During escrow, lenders and title companies will often ask buyers how they’d like to take title on the property. Most buyers pause, and hesitate, and never think about the tax, financial and legal implications to themselves and their heirs.
Normally, you would be given a few options depending on whether you are buying the property by yourself, with your spouse or someone else. Please review a list of common ways to take title here: Common Ways to Take Title in California. A living trust is not one of the options given because most lenders won’t allow you to take title in a trust. However, after you close escrow, you should speak to an estate planning attorney to see if you should place your assets in a trust. Setting up a trust may allow your assets to be passed on to your loved ones upon your death without going through a long, dreadful and expensive probate process.
If you do worry about how your assets will be distributed or handled, you should consult an attorney to set up the best vesting for your specific situation.
At the courtesy of David E. Miller, attorney at law, he allowed me to share the following article regarding the Revocable Living Trust.
David E. Miller is an attorney who specializes exclusively in estate planning. A practicing attorney for over forty-five (45) years, he graduated from the Ohio State College of Law in 1964 with a Doctor of Law degree. He is a member of California, Ohio, Washington, D.C., New York and Virginia State Bars. He is also admitted to practice before the United States Supreme Court, the United States Tax Court and the United States Court of Appeals. His previous experience includes being an Assistant Attorney General for the State of Ohio and a Lieutenant Commander in the United States Navy. In addition to maintaining his active law practice, he qualified a statewide initiative to eliminate the California Inheritance Tax, which was approved by the voters and became law. Mr. Miller has personally established over fifteen thousand (15,000) Revocable Living Trusts. He has lived in the Bay Area for over thirty-eight (39) years. He is married and has three (3) children, ages 34, 36 and 38. He is the author of a book titled, “LIVING TRUSTS AND BEYOND”.
THE REVOCABLE LIVING TRUST
1. A Revocable Living Trust is a written document that is a substitute for a W ill with very distinct advantages. A Trust is considered to be a legal person, just as you are, in the eyes of the law, with the power to buy and sell its assets. This Trust has three (3) positions that you nominate a person to hold:
a. The Trustor, which would be you or you and your spouse, the one(s) setting up the
b. A Trustee, or one who will manage the Trust, which will be yourself while you are alive, with a successor named to take over at the time of your death, in accordance with your instructions; and
c. A Beneficiary, or those who will enjoy the benefits of the assets that you have placed in the Trust.
You alone may hold all of the three (3) above positions, providing that a Successor Trustee is named. This Trust may be revoked by you at any time during your lifetime. The Trustor, again the one(s) setting up the Trust, has complete control over the investment of the Trust’s assets.
It is my firm belief that a Revocable Living Trust is the basic foundation and framework for proper estate planning. The Trust should be utilized whenever any of the following benefits are desired by you, and are completely unattainable through a W ill. The size of one’s estate is not a factor in considering its benefits.
2. A Pour Over W ill is an integral part of the R evocable Living Trust and supersedes all previous W ills. The Pour Over W ill will also transfer to your Trust any assets left out of the Trust during your lifetime, either due to inadvertence or neglect.
3. The Living Trust gives you, and not the Court, complete control over your assets, allowing you to give whatever you wish, to whomever you desire, and at exactly the time you designate.
4. Executor’s commissions, both statutory and extraordinary, are eliminated.
5. The Attorney’s statutory fees, necessary with a W ill, are eliminated.
6. The Court costs of going through probate are eliminated.
7. If you have become mentally or physically unable to act for yourself, conservatorship proceedings are eliminated, as your pre-nominated Trustee will step in on your behalf.
8. The distribution of your Trust’s assets (which is normally all that you own) may be distributed immediately to your heirs, for their immediate benefit and welfare. However, should you wish, you may also delay the distribution of the Trust’s assets to your children, until they are of older age. Such assets w ill be invested, with the income produced being spent on your children’s education and general welfare until such time as you have provided that they inherit the principal.
9. Should you die leaving minor children, a guardian appointed by the Court to care for your children’s inherited property is eliminated. Again, your nomination of a successor Trustee, usually a trusted family member, will act in your place.
10. A Living Trust absolutely prevents any information about your assets, liabilities and beneficiaries from becoming public information.
Click the link below for the complete list of the advantages of revocable living trust and disadvantages of a simple will and how much it’d cost for your heirs upon your death if your assets need to go through probate.
To contact David E. Miller, Attorney-at-law, please call (408)297-7448.
Disclaimer: Haylen Group Inc and its agents cannot give legal or tax advice in connection with options on title vesting. We strongly recommend you to consult your legal, tax and any other consultants or advisors regarding the best title vesting options for your specific situation.