What is a Trust, and Do I Need One?

Estate planning isn’t just legal paperwork it’s looking out for your loved ones long after you’re gone. It’s an opportunity to maximize your family’s inheritance, and guarantee their financial security for generations to come. That is, when planned effectively. You want the best for your family, and so do we. At Strategic Wealth and Legal Advisors, we focus on family-centered estate planning, built on trusts that incorporate your values so the future of your assets is by your design.

Many assume that a detailed will guarantees the seamless passage of wealth to your loved ones after you pass. Yes, your beneficiaries are inheriting what you intend, when you intend it. But with a will alone, they are also inheriting the headache that is probate administration, a needlessly expensive and multi-year public process required to inherit your wealth. Even the clearest instructions can’t avoid this, but the addition of a trust in your estate plan can. Revocable living trusts are game-changers for several reasons….

For starters, a living trust in your estate plan is substantially less expensive than probate administration, allowing your loved ones to keep more of the wealth you planned to pass on. Under California law, probate fees are set based on the value of the estate, regardless of the complexity. Typically, beneficiaries end up paying 4-7% of the estate’s gross value in statutory fees. This means at least $40k is automatically subtracted from a million dollar inheritance when you pass away with a will alone. When you pass away with a trust built into your estate plan, your beneficiaries will be paying trust administration fees based on the complexity of the estate, typically totaling between $5k and $20k. For this reason alone, living trusts are strongly encouraged, especially for California residents who have accumulated significant wealth through CA real estate.

Strategic Wealth Legal Advisors treats trust planning as more than a strategy to avoid probate. A trust serves as the foundational building block of a strong estate plan. With a trust in place, clients maintain full, flexible control over their asset distribution, with probate avoidance being an added plus. Trust administration additionally allows your loved ones to handle the wealth inheritance process quickly and privately, ensuring the passage of wealth truly is as hassle-free as we intend when planning.

We realize the importance of guaranteeing financial security for your surviving loved ones. The true test of your trust’s strength comes after you pass, but by planning a comprehensive estate plan with built-in protections, the future is entirely predictable and written by you.

A properly drafted trust accounts for all of life’s curveballs. We draft trusts to provide generous support for surviving spouses, prevent accidental disinheritance of children, and preserve assets for future generations by protecting against predators (in the case of divorce) and creditors (in the case of litigation). In short, we specialize in estate planning that is family centered, covering three major areas of protection:

1. Divorce Protection Planning

The purpose of Divorce Protection Planning is to ensure that inherited assets remain with the child you intended. Without this planning, these assets are at risk of becoming marital property, meaning they will be divided 50/50 between your child and their ex partner in the case of divorce. With effective divorce protection planning, your child’s assets will be maintained in protective trusts with defined rules for beneficiary access. These assets remain separate property and are not commingled with marital assets, providing strong protection beyond common prenuptial and postnuptial agreements.

2. Bloodline and Remarriage Protection

A common concern within estate planning is the distribution of assets following the death of the first spouse. Should the surviving spouse remarry and have new children, remarriage protection planning prevents the children from the original marriage from being disinherited. This type of protection allows you to provide ongoing support for your surviving spouse while restricting their ability to redirect inherited assets away from your children. This guarantees the preservation of the family’s legacy plan regardless of events following one spouse’s death.

Remarriage planning is also crucial in cases of blended families. It is structured to ensure each side of the family is treated according to the couple’s wishes, regardless of shifting family dynamics following a death.

3. Asset Protection, what we call “Yellow School Bus Protection”

“Yellow School Bus Protection” refers to catastrophic liability planning, as in the case of your spouse’s major automobile accident threatening your joint assets.This ensures that your assets stay safe, regardless of litigation involving your spouse. This includes business lawsuits, professional malpractice claims, auto accidents, and personal creditor issues. Note that asset protection must be implemented before a litigation claim arises.

By focusing on these three major areas of protection, your estate plan accounts for most threats your assets may face without your supervision – even beneficiary behavior. A living trust ensures your wealth goes where you want and nowhere else, allowing you to protect your loved ones long after you’re gone.