Estate Plan and Living Trust 101

Submitted by Natalie Spiwak, President of Affinity Trusts

Chances are that if you own a home or have children, you have considered looking into or establishing an estate plan and a living trust.  Knowing where to start, what type of trust you need, and controlling cost can be challenging.  Below is a simple breakdown of the differences between an estate plan and trust as well as the different types of trusts available depending on your individual situation.

What is an estate plan?  

An estate plan is created to take care of your family, properties, and any other obligations should you pass away.  It includes all of your assets and how you want them handled.  If a proper estate plan isn’t developed, your beneficiaries may be subject to the probate process.  Probate is a court-supervised proceeding that your loved ones will go through in order to transfer the assets to their heirs. In California, this can take one to two years to complete, is public making the estate easy to contest, and can be expensive as 4-8% of the gross value comprises estate. By creating a proper estate plan, you can avoid unnecessary delays and costs associated with the probate process.

What is a trust?

A trust is an estate-planning tool used to avoid the delays and costs associated with the probate process.  An individual will typically work with an attorney or professional estate planner to create a trust agreement.  Upon creating the trust, the individual transfers title or ownership of their assets to be held under the trust.  

Types of trusts

Revocable living trust

A revocable living trust provides instructions on how you wish your estate is distributed upon your death.  It avoids probate and allows for the administration and distribution of the estate without court supervision.  It can also be changed or amended at any time during the life of the Creator(s).

Irrevocable living trust

An irrevocable trust is a type of trust that cannot be changed or modified after it is created without obtaining a court order.  It is appropriate if the estate value is higher than the federal tax exemption which is currently $11.7 million for each unmarried person and $23.4 million for married couples. 

Asset protection trust

If you have accumulated large investment accounts or wealth and would like additional protection from future creditors, an asset protection trust may be appropriate.  These types of trusts are structured so that they are irrevocable for a certain amount of years and the current trustor is not able to access the assets during this time.

Charitable Remainder Trust

If you would like to structure your trust with philanthropic intent, a charitable remainder trust may be an option for you to consider.  This tax-exempt trust distributes income to your beneficiaries for a specified time period and then donates the remainder to the charity of your choice.

Special needs trust

If you care for an individual who receives social security income, then you may want to consider the preparation of a special needs trust.  A special needs trust is a legal arrangement that allows for a physically or mentally ill person, or an individual who is chronically disabled, to not be disqualified from receiving public assistance programs due to an inheritance.  This is a useful tool to ensure that your beneficiary receives assets to pay for things not covered by government benefits.

Now that you understand the different types of trusts, you can determine which trust or combination of trusts are appropriate, depending on your estate planning goals and value of the estate.  

At Pacific Service CU, we’ve teamed up with Affinity Trusts to provide our members with discounted estate planning services prepared by licensed estate planning attorneys, which can include creating or amending a living trust.  Schedule a complimentary consultation with an attorney or professional estate planner today! 

For more information, visit our website or contact a member service representative today at (888) 858-6878.

Information not intended as legal advice.  All information should be confirmed with legal and/or tax experts.


Natalie Spiwak, President and CEO of Affinity Trusts

Natalie Spiwak is the Founder and President of Affinity Trusts. She has been educating the community about the importance of protecting and transferring their wealth quickly, privately and cost effectively for almost 15 years. Affinity Trusts proudly serves the estate planning needs of Pacific Service Credit Union Members, providing accessible educational seminars and delivering affordable Estate Planning documents (such as Living Trusts, Wills, Powers of Attorney, Health Care Directives) prepared by experienced attorneys from reputable law firms, to it’s members. Natalie is a paralegal and a California Notary Public.

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