Singh Law Firm
How to Create a Living Trust in the State of California
Creating a Living Trust in California comes with numerous advantages. Discussed extensively in this guide, the key advantage is skipping over the costly and lengthy probate process. The probate process is notoriously long in California, making the option of setting up a Living Trust even more attractive.
Another advantage of utilizing a Living Trust over any other type of Trust is that you still get to manage and access Trust-owned property and assets during your lifetime (as if they were your own.) They would then pass to your beneficiaries after you pass away.
If you’re interested in setting up a Living Trust, you’ll need to know how. Here are the steps to setting up a Living Trust in California:
1. Take an inventory of your assets
When developing an estate plan, one of the first things you’ll want to do is take an inventory of your assets. Make a list that includes all of your assets, including real property and financial accounts. This will help you map out the size of your estate, and begin thinking about how you want to structure it.
Next, decide which assets you want to transfer into your Living Trust. You’ll likely want to transfer assets such as your house(s), financial assets, and other valuable assets. It’s typically impractical to transfer assets that are easy to sell and depreciate. Also be careful not to transfer assets that would pass outside of the probate process regardless, such as retirement accounts or life insurance policies that already include beneficiary designations.
2. Select your trustee
Once you’ve inventoried your assets, it’s time to choose your trustee. Your trustee is the individual or entity that you name to act as the custodian of your Trust. Their responsibilities include managing assets held in the Trust, administering finances, and distributing assets per the instructions in the Trust.
Living Trusts are unique because you can select yourself as the trustee during your lifetime. This makes sense because you can more easily manage and use your assets transferred into the Trust without having to go through a third party. However, be careful to name your alternative trustee who will step into the role when you pass away. Learn more about selecting your trustee.
3. Designate your beneficiaries
Your beneficiaries are the individuals or organizations who will inherit assets from your Trust. Your trustee will distribute these assets to your selected beneficiaries when you pass away per your instructions.
One of the many advantages associated with a Living Trust is having control over the timing and nature in which your assets are distributed. If you have a reason why you wouldn’t want certain assets passed automatically to a beneficiary, a Trust allows you to set up conditions.
4. Write up your Declaration of Trust
The next step is arguably the trickiest: drawing up your Declaration of Trust. This is because there is no standardized template to follow, but you need to ensure your language is legally correct and binding.
5. Sign your Trust in front of a Notary Public (optional)
The good news is you don’t need to get your Trust witnessed or notarized to make it valid. All you have to do is sign your Trust document and, voila, it’s all done!
You may want to consider the optional step of signing your Trust in front of a notary public to have it notarized. This will authenticate your document and cut down the risk of having the validity of your document questioned later down the line.
6. Transfer assets and property to the Trust
Last but not least, make your Trust functional by transferring your assets into it! You will retitle your property so that it is under the ownership of your trustee. Be prepared to bring your Trust and identification documents to your financial institutions to request the transfer of your assets.
Think Real Estate Benefits do not function as a law firm and do not offer legal advice. Should you have inquiries concerning legal matters, we encourage you to contact our living trust attorney available through Think Real Estate Benefits.
Source: Hicks, P. (2023) Creating a living trust in California - requirements & cost, Trust & Will. Available at: https://trustandwill.com/learn/living-trust-california (Accessed: 29 January 2024).
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