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INTRO: In Part One of this series, we spoke about some of the key privacy and disclosure rules in California. Today we discover the answer to a common client question: “When must I [or we] give a copy of our trust to our children [and/or other loved ones]?” in Living Trusts – How Far Does Privacy Go?
A common client question is: “When must I [or we] give a copy of our trust to our children [and/or other loved ones]?” Applying the above-referenced statute, if you are unmarried, the answer is when you die – because that’s when your revocable Living Trust becomes irrevocable. If you are married and have a trust, the answer depends on how your trust is structured.
Those who are married and have a “streamlined” trust – under which all assets owned by both spouses are kept in the same trust pot after the first spouse dies (i.e. the surviving spouse owns and controls all the assets), the trust remains revocable during the surviving spouse’s life. As such, the above-referenced notification requirement is not triggered until the surviving spouse dies.
Alternatively, those who are married and have an “A-B” trust (or other such trust under which “his” and “her” assets are allocated into two or more separate pots after the first spouse dies), the “B” trust – that sub-trust containing the deceased spouse’s assets – becomes irrevocable upon the death of the first spouse. So, with an A-B trust, the notification requirement is triggered at that time and may not be withheld or delayed until the surviving spouse dies.
As I’ve written about previously, a major Federal Estate Tax law change occurred in early 2013. One of the consequences of the new legislation is that most married couples no longer need an “A-B” Living Trusts for Estate Tax purposes. So, for this and other potentially compelling reasons, married couples would be wise to review their trust with an estate planning attorney to evaluate the pros and cons of restructuring it to the simpler, “one pot” trust. A relevant consequence of converting to a simpler trust is that no notification requirement is triggered until after the surviving spouse dies.
This article is intended to provide information of a general nature, and should not be relied upon as legal, tax, financial and/or business advice. Readers should obtain and rely upon specific advice only from their own qualified professional advisors. This communication is not intended or written to be used, for the purpose of: i) avoiding penalties under the Internal Revenue Code; or ii) promoting, marketing, or recommending to another party any matters addressed herein.
Mr. Silverman is an attorney with R. Silverman Law Group, 1855 Olympic Blvd., Suite 125, Walnut Creek, CA 94596; (925) 705-4474; rsilverman@rsilvermanlaw.com.
ESTATE PLANNING & TRUST ADMINISTRATION: Need to find an experienced estate & trust administrator in Walnut Creek CA? Contact Robert Silverman at 925-705-4474 for legal advice on a Revocable Living Trust, “Summary” Estate Administration, Trust/Estate Beneficiary Representation and Will & Trust Disputes.