If you are setting up an estate plan in California, you may discuss the option of including a living trust. This is a legal arrangement that authorizes you to transfer many of your assets to someone else, known as a trustee. You can appoint some else to be your trustee or you can be your own, but the terms stay in place after your death unless otherwise specified.
The first type of living trust is a revocable living trust. According to SmartAsset, a revocable trust is more flexible and can be changed at any time. This means assets can be moved into the trust or from it as you see fit. The trust can also be revoked at any time if necessary.
The second type of living trust is an irrevocable trust. This is a permanent trust, and even you are not allowed to remove assets once they are placed in the trust.
People put many types of assets into a living trust, including the following:
• Family heirlooms
• Bank accounts
• Mutual funds
A living trust can also include bonds, stocks, stamp or coin collections, artwork, antiques and other securities. An IRA or 401K cannot be included in the trust, but you can change the beneficiary, so the money goes right to the trust when it becomes available.
While there are no specific rules regarding who needs a living trust and who does not, you should consider a few things when making your choice. Does the size of your estate and the number of dependents you have make up for the cost of maintaining a trust? If not, then a will may be sufficient, although a trust provides peace of mind and extra protection for your assets.