What Is A Trust?

We’ve talked about why probate isn’t such a great deal for most people in the state of California and because of that, a lot of people end up doing our third option. Option three is to do a trust. The easiest way to look at a trust is that a trust is like a box. You set it up, you put your stuff into it, and the box owns the stuff, but you on the box. It’s kind of one step removal of ownership. The reason that’s useful is when you’re gone, the trust continues to exist. You will have designated people who can step up to control the box and everything in it, following your instructions. Whether that’s to take everything out of the trust and give it to the people were supposed to receive it, or keep it in the trust for the benefit of those people.

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Of course a lot of times we have clients come into a small children, and it does make a lot of sense to dump a bunch of property and money into the lap of a five-year-old for example. So with a trust, you can make it so that all of those things are held in the trust that person’s benefit and not distributed until some triggering event, such as when they reach a certain age, graduate from college, or whatever else you think is most appropriate.

Everything that’s inside of a trust is considered outside of your probate estate. The idea is that you set up a trust, you put everything in it, you put in your house, you put in your bank accounts, you point your life insurance at it, you point your investment accounts at it, and everything else that you need to make sure that the trust is properly funded. At the time that you pass away, you don’t have a probate estate. The threshold for going into probate is if you have any assets with a gross value of more than $150,000 or if you own any real estate with a gross value of more than $50,000. If you take all that stuff you put it into your trust, then at the time you pass away, your state doesn’t hit those thresholds and so you don’t have to worry about going into a probate.

Summary

Title

What Is A Trust?

Description

The easiest way to look at a trust is that a trust is like a box. You set it up, you put your stuff into it, and the box owns the stuff, but you on the box. It's kind of one step removal of ownership. The reason that's useful is when you're gone, the trust continues to exist.