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Does a California estate plan need a revocable living trust?

Legal documents used in estate planning have unique purposes. California advisers usually recommend that everyone creates a will. The same advice may not apply to revocable trusts, depending on individual estate plan desires.

Revocable trusts are most often created to keep estate assets meant for heirs out of probate. A person funds a trust with assets during their lifetime while retaining control of what happens to them.

Assets placed in trusts also tend to reach heirs quickly, since tax waivers are not required before the distribution of inheritances. The ease of asset movement from decedent to heir is especially beneficial for large estates.

Trust terms may be modified. If an individual decides the trust is no longer necessary, the revocability option allows him or her to terminate it.

Income from a trust is taxable to its owner. Assets within the trust are counted as part of an estate. Revocable trusts are also not protected from lawsuits by creditors.

Unlike a contested will in probate, trusts are not public records. Privacy issues are often important to people with significant wealth.

Assets within revocable trusts may be managed by the trustee - the person who created the trust - or co-managed with an agent under a power of attorney.

Extensive planning and a sizeable financial commitment are needed to put together an effective revocable living trust. Added costs include commissions for designated trustees.

Experts say revocable trusts should be used when the expected results are realistically achievable. Otherwise, a trust may not be a wise estate planning decision. Before deciding whether a revocable trust is needed, discuss other estate planning options with advisers to learn what financial advantages they may have that trusts do not.

Retitling and transferring assets into a revocable trust requires a great deal of time. Estate planning attorneys and financial advisers can help individuals smooth the transition and provide effective advice, according to the law.

Source:, "Biz Brain: The benefits of a living trust," Karin Price Mueller, Feb. 18, 2013

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