What Can an Estate Plan Do for You?

While most people know they should consider estate planning, it’s a topic that often finds itself on the backburner. A new year is a great time to start thinking about the future of your assets. To get you started, here is an overview of what an estate and trust plan can do for you.

What is your “estate”?

Generally, an estate includes all the property owned by a person who has died (the “decedent”). This includes not only assets, but any outstanding liabilities (mortgages, loans, etc.) the decedent may have. The net assets (what’s left after the fulfillment of liabilities) are what will be distributed from the estate to your beneficiary(ies). Unless other methods are in place, upon death, the decedent’s estate goes into probate — which is the legal process that transfers the legal title of property from the decedent’s estate to the beneficiaries.

Probate can be both expensive and time consuming, therefore avoiding the probate process can be an important component in achieving your estate goals, and a variety of estate planning devices are available to assist in achieving this effort.

Joint Ownership

Typically joint tenancy with rights of survivorship or, in California and certain other community property states, community property with rights of survivorship.

Beneficiary of Payable/Transfer on Death Designations

Commonly available on retirement accounts such as pension, profit sharing, 401(k) or IRA accounts, life insurance policies, bank accounts, securities (stock brokerage) accounts and vehicle registrations.


Gifting property and assets out of the estate prior to death removes the property from the assets that must potentially go through probate. If gifts are numerous or large, the donor may need to complete a federal gift tax return in the year of the gift.


Of these commonly used vehicles, trusts are perhaps the most talked about, as they represent the core of most individuals’ estate plans. Of the trusts, the revocable living trust is arguably the most widely-used.

Revocable Living Trust

A revocable living trust is a non-taxpaying legal entity that can hold title to property and assets during an individual’s lifetime. A trustee is named to manage the trust assets according to the trust’s terms. During his or her lifetime, the grantor can serve as trustee, even though the assets belong to the trust. Upon death of the grantor, a named trustee can quickly settle any liabilities of the trust and transfer remaining trust property to the named beneficiaries without going through probate. In effect, the trust functions much like a will but avoids the time-consuming and potentially costly probate process.

Other Types of Trusts

A number of different (and increasingly specialized) trusts exist, all of which have the benefit of keeping assets out of probate and serve a variety of different purposes.

Irrevocable Living Trusts

Unlike revocable living trusts, irrevocable living trusts may not be altered or terminated by the grantor once the trust agreement has been signed. Additionally, the grantor must typically forego ownership and control of the trust assets and income in favor of the trust. The benefit of this arrangement is that the grantor is no longer the taxable entity for the income from the trust assets — the trust becomes the taxable entity. The irrevocable living trust is often used to set aside funds for minor children, life insurance policies, and the like, when trust assets are not currently needed by the grantor and can be set aside permanently. Tax results can be mixed, so check with a qualified tax planning professional to determine appropriateness and impact.

Charitable Trusts

Charitable trusts are used to set aside assets that will ultimately benefit charity. Some types of charitable trusts distribute trust assets during the grantor’s lifetime, others are set up to provide the grantor or the grantor’s beneficiary(ies) with the income stream from trust assets, with the trust asset then reverting to the charity upon death of the grantor or beneficiary(ies). Significant tax advantages can be attained if the trusts are properly structured. Again, consulting with a qualified tax planning professional is advised.

Not sure what’s right for you? Contact our Estate and Trust experts at 925.271.8700 or at info@ssfllp.com.