Living Trust


The centerpiece of sound estate planning is the Revocable Living Trust. It’s an incredibly cost- and time-effective means by which we spare our heirs from uncertainty and maximize their benefits. Beginning with an introduction, this article will highlight some of the main aspects of the living trust:

I.  Introduction to the Revocable Living Trust 

II. Living Trust Mechanics (How does the living trust basically work?)

III. Living Trust: What is Revocability? 

IV. Do I need a Living Trust? (The answer may differ for non-homeowners) 

V. The Living Trust Package (With a link for further reading on the documents that accompany the living trust)


I. Introduction to the Revocable Living Trust (also known as an inter vivos trust)

A primary means of estate planning is creation of a revocable living trust.  You can cancel, amend or revoke this important instrument, which you create while you’re (still) living.  A trust is a means of bypassing probate, an expensive and time-consuming process). Probate is the proceeding wherein the probate court presides over distribution of the departed’s real and personal property; due to inherent costs and complications, probate exacts a high toll. It depletes a decedent’s estate, delays distribution and deprives heirs from inheritance; it postpones opportunity to timely transfer assets. Yet, timely cost-effective writing of a living trust averts that burden.

Here’s an illustration of how a revocable trust comes into play:

Say Papa didn’t pay for a trust (around $1,500-$2,000).  Papa passes; his home’s valued at $500K (that’s San Diego dollars; it implies a modest estate).  Sonny wishes to sell passed-away Papa’s property, but sale is stalled a whole year in San Diego’s Superior Court (probate division).  When Papa’s place is finally sold,  the probate process will have plucked from its proceeds some twenty-six thousand dollars (yes, $26,000).  A living trust would’ve spared Sonny that exorbitantly excessive expense.  Why is probate so costly?  Its costs are calculated as a percentage of  property’s value: 4% against the first $100,000, 3% against the next $100K, 2% against the following $100K (up to $1M), etc.  Fees are assessed against gross value (rather than equity), which means mortgages don’t diminish probate’s cut.  Percentages become doubled upon probate-court appointment of an executor and an executor’s attorney (both entitled to fees).

Not to preach, Papa, but your people could’ve kept much more had you placed your living place in a living trust.

II.  Living Trust Mechanics

The revocable living trust designates a trustee to manage it; that trustee is most often you, the creator or trustor of the trust.  This means you neither relinquish nor surrender ownership or management of property.  After all, a living trust’s raison d’être is to secure your right to control assets in life and in death.  The trust will designate a successor trustee to manage it upon your death or if you become incapacitated (physically or mentally unable to conduct affairs).  You appoint a person you trust instead of leaving gaping question marks that beg probate court oversight.  Upon your passing, the successor trustee will distribute property to your beneficiaries in accordance with your trust directives; the successor trustee may also retain assets in the living trust for future distribution per your instruction.

III. Living Trust: Revocability

What if I make a mistake?  That’s okay. One may trust that a revocable trust is revocable: it can be canceled, amended, edited or updated. You can readily change essential elements or perform routine additions, for example if you acquire new real property. Because humans err and things change, a revocable living trust is the standard; its counterpart, the irrevocable living trust is not favored. Mostly. [1]

IV. Do I need a Living Trust?

Yes (for the homeowner)   If  you’re a homeowner (and your home will pass to heirs), you need a Revocable Living Trust. Creation of a living trust entails transferring title to assets (e.g. your home) from a person to the trust; so the Evergreen Terrace home heretofore titled to Homer becomes the property of The Homer Living Trust 2014. When Homer passes, Homer’s home (that is, The Homer Living Trust home) [2] bypasses probate straight to Homer’s heirs. As we saw with Papa, this straightforward transfer saves time and money.

If your home or other real property isn’t transferred to your living trust, your beneficiaries will be shortchanged by incurring exorbitant probate fees and suffering needless delay. It’s pretty simple in California. If you own a home, you HAVE to have a trust.

Yes (for the non-homeowner) Even if you’re not a homeowner, you need estate planning and may need a revocable living trust.  Probate (in California) is triggered by assets valued in excess of $150,000.  Even if you’ve yet to acquire significant assets, you may soon and a trust in time saves nine. It sets up the framework for ready inclusion of future assets by way of routine amendment or through the features of a pour-over will.

If you’re a parent, you don’t need real property or sizable assets to have a living trust. The revocable living trust can include detailed instruction on children’s care, and preferences for guardianship. With regard to guardianship, the notarized document is not binding on the court, but it does make clear your wishes to help minimize controversy.

V. The Living Trust Package:

There are additional compelling reasons for creation of a trust. Namely your welfare and fulfillment of preferences for health care and money management after death AND during life (remember: it’s a living trust).

These vital matters are encompassed in the Living Trust Package. If your estate doesn’t demand a trust (we’ll only recommend what’s merited), a similar package (what we call a “Living Estate” Package) affords the same protections as the Living Trust Package (just without the trust). [3] 


The irrevocable living trust spares estate taxes, but the common estate (valued below $5.25 million per person) is exempt from those taxes anyway.

[2] Or some other spiffy sobriquet; creative minds know a name of a trust needn’t conform to conventional verbiage. Though naming Homer’s trust the “Pink-Sprinkled-Donut Trust 2014” may be silly (albeit delicious), it’s still a valid name.

[3] In the absence of minor children, real estate and meaningful assets, one will still seek the provisions provided for within the Living Trust Package (simply sans the trust itself). The Will, Durable General Power of Attorney and Advance Healthcare Directive are indispensable elements of sound planning, whether or not you have assets. These instruments are fully provided for within a Living Estate Package planned out to fulfill personal preferences for welfare, health care and money management.
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