as a “pour-over” will. Under the terms of the Will, any assets held by you which have not previously been transferred into your Trust will be added to the Trust at the time of your death (but may be subject to a probate administration in order to do so). The purpose of this is to make sure all of your assets (whether in the Trust or not) are distributed according to the dispositive plan set forth in the Trust).


This is your “general power of attorney” which is primarily intended to give your named agent the power to deal with any non-trust assets in the event of your incapacity. Please be aware that this document does give your agent broad powers to dispose of, sell, convey and encumber your real and personal property; if you have any concern about granting such broad powers, please contact me at once.


The Advance Directive gives your named Agents the power to make medical decisions, sign consents and/or releases with hospitals and/or doctors [it conforms to the new Federal Laws (known as “HIPAA”) with regard to the releases]. It also acts as your “living will” for end-of-life decisions.


The HIPAA Authorization and Waiver is a “stand-alone” document to authorize your health care providers to release information concerning your otherwise confidential medical information to the individuals you have designated to act on your behalf in the event of disability and to any other individuals who you would also want to have such access. Please note that state law requires that the form be generated in “14 point type-face”.


These Instructions give you the opportunity to specify how you wish to have your remains be dealt with (i.e., cremation or burial); to provide details of any prior arrangements and to designate the persons to carry-out your wishes.

What You’ll Need To Get Started

It will be easier to make your living trust if you have this information on hand:

1.         An inventory of the property you want to leave through your living trust,

2.         A list of beneficiaries,

3.         A list of alternate beneficiaries,

4.         A list of young beneficiaries who might require property management until they become adults,

5.         Your first and second choices for successor trustee, and

6.         Your first and second choices for your healthcare agents.

Contact CA Paralegal Services, Inc. to schedule your free consultation.




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            More and more individuals are putting their assets into revocable living trusts, which are completely flexible and broadly adaptable arrangements for management, protection and distribution of a family's assets.  

            A living trust is created during your lifetime and is funded with most or all of your assets by simply re-titling the assets to yourself as trustee.

            A living trust is LIVING in that it takes effect immediately. You continue to enjoy all the present benefits of your assets without any changes in your ability to control them.

            A living trust is revocable during your lifetime, which means that its terms are changeable and assets in the trust can be re-transferred to your name if desired without adverse tax consequences.