Known as the eighth-most populous city in the United States, San Diego is a famous city in California. Hence, the real estate market is booming in this second largest city in California. Having multiple properties in a 1031 Exchange has many moving parts that real estate investors must understand before attempting its use.
If you own a property in California, it is essential to use trusts in estate planning. Whether you want to save on your property taxes or keep your asset safe for an inheritance, it is essential to consult a Trust Attorney San Diego.
These expert lawyers provide a valuable and personalized solution to your real estate planning. The following article will guide you to understand the different trusts available in San Diego.
How is a Trust Built?
According to the Superior Court of California, the decedent’s will should be submitted to the Court of County in which the estate is administered.
There are three people involved in a real estate trust.
- A trustor grants the rights to another person to control the estate, property, or asset.
- A trustee takes over from the trustor and manages the asset.
- A beneficiary who will inherit the property in the future.
A Living Trust
It is also known as inter-vivos trust. Here, the trustor can use the asset till the time of death. After the death, the property is transferred to the beneficiary.
A Testamentary Trust
These trusts are created only after the death of the trustor. The will is used as a reference to create this trust. It comes into effect only after the trustor passes away.
According to San Diego County housing market trends, the median price of a one-bedroom house is $425K.
A bypass trust is called a married A-B trust. It protects the property of spouses. When one person dies, the asset is divided into two trusts. Hence, the surviving spouse is exempted from paying estate tax.
Special Needs Trust
Here, after the trustor’s death, the property is passed to someone who is physically or mentally disabled. A trustee manages the financial needs and looks after the property for a beneficiary with special needs.
The probate division of San Diego manages decedents’ estates, trusts, the guardianship of children, and conservatorship of adults who are physically or mentally challenged.
It is the best option for pet owners. They can set aside a specific part of their property to tend to their pet’s needs after their death.
Here, the trustor names a non-profit organization as the beneficiary in the trust. It is created during the lifetime of the trustor. Estate planners use it to reduce the amount of gift or estate taxes. After the trustor’s death, their property is distributed as charity.
Here, the beneficiary is unaware of the property till the date of inheritance or the trustor’s death. It is the best option if the trustor expects conflict between one or more beneficiaries.
If your spouse or a child’s parent passes away without a will, California law has specific rules called intestacy laws to determine who will inherit their property.
Life Insurance Trusts
Here, the trustor can transfer their life insurance account into the trust. You can avoid tax fees from a life insurance policy. The beneficiary can immediately access the life insurance policy right after the trustor’s death.
These trusts are irrevocable. Hence, the trustor cannot revoke or change the plan once it is made.
If you look for an easy method to save real estate taxes, this is one of the most accessible options. You can create this trust for the benefit of your grandchildren. Hence, it is known as generation-skipping trust.