Trust Me It’s Simple: Simple steps for California Trust creation

simple

Fun fact: Trusts are not testamentary documents. That means Trusts do not have to follow all of the strict rules required to make a valid Will. Wills require a written document, signed by the decedent and witnessed by two witnesses…not so for Trusts.

Trusts fall into a broad category of estate planning vehicles known as “Will substitutes” because they bypass the probate process. All Wills must pass through probate to be validated and then administered with Court supervision. Trusts do not have that requirement. Other Will substitutes include joint tenancy, pay-on-death accounts, transfer-on-death accounts, and beneficiary designations—all of which transfer automatically at death without the need for probate.

While it is possible to have an oral Trust, most Trusts are written, and for good reason: written Trusts are much easier to prove. To create a Trust you need a few things:

  1. Settlor—you must have a Trust creator, someone who chooses to transfer personally held property into a Trust (which just means the property is transferred to a new person as “Trustee” of the property).
  2. Trust Res—Res is Latin for “stuff” (actually Latin for “thing”, but stuff sounds more amusing), you cannot create a Trust without having assets to put into the Trust. Unlike a corporation, a Trust simply does not exist without Trust property. If there is no property in the Trust, then the Trust is nonexistent.
  3. Beneficiaries—you cannot create a Trust without known, specified beneficiaries.

And that’s all you need to validly create a Trust. Note how I did not say “Trustee” because a Trustee is not a vital element to Trust creation. Of course, you need to name a Trustee or the Court will have to name one for you, but you can have a valid Trust without a Trustee. You just won’t get anything accomplished without a Trustee, so from a practical perspective a Trustee is quite necessary.

All of the above elements are put down in your written Trust. The Trust then has to be signed by the Settlor, and either signed by the Trustee or accepted by the Trustee.

Notice that a Trust does not need to be notarized. Notarization is NOT a legal requirement to create a valid Trust, yet nearly every Trust is notarized. That’s because it provides better proof that the Settlor signed it since the Settlor cannot testify as to his signature when the time comes.

And there you have it, a written Trust meeting the basic elements for Trust creations is all you need to have a California Trust.