San Diego Living Trust Glossary of Terms
A-B Provisions: Makes your California living trust into an AB living trust, which means you and your spouse or partner own an A trust or a B trust, respectively. When one spouse dies, the other gains control of his or her trust. Talk to your San Diego living trust lawyer about how AB provisions can help you pay reduced estate tax.
Backup Will: A will you create in addition to your San Diego living trust to protect assets not included in your trust, and to make the transfer of certain kinds of property easier. Your California living trust lawyer can advise you on how to set up a backup will that will compliment the functions of your trust.
Beneficiaries: Beneficiaries are the individuals named in your California living trust or will, who will inherit different portions of your estate.
California Living Trust: Like a will, a San Diego living trust is a set of legal documents that allows you to leave your estate securely in the possession of your chosen beneficiaries. A California living trust is similar to a will, but has greater flexibility and offers the significant advantage of allowing you to avoid probate, as well as reducing estate tax in some circumstances.
Disclaiming Inheritance: Indicates the choice of a surviving spouse to inherit only a portion of the property of a deceased spouse, funneling the rest into the California AB living trust. This allows couples who have established a San Diego living trust with AB provisions to potentially pay reduced estate tax.
Estate: All of the assets and property you own at the time of your death.
Estate Tax Credit System: Each estate owner has Unified Credit, which indicates the amount of assets that is protected from estate tax per individual.
Estate Tax Exemption: The portion of your assets on which you do not have to pay estate tax. If your estate exceeds the amount which qualifies for estate tax exemption, you may benefit from establishing a California living trust with AB provisions.
Executor: The person who oversees the distribution of your assets when you have a will. Institutions such as banks appreciate executors even if you also set up a San Diego living trust.
Formula Clause: A clause in your estate planning set up by a San Diego living trust lawyer, which dictates that only the amount of your assets that is exempt from estate tax will be placed in the portion of trust belonging to the first spouse to die. This formula ensures that the surviving spouse will not have to pay any estate tax when his or her husband or wife dies.
Initial Trustee: The person who originally creates a California living trust. At the death of the initial trustee, your San Diego living trust lawyer will oversee that the successor trustee takes over.
Life Beneficiary: In the context of a California AB living trust, a life beneficiary is usually the surviving spouse, who will control and use assets left behind for the duration of his or her lifetime, according to the parameters of the trust.
Probate: A court’s legal supervision of the distribution of property in a will.
Residuary Beneficiary: The person who receives everything you leave behind that is not designated for another individual. For example, if you unexpectedly gain significant assets, a backup will allows a transfer to your residual beneficiary, without requiring changes to your San Diego living trust.
Successor Trustee: The person who oversees your California living trust after your death. This may be the same person as the executor for your will. Talk to your San Diego living trust lawyer about useful overlap between wills and California living trusts.
Trustee: You are the trustee of your San Diego living trust. This means that during your lifetime, until the successor trustee takes over, you control your California living trust.
Unified Credit: The amount of personal or familial assets that each individual can protect from estate tax within a California living trust. If you establish an AB living trust, both you and your spouse can utilize your Unified Credit, shielding twice as much of your assets from estate tax. Your San Diego living trust attorney can explain how taxes are likely to affect your estate, given your unique situation.
Will: A legally binding document that allows you to specify which beneficiaries will receive which assets, and ensures that all assets without a specified recipient become the property of your residual beneficiary.
We hope our Living Trust Glossary has been a help to you. You can let us know on the form to the right if there is anything you would like us to add.