Trusts are one of the most popular estate planning tools used in California. They help add control, privacy, and serenity to an individual with assets that they care deeply about. Taking the time to create a trust, especially with the aid of a California trust lawyer, can also help save money on taxes and probate fees.

However, trusts also come with their own potential disadvantages, depending on what goals you are trying to achieve for your own estate. By better understanding how a trust could disadvantage your estate situation, and the value that a California trust lawyer could add to the trust process, you can feel better informed on what decision to make for your own estate planning needs.

Most Commonly Cited Disadvantages of a Trust

Complexity and Cost of Establishment

A trust is much more complicated to develop than a standard will. It requires many details that outline very specific instructions on how the trust will operate when the time comes. While complicated, it is all necessary information that needs to be clear.

Having a California trust lawyer to assist in this measure can make a great difference in how fast the process is completed and how confident you are in the merits of the trust. However, some people still find that the complexities of a trust do not outweigh the value added.

Ongoing Maintenance and Administration

Once you establish a trust, it is not finished. It will likely require ongoing management to reflect your wishes as circumstances in your life change. This can be a huge burden for the trustee, who is responsible for managing all the assets in the trust. They must try to keep records clean while also communicating all these updates to the designated beneficiaries. If you have hired a professional trustee, this could also generate additional costs.

Limited Flexibility

Some people find that changing the terms of a trust can be difficult. This is especially true with irrevocable trusts, which are usually unchangeable. This lack of flexibility is commonly cited as a huge drawback for individuals who want an easier way to reflect the evolution of their wishes later in life.

Potential for Conflicts

It is not uncommon for the details within a trust to create conflict between its beneficiaries. This is especially true if they believe that they were not treated as fairly as the others. Decisions that the trustee makes are also open to the possibility of being contested, which can lead to family disputes or legal challenges. All these issues can cost a lot of extra money.

Privacy Concerns

While trusts are sometimes chosen for their ability to have more privacy, rather than going through a public probate process, there are also scenarios where the trust documents could become public. For example, this can occur during a legal dispute where some of the beneficiaries are challenging the execution of the trust. This can compromise levels of privacy that the trust creator wanted to preserve.

Most trusts are unable to provide complete protection from creditors. This is because creditors often have access to the different assets that might be held within a trust. If they have a valid claim against one of the beneficiaries or the settlor, they could potentially access those assets to settle an outstanding debt.

FAQs

Q: Can a Trust in California Affect Eligibility for Government Benefits?

A: Yes, there are scenarios where a California trust could impact someone’s eligibility to receive government benefits. This is especially true if you are looking to benefit from needs-based programs, like Medicaid or social security income.

Assets that are held in some types of trusts might still be considered a personal asset of a beneficiary, which could be calculated into an individual’s eligibility for these types of government programs. Before applying, it’s critical to connect with a California trust lawyer to better understand how different trusts interact with these programs and plan accordingly.

Q: Are There Different Types of Trusts in California?

A: There are several different types of trusts in California, and all have their own purpose. The two most common are called revocable and irrevocable trusts. A revocable trust can be altered or dissolved by the originator of the trust at any point during their lifetime. This is not true for the irrevocable trust. It is mostly unchangeable once established.

If neither of these types of trusts works for your situation, there are other options, like a charitable trust, special-needs trust, and spendthrift trust, that might better align with your estate planning goals.

Q: Can a Trustee Be Changed Once a Trust Is Established in California?

A: The flexibility to change a trustee will depend on the specific type of trust that was set up. In a revocable trust, the originator of the trust has the capability to change their trustee at any point. However, this option is not available after establishing an irrevocable trust unless all beneficiaries consent to the change or there is a court order to do so.

It’s critically important to understand both scenarios, as it could make you deeply consider who is the most appropriate person in your life to be a trustee.

Q: What Happens If a Trust in California Is Contested?

A: If a trust becomes contested in California, it will enter a formal legal process, where it will be reviewed and resolved in court. Some common reasons why someone might contest a trust include:

• An allegation of undue influence
• A lack of capacity
• Questions about how the trust was executed

Any challenge to a trust’s authenticity can create a long and costly legal battle, which could also offset some of the value that an individual would receive from the trust.

This is why it’s incredibly important to work with a California trust lawyer. They can ensure that a trust is properly set up and administered to avoid the possibility of it being contested in the future.

Contact Sweeney Probate Law Today

If you are wondering more about the advantages and disadvantages of a trust, contact us today. We are estate planning professionals who can explain all your options in great detail. Our team at Sweeney Probate Law can help you make the most informed decision on how to take care of your assets and family.