Estate Planning Services
Family & Living Trusts
Jack E. Stephens has contributed to the California publication on drafting Wills and Trusts in California and has instructed other professionals on this topic. Rather than merely avoiding probate as a problem under California law, our properly drafted and funded Family/Living Trust can provide the following benefits for you and your family:
- Protects a child’s inheritance from divorce, lawsuits, and creditor claims
- Reduces/negates property tax reassessment on multiple real properties
- Avoids costly legal proceedings — probate, conservatorship, guardianship
- Protects the home from Medi-Cal liens and claims
- Reduces/negates federal estate tax on assets and property
- Protects minor children’s inheritance from dissipation under harsh California laws
- Protects against spousal spend-down requirements under catastrophic illness laws designed to prevent a spouse’s impoverishment
- Protects the inheritance of the first deceased spouse’s children in blended families
- Ensures a 100% step-up in basis on capital gain assets upon the death of the first spouse
- Provides protection from costly trust contests against the trustee through Trust Protector and no-contest provisions
What separates a basic Living Trust from a comprehensive asset protection Trust?
A basic Living Trust is primarily a probate avoidance tool. Comprehensive asset protection can include documents and provisions to protect assets from divorce and lawsuits; Medi-Cal; property tax reassessment on transfers of homes to children; and estate and capital gains tax exposure. At Stephens Law Group, such documents and provisions are tailored to fit each individual family with these objectives in mind.
What specific risks can a well-drafted Living Trust protect against?
A properly drafted and funded Stephens Law Group Living Trust addresses a broad range of real risks: it protects children’s inheritances from divorce and creditor claims, reduces or eliminates property tax reassessment when real estate transfers to children, shields the family home from Medi-Cal liens, protects minor children’s inheritances from California’s guardianship laws, preserves the full step-up in tax basis on capital gain assets when the first spouse dies, and safeguards the inheritances of children from a first marriage in blended family situations.
Does a Living Trust protect my personal assets from my own creditors during my lifetime?
A Revocable Living Trust does not protect your assets from your own creditors while you are alive. Because you retain control of the Trust, those assets remain reachable by your creditors.
What is a No Contest clause and how does it protect the Trust?
A No Contest clause provides that any beneficiary who contests the Trust without probable cause forfeits their inheritance. Stephens Law Group includes No Contest provisions as a standard safeguard against challenges that could drain the estate in litigation costs. Combined with Trust Protector provisions, which allow independent oversight of Trustee conduct without court involvement, these clauses protect the integrity of the Trust and its assets from unnecessary and expensive legal disputes.
How does a Living Trust address Proposition 19 and property tax reassessment in California?
California’s Proposition 19, effective 2021, significantly tightened the rules for transferring property to children without triggering a full property tax reassessment. The principal residence can still be transferred with favorable property tax treatment, subject to conditions. For families with multiple properties, the Trust’s distribution language must be carefully drafted to maximize available reassessment exclusions. Stephens Law Group builds Proposition 19 planning into the Trust when the home is to be inherited by a child or children.