Creating an estate plan allows a person to direct the distribution of their assets after their death. A will is perhaps the fundamental estate planning document, but it is far from the only way to distribute one’s assets. Creating a “living trust” allows a person to begin the distribution process while they are still alive. The person designated to administer the trust is known as the “trustee.” Living trusts might not be right for everyone’s estate plan, but California real estate investors should carefully consider them. They should also consider who can meet the legal standards for a trustee with regard to selling real property assets.
What Is a Trust?
The term “trust” can refer to a legal document and the entity created by that document. A trust document bears some similarities to a will. When a person dies, their assets become part of a legal entity known as their “estate.” A trust instrument also creates a legal entity, known as a trust.
A trust designates beneficiaries who are entitled to receive something from the assets held by the trust. This could be ongoing income from interest or rent, or proceeds from the sale of trust assets. The person who creates a trust, known as the “trustor” or “settlor,” must designate a trustee in the trust document. In a living trust, the trustor may designate themselves as trustee, but they must also designate a “successor trustee” to take over after the trustor’s death.