Setting Up a Trust

Setting up a trust is one of the best ways to protect your loved ones and your assets. However, trust law can be tricky; a simple misunderstanding or oversight can leave your estate vulnerable or unintentionally burden your beneficiaries. That’s why you need to work with a skilled estate planning attorney. 

Davidson Estate Law has been helping Bay Area families in Oakland, Walnut Creek, Berkeley, San Francisco, El Cerrito, and Alameda with their estate planning needs for over 25 years.  

Whether you’re trying to protect your children’s inheritance or wish to simplify the transfer of assets for your heirs, reach out today to learn how a trust could benefit you and your family. 

What Is a Trust? 

A trust is a legal arrangement that allows you to manage your assets during your lifetime and distribute them to your chosen beneficiaries after passing. It involves three roles: 

1. Grantor - The person who creates the trust and places their assets into it. 

2. Trustee - The individual or entity responsible for managing the trust. 

3. Beneficiary - The person(s) who receive the trust's assets according to its terms. 

Trusts are highly versatile tools that provide privacy, reduce legal complications, and provide greater control over how your wealth is distributed. 

Why Set Up a Trust? 

Many people assume that a will is enough for estate planning, but creating a trust can provide additional benefits, depending on your circumstances. Here are a few reasons to consider setting one up: 

• Avoid probate: Unlike a will, a trust bypasses the California probate process, enabling your beneficiaries to receive assets more quickly and without court involvement. 

• Keep your estate private: Probate is a public process, but a trust keeps your financial affairs confidential. 

• Control your legacy: Want to ensure minors or dependents receive their inheritance at certain milestones or under specific circumstances? A trust gives you the power to dictate these terms. 

• Plan for incapacity: If you cannot manage your finances due to illness or injury, a trust lets the trustee step in and handle responsibilities on your behalf. 

California Laws Governing Trusts 

California has several laws that regulate how trusts are created and managed. Here’s what to keep in mind before you begin: 

Types of Trusts 

• Revocable: These can be altered or canceled during your lifetime and are often called living trusts. 

• Irrevocable: Once established, these cannot be changed. They offer strong protection against creditors but involve surrendering control of the assets held in trust. 

Validity Requirements 

The trust must be in writing, clearly identify the assets being included, and express the grantor’s intent. Like a contract, it requires signatures to become legally binding.  

Tax Considerations 

California trust income may be subject to state taxation. Additionally, irrevocable trusts often involve more complicated tax rules like estate or gift taxes. 

Distribution Rules 

California courts may intervene if a beneficiary believes the trustee has not acted in their best interests. Trustees have a fiduciary duty to act with care and loyalty when managing the trust. Mismanagement of assets or failure to comply with the trust terms can result in legal consequences. 

How to Set Up a Trust 

Setting up a trust may seem overwhelming, but the process can be straightforward with good guidance. Here’s a step-by-step breakdown: 

Step 1. Decide on the Kind of Trust  

Determine whether a revocable or irrevocable trust suits your needs. Consider your financial situation, goals, and the level of control you wish to retain. 

Step 2. List Assets  

Create a comprehensive list of assets—such as real estate, investments, savings accounts, or valuable personal property—you’d like to place in the trust. 

Step 3. Choose a Trustee  

Select someone you trust to manage the assets. This could be a family member, a close friend, or a professional fiduciary. Some people also opt for co-trustees, separating roles to minimize conflicts of interest. 

Step 4. Name Your Beneficiaries  

Clearly identify every individual or organization you’d like to benefit. Specify distribution terms, such as ages for inheritors or percentages for asset division. 

Step 5. Draft the Trust Document  

An attorney can prepare the legal paperwork to codify your trust. The document will define the roles, distribution plan, and rules for managing the assets. 

Step 6. Fund the Trust  

Transferring assets into the trust ensures it functions as intended. For example: 

• For real estate, you must change the property deed to list the trust as its owner. 

• For financial accounts, you may need to contact your bank or brokerage firm to retitle the accounts in the name of the trust. 

Step 7. Keep It Updated  

Over time, your circumstances may change—you might sell property, acquire new assets, or have new family members. Update the trust regularly to reflect these changes. 

Common Questions About Trusts 

Here are answers to some of the most frequently asked questions about trusts. 

Do I Need a Will if I Have a Trust?  

Yes, a will serves as a backup for assets not explicitly included in your trust. Most attorneys include a "pour-over will" in estate planning packages, which move any remaining assets into the trust upon your passing. 

Can I Set Up a Trust Without a Lawyer?  

While DIY estate planning tools exist, they can be risky. Even minor errors in drafting could invalidate the trust or complicate its implementation. Consulting a lawyer ensures your trust is comprehensive and legally enforceable. 

How Long Does It Take to Set Up a Trust?  

It depends on the complexity of your estate. Some trusts can be finalized in weeks; others take months, especially if asset transfers are involved. A lawyer can help streamline this process for you. 

Estate Planning & Probate Attorneys in Oakland, California 

Making long-term plans for your family is one of the most meaningful decisions of your life. For over 25 years, Davidson Estate Law has been the Bay Area’s go-to law firm for compassionate and knowledgeable estate planning services. From drafting wills and creating trusts to assisting with probate matters, we’re here to guide you.

If you're located in Oakland, Walnut Creek, Berkeley, San Francisco, El Cerrito, or Alameda, call today to secure your family’s financial future.