Myth #1: You lose control of your assets in a Living Trust
The most common type of living trust that are created are REVOCABLE. That means that
you can get rid of the trust anytime that you are alive and able to make decisions. You
continue to completely control your belongings and can use any assets you have in the
trust for any reason that you may want. A living trust provides for your assets to be distributed, as you wish when you can no longer have the ability to make decisions.
Until then, you have use ALL your assets and you can make as many changes to a living
trust as you see fit. There is not need to worry that your assets are somehow unavailable
to you. In fact, you can void a living trust simply by saying it is no longer in effect.
Remember, as the creator of the living trust, you are in complete control of all aspects
of the living trust including revoking it completely.
Myth #2: Living Trusts are only for rich people
On the contrary, living trusts are for anyone who lives in California, especially if you have
real estate (your home) that you own. By putting your home and/or other real estate in
the name of the living trust, you provide a significant tax advantage for your loved ones
when it comes time for them to inherit your assets.
You should discuss this very issue with an Estate Planning Attorney to understand the potential financial burden your beneficiaries may be faced with if you do not have a living trust in California if you own a home. This is even if you have a mortgage or other debt linked to your home.
Myth #3: Living Trusts are just too difficult and expensive to set up
While a living trust requires more legwork initially while you gather your records and documents for the Estate Planning Attorney to include in your living trust. Once your
assets are put into your living trust, you will have prepared detailed instructions for your
loved ones to follow when you can no longer express your wishes.
While a living trust is more costly upfront than a simple Last Will, the Estate Planning
Attorney will prepare the living trust document, you will review and authorize the final
form the living trust takes. Without a living trust your assets would have to go through
Probate and pay Court fees, Statutory fees and spend a lot of time in the Probate process.
Currently, a relatively simple Probate Estate in the Los Angeles Courts takes between
6 -18 months. All that time, your assets are tied up in Court.
Myth #4: A Living Trust cannot be updated once it is made
As stated in the answer to Myth #1, you can change your living trust as much as you want
or need. Once you are no longer able to make decisions about your assets, the living
trust will not be able to be changed by anyone else, unless you have designed that in
In fact, most Estate Planning Attorneys recommend and will remind you to review your living trust every 3-5 years to make sure it still reflects your wishes and includes any new assets you may have aquired during the interim.
Myth #5: A Living Trust avoids probate and protects your assets
from creditors, such as nursing homes
A living trust has the potential to avoid Probate if you have diligently keep your trust
updated and your assets in the name of the trust. In California, when you pass away and
all your assets are in the trust, you, personally, will not have an estate large enough,
under California law, to require a filing of a Probate Estate case with the Court. Your
executor and/or the Attorney representing your executor may be able to simply file a
Declaration of a small estate with the Court.
While there are legal means to assist in limiting the ability of creditors from attaching claims to your assets in the trust, an Estate Planning Attorney is the best source for you to discuss those options and see if they are right for you.
Practically speaking, if you owe creditors money, the trust is often obligated to pay those debts and any new debts, such as funeral costs from the assets in the trust.