How Can a Living Trust Protect Your Assets During Your Lifetime?

Planning for the future involves more than deciding who gets what after death. In California, many individuals turn to a living trust to protect their property while they’re still alive. A living trust can be a practical tool for keeping control over assets and supporting long-term personal and financial goals.

A living trust does more than transfer property. It provides flexibility, continuity, and a level of privacy that other tools don’t offer. Those focused on estate planning, the structure, and benefits of a living trust deserve careful consideration. For those in need of estate planning, reach out to me at the Law Offices of Gary R. Kershner in California to get the experienced attorney you need.

What Is a Living Trust?

A living trust is a legal document that places property into a trust during your lifetime. You usually serve as the trustee while you're alive and capable, meaning you keep control over the trust’s assets. After you pass away or become incapacitated, a successor trustee takes over and follows the instructions you’ve left.

This kind of trust is sometimes called a revocable trust because you can change or revoke it at any time while you're competent. That flexibility makes it a popular estate planning option in California.

Keeping Control Over Your Property

One of the main reasons Californians use a living trust is the ability to stay in control. As trustee, you can buy, sell, manage, and move property in and out of the trust as you see fit. There’s no need to ask permission from anyone, and the trust doesn’t interfere with your daily financial life.

This arrangement works well for people who want to protect their assets without giving up the authority to manage them. Since the trust holds legal title to your property, it also helps organize your estate more clearly, which can reduce confusion later.

Protecting Assets During Incapacity

A major benefit of a living trust is how it functions if you become incapacitated. If you’re unable to manage your affairs due to illness or injury, your named successor trustee can step in and manage the trust without court involvement.

This allows your bills to be paid, investments to be managed, and property to be maintained. Your financial life continues without interruption, and your loved ones avoid a lengthy court process to obtain authority through conservatorship.

Avoiding Probate in California

Probate is a court-supervised process for settling a deceased person’s estate. In California, probate can be expensive and take months—or even years—to complete.

A properly funded living trust avoids probate because the trust, not the individual, owns the assets. When you pass away, the successor trustee can distribute the trust property according to your instructions, without going to court.

Asset Protection Considerations

While a revocable living trust doesn’t offer full asset protection from creditors during your lifetime, it can still help shield assets in certain situations. For example:

• If a property is titled in the name of the trust, it’s easier to manage and track, reducing the chance of mismanagement.

• Assets in a trust are less likely to become tangled in disputes between family members or business partners.

• A living trust can include language to limit access by others if you become vulnerable due to aging or health issues.

In estate planning, an organization can often prevent legal conflict. The clearer your structure, the easier it is to protect what you’ve worked for.

Coordinating With Other Estate Planning Tools

A living trust doesn’t replace other estate planning documents. Instead, it works alongside them to build a more complete plan.

In California, a well-rounded estate plan usually includes:

• A will (to handle assets not placed in the trust)

• A durable power of attorney (for managing non-trust financial matters during incapacity)

• An advance health care directive (to outline your medical wishes)

The trust acts as the central asset management tool, while the other documents support it by addressing different aspects of your life and property.

What to Include in a Living Trust

You can place nearly any type of property in a living trust, including:

• Real estate (your home, rental property, or land)

• Bank accounts

• Investments

• Business interests

• Personal property of value

To make the trust effective, you must transfer ownership of these assets into the trust. This step is often called “funding the trust.” If you fail to do this, the assets may still go through probate.

Handling Joint Property and Community Assets

In California, where community property rules apply, it’s important to coordinate your living trust with marital property rules. Spouses often create a joint trust that includes community and separate property.

This allows both partners to retain access to shared property while providing instructions for how those assets should be handled if one spouse passes away or becomes incapacitated.

Naming a Successor Trustee

Choosing a successor trustee is a critical decision. This person will be responsible for managing the trust if you're unable to do so or after your death. They’ll pay bills, manage investments, distribute property, and communicate with beneficiaries.

Look for someone who:

• Is organized and responsible

• Understands financial matters

• Can follow instructions and maintain impartiality

• Has the time and availability to serve

In some cases, individuals choose a corporate trustee. Others name a relative or friend. It's possible to name more than one person to act together, although this may require careful coordination.

Modifying or Revoking the Trust

One reason many people choose a living trust is its flexibility. As long as you’re alive and mentally competent, you can:

• Add or remove assets

• Change beneficiaries

• Replace the successor trustee

• Revoke the entire trust

These changes usually require written amendments or a full restatement of the trust. Keeping your trust current is an important part of effective estate planning, particularly after major life events such as marriage, divorce, or the sale of property.

Tax Considerations in California

A living trust doesn't change your tax responsibilities during your lifetime. You continue to file your taxes using your Social Security number, and any income earned by trust property is reported on your individual return.

Upon your death, the trust becomes irrevocable, and different tax rules may apply. For higher-value estates, federal estate tax issues may arise, though California does not have a separate estate tax.

Maintaining Your Living Trust Over Time

A trust is not a set-it-and-forget-it document. Life changes, and your trust should reflect those changes.

Periodic reviews are helpful. Some people review their trust every three to five years or after major events such as:

• Buying or selling property

• Changes in marital status

• Births or deaths in the family

• Retirement or business succession planning

An outdated trust can create confusion or fail to reflect your current wishes. In estate planning, staying current is just as important as getting started.

What Happens After Death

After death, the successor trustee takes over and follows the instructions in the trust. This may include:

• Paying outstanding debts

• Filing taxes

• Distributing property to beneficiaries

• Managing property that’s held long-term, such as for minor children or charitable gifts

This process, known as trust administration, is usually faster and less costly than probate. It also gives the trustee flexibility to act according to the situation, without court involvement.

Why a Living Trust Supports Your Broader Estate Planning Goals

Estate planning in California goes beyond just writing a will. It involves planning for incapacity, managing risk, and maintaining privacy. A living trust supports all of these goals by offering a flexible, practical way to control your property during life and after death.

While a living trust doesn’t cover every situation, it often acts as the central tool in a broader estate planning strategy. For individuals with real property, blended families, business interests, or concerns about court involvement, the living trust can bring clarity and control.

Dedicated Legal Support

A living trust gives you the ability to protect your property during your lifetime while preparing for the future. At the Law Offices of Gary R. Kershner, I serve clients in Oakland, California, and throughout the Bay Area, including Berkeley, Alameda, Emeryville, Rockridge, Piedmont, Fruitvale, Fremont, San Jose, San Francisco, and beyond. Call me today to learn more.