Should I wait until retirement to make a trust?

Delaying the creation of a trust until retirement can seem logical – perhaps assets will be more defined, or the need more apparent. However, proactively establishing a trust *before* retirement often provides significant advantages in terms of estate planning, asset protection, and overall financial control, and it’s a question many face when considering their future security.

What are the benefits of creating a trust sooner rather than later?

Many people believe they have plenty of time to address estate planning, but life is unpredictable. Creating a trust while you’re younger and healthy ensures your wishes are documented and can be implemented smoothly, even if unforeseen circumstances arise. Furthermore, establishing a trust early allows for a longer period of asset growth *within* the trust, potentially minimizing future estate taxes (though California doesn’t have a state estate tax, federal estate tax is still a consideration for larger estates). Around 47% of American adults do not have a will, let alone a trust, highlighting a significant gap in preparedness, and many are unaware of the benefits of trusts beyond simply avoiding probate. A trust isn’t just about death; it’s about *lifetime* planning and control. Consider this – a trust can help manage assets if you become incapacitated, avoiding a costly and public conservatorship proceeding.

How does a trust help with incapacity planning?

This is a key benefit often overlooked. A properly funded trust allows a designated trustee to manage your assets if you become unable to do so yourself due to illness or injury. This avoids the need for a court-appointed conservator, which is a public and expensive process. The “California Prudent Investor Act” guides trustees in making sound investment decisions on your behalf, ensuring your financial well-being is protected. Imagine a scenario: Old Man Tiberius, a retired carpenter, spent years building his savings. He put off creating a trust, thinking it was only for wealthy individuals. When a sudden stroke left him incapacitated, his family was forced to petition the court for conservatorship. The legal fees and court delays were substantial, and the process was emotionally draining for everyone involved. A trust could have prevented this entire ordeal.

What about the costs of setting up a trust – are they justified?

The cost of establishing a trust varies depending on the complexity of your estate and the attorney’s fees. However, the costs are often outweighed by the benefits, especially when compared to the expenses of probate. In California, formal probate is required for estates over $184,500. Statutory fees for executors and attorneys are percentage-based, meaning the larger the estate, the higher the fees. These fees can quickly erode the value of your assets. Moreover, a trust avoids the public record aspect of probate, offering privacy and potentially preventing disputes among heirs. Consider the example of Ms. Eleanor, a successful artist. She delayed estate planning, assuming her estate was straightforward. Upon her passing, her estate went through probate. The process dragged on for over a year, costing her heirs a significant sum in legal and court fees. A trust would have streamlined the transfer of her assets, saving time and money.

What types of wills are valid in California, and how does a trust differ?

In California, you can have a formal will – signed and witnessed by two people at the same time – or a holographic will, which is entirely handwritten and doesn’t require witnesses. While wills are simpler to create initially, they lack the ongoing management and asset protection features of a trust. A trust is a more comprehensive estate planning tool. Furthermore, all assets acquired during a marriage are considered community property, owned 50/50. This offers a significant tax benefit known as the “double step-up” in basis for the surviving spouse, meaning the cost basis of the assets is adjusted to the fair market value at the time of death, potentially reducing capital gains taxes. A trust allows you to specifically direct how these community property assets are distributed, ensuring your wishes are honored.

Don’t wait until retirement to address your estate planning needs. A trust can provide peace of mind, protect your assets, and ensure your wishes are carried out, both during your lifetime and after your passing.

Contact Steven F. Bliss ESQ. today at (951) 412-2800 to discuss your estate planning needs and learn how a trust can benefit you and your family.

Don’t leave your legacy to chance – plan for tomorrow, today!