FAQ

Will I need to file different tax returns if I have a living trust?

No. If someone asks you for the taxpayer identification number of the trust, you’ll give them your social security number. If you’re married, your spouse can continue to use his or her social security number if he or she wants to. All income tax items will be reported under your social security number(s), which means you’ll file the same returns as usual.

Will transferring real estate to my living trust cause problems with my property taxes?

No. From a property tax point of view, you and your living trust are the same person. You can transfer property into and out of the trust without causing any changes in your property taxes for that property.

Who is the “trustor” of my trust?

You are. Remember that a living trust is a contract between the person creating the trust (the “trustor”) and the person who will manage the trust (the “trustee”). Since you’re the creator of your living trust, you will always be the trustor of that trust. If you’re married, your spouse will also be a trustor of your trust.

Who is the “trustee” of my trust?

You are. Remember that a living trust is a contract between the person creating the trust (the “trustor”) and the person who will manage the trust (the “trustee”). You will also manage the trust as long as possible, which makes you a trustee. If you’re married, your spouse will also be a manager of your trust. If neither you nor your spouse can continue to manage it, then someone else (someone you pick) will take over as manager and will become a successor trustee.

What can I change after I sign my living trust?

As long as you’re well, you can change anything you want to change. You can put assets into the trust, take assets out of the trust, add beneficiaries, delete them, and change your successor trustees. You can get rid of the trust altogether. If you become incapacitated, the terms of the trust freeze because only you can change your trust. Once you regain capacity, you can start making changes again.

Do I need to do anything with my property after I sign my living trust?

Yes. You need to make sure all your property is transferred to the trust, and we’ll give you instructions on how to do this. For now, just remember that one of the important reasons for doing a trust is to avoid court involvement with your estate, and a trust is only effective in accomplishing this if you transfer your assets to the trust.

Who should I name to manage the trust if I can’t do it?

This is one of the most important issues in estate planning. Even though it’s a little trite as an answer, it’s the best answer: you should name someone you trust. People tend to name their parents or siblings for this job because people think their family members will watch out for them. But watching out for you isn’t the job; whoever manages the trust must carry out the instructions in your trust no matter what – even if they actually disagree with the instructions. You should identify people who will be able to do that.

Who should I name as guardian for my children?

Remember that with a living trust, two people will be involved with your children. The manager of your trust will use your property to support your children until they can support themselves, which means he or she will need to balance current needs (like deciding what kind of car a 16-year old needs) with likely future needs (such as college expenses). The guardian will make day-to-day decisions about your children, such as where they should live, where they should go to school, and what kind of medical treatment they should get. Sometimes, it makes sense to have the same person in both roles; sometimes it doesn’t. You may trust one person with financial issues but prefer someone else’s parenting style.

What instructions can I give my guardians?

Your estate documents are meant to address a lot of legal issues, and it’s hard to incorporate parenting ideas into those documents. But, of course, those ideas will be very helpful for your guardians, and they can become very important for your children as they grow up. As a result, we encourage you to write a letter to the guardians that covers the issues you think are important. Some of the best letters we’ve seen cover things a parent hopes children will do – issues such as staying in touch with family members, continuing specific family traditions, whether you want your children to use college for career preparation or to study liberal arts, and comments about on your own religious involvement. Some of the worst letters we’ve seen set up lists of “dos” and “don’ts.” These letters can be updated as your children grow and you learn more about the people they’re likely to be. Since a court must formally appoint guardians, these instructions give the judge some specific issues to consider in deciding which person is best suited to take care of your children.

Can I name co-guardians?

It’s not normally a good idea to do so. Since guardians must be appointed by a court, you double the court’s work if you name two guardians. Worse, what happens if the co-guardians disagree about something? Either one of them can pull the situation right back into court, which means your children will end up living with decisions made by a judge. What happens if the co-guardians have a falling out? It’s fairly common to designate “my sister and her husband” because you want your kids to live with that family if that time ever comes. But if your sister and her husband fall apart and get divorced, then your children end up in their custody dispute. If you really want your sister to take care of your kids, just name her and make it easy for her by reducing the number of ways the situation could sour.

Are there any reasons I shouldn’t use Tracy J. Roberts?

We handle estate planning for clients with both large and small estates, and provide all of our clients with the same personalized advice and quality of service. If you live outside of California, you should contact an attorney who is an estate planning specialist in your state.

If I live outside of Orange County, can I use Tracy J. Roberts?

Certainly. We have clients that live all over the state of California.

Retirement plans and life insurance proceeds are controlled by my beneficiary designations, so why do you talk about them as part of my estate plan?

Your retirement plan administrator and your life insurance company will make payments to the people you designate as beneficiaries. But if the administrator or insurer decides there was some problem with your designation (and that’s a problem that usually doesn’t surface until after your death), then they will insist on making payment to the executor of your probate estate, which means a court has to get involved. Also, if you designate young children as beneficiaries, then a court guardianship proceeding will be necessary because payments cannot be made to minor children. Beyond that, if your retirement assets or life insurance proceeds are a big part of your estate, then you probably want to protect those assets by coordinating them with your living trust. Naming your living trust as a contingent beneficiary of these assets serves a multitude of purposes.

Why encourage lifetime trusts for beneficiaries?

An example will help with this answer. Say I have two sons and they are equal beneficiaries of my estate. After my death, my trust says to create equal shares for them (so each gets 50% of my estate), but instead of ending the trust and giving each son his share (a pretty typical approach), I say to keep the trust going. I also say that each son automatically gets all the income from his share and can use more than the income (up to 100% of the assets) if he needs more for living expenses. I specifically say that I do not want these assets paid to his creditors. By giving this instruction, I’ve created a pocket of assets which will always be available to my sons and their descendants but that creditors cannot touch. If he runs some attorney off the road, or makes a bad business decision, or marries the wrong person and ends up with a divorce court looking to split his assets, my trust will protect his inheritance. If I make him the manager of his trust, then he can invest and control the assets as he sees fit, which means he can buy a house through his trust or start a business. This gives him maximum flexibility and maximum protection.

I’m married. What can my spouse do with property in our trust after my death?

The goal of estate planning for married couples is making it as easy as possible for the survivor. After the first spouse dies, the survivor will have complete control over the assets in the trust. This means the survivor will only need to do a minimal amount of paperwork after the first death.

What is different for domestic partners?

California law says that registered domestic partners should be treated as spouses. Those couples who got married in 2008 expect to be treated as spouses. But federal law and the laws of many other states don’t agree. Estate documents make sure your partner gets to make decisions for you and control your assets if you can’t; however, your partner’s authority has to be limited in certain ways or else you both face bad tax consequences. One of the biggest differences is that we encourage each person in a domestic partnership to have a separate living trust, instead of doing a joint trust like a married couple usually does. All other estate documents work pretty much the same way for married couples and for domestic partners.

What is different for domestic partners?

California law says that registered domestic partners should be treated as spouses. Those couples who got married in 2008 expect to be treated as spouses. But federal law and the laws of many other states don’t agree. Estate documents make sure your partner gets to make decisions for you and control your assets if you can’t; however, your partner’s authority has to be limited in certain ways or else you both face bad tax consequences. One of the biggest differences is that we encourage each person in a domestic partnership to have a separate living trust, instead of doing a joint trust like a married couple usually does. All other estate documents work pretty much the same way for married couples and for domestic partners.