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Money Management

Considerations for Establishing a Living Trust

Where do you want your assets to go when you pass on? If designating beneficiaries and/or establishing a living trust isn’t something you’ve previously considered, it’s time to make a plan. You can’t assume your wishes will be known or carried out correctly unless you properly document them. Plus, failing to create clear guidelines for what happens to your estate could create stress and fractured relationships among your heirs in the midst of their grief. Here are some things to consider if you’re thinking about establishing a living trust.

What is a Living Trust?

This particular estate planning tool is created with the help of a lawyer and offers many benefits over a simple will. A living trust, or revocable trust, as it’s also called, holds a person’s assets while they are alive. Establishing a revocable trust has become popular because trustees have the ability to change or cancel the trust at any time. Once the person passes on, a successor trustee carries out the wishes of the original trustee, distributing assets accordingly.

Establishing a living trust has a number of positive outcomes: It can help control the amount and timing of your asset distribution. You can protect your assets from individual family members or the disliked partners of your beneficiaries. It can also protect your privacy because assets in a trust don’t go through probate, and thus, do not become part of the public record. Establishing a living trust can also help to reduce tax burdens, or simply ensure that your beneficiaries don’t squabble their inheritance. In essence, it gives you much more control over how your assets are used once you are gone.

Establishing a Living Trust Means You’ll Avoid Probate

When you die without establishing a living trust, your assets must go through probate - a legal process that determines how your money and property are distributed. In California, your inheritors can skip probate if your estate is less than $150,000, excluding property that passes directly to your beneficiaries. But if the estate is worth more, probate can be quite lengthy and expensive; and it sometimes doesn’t resolve in a way that benefits your beneficiaries as you’d intended.

If you only have a will, your assets will go through probate. It’s better than nothing. Going through probate helps ensure your wishes are carried out. But keep in mind that wills are more easily contested than a living trust. If you have a large estate and/or specific wishes in how your assets are distributed - especially if they aren’t being shared equally - establishing a living trust will give you peace of mind and help prevent arguments among your heirs.

A Few Words on Beneficiaries

If you’re married and/or have dependents, you might assume your assets will simply pass on to your next of kin when you die. Likewise, if it’s your spouse who passes on, you might expect to inherit anything of your partner’s automatically. While this is true in some cases, like with employer-sponsored retirement plans, it’s often not - and the paperwork matters. If beneficiaries aren’t properly documented, there is risk that your assets won’t go to the people and organizations you intended. This is another reason establishing a living trust is a good choice.

Think about any life insurance policies, retirement and investment accounts, and regular banking accounts you have. You likely named beneficiaries for most of these when you opened them. But have you reviewed those lately? Any time you or your stated beneficiaries have a major life event, like a marriage or divorce, or the birth of a child, it’s an opportunity to review all your important accounts to add or change how your assets will be distributed. Keep in mind that if you wish your minor children to be beneficiaries, they will need a court-approved guardian or trustee to be the custodian of the funds until they come of age.

One other note here regarding regular banking accounts: If you have a joint owner who is still alive at the time of your passing, that person will inherit your accounts. However, if you don’t want someone to have access to your accounts as a joint owner while you are living, and you are still on the fence about establishing a living trust, ask your financial institution about a payable-upon-death account. It’s a simple bit of paperwork that will make it much easier for your heirs to deal with your accounts once you are gone.

Steps to Take After Establishing a Living Trust

If you’ve determined that establishing a living trust is the best choice for you, and you take the steps to create one, you might think you can check off that box. But estate planning is an ongoing process.

Be sure to keep all those important forms together and in a safe place for easy access. You should revisit the trust plan at least once per year to determine if any changes or additions are necessary. Do this more often if there are big life events as described above.

Finally, even though you have gone through the effort and expense of establishing a living trust, you’ll want to also have what’s known as a “pour-over” will to ensure any assets inadvertently left out of the trust will still have direction for distribution.

Estate planning can seem overwhelming if you’ve never taken the time to address it, but doing so can provide you and your heirs peace of mind.

Through our partnership with Affinity Trusts, you can get answers to your questions and help when creating a plan. Learn more about establishing a living trust to avoid probate, assigning beneficiaries, making provisions for your loved ones, and empowering the right person to manage your finances in case of the unexpected. Orange County’s Credit Union has arranged for discounted, flat pricing on trust services. Make an appointment today with Affinity Trusts.

Additional Services to Consider…

Orange County’s Credit Union offers additional services that can help protect you in the event of something unexpected happening. If you have loans, Debt Protection could help protect you and your finances against death, disability, or involuntary unemployment.1 Ask one of our loan officers for more information.

There’s even protection from unexpected covered repairs to your vehicle through Mechanical Repair Coverage (also known as Mechanical Breakdown Insurance (MBI) in CA).3 Discuss your options with one of our auto loan consultants.

For additional questions, contact Orange County’s Credit Union at:
(888) 354-6228
Monday - Friday: 8:00 am to 7:00 pm
Saturday: 9:00 am to 2:00 pm


1Your purchase of Debt Protection is optional and will not affect your application for credit or the terms of any credit agreement required to obtain a loan. Certain eligibility requirements, conditions, and exclusions may apply. Please contact your loan representative or refer to the Member Agreement for a full explanation of the terms of Debt Protection. You may cancel the protection at any time. If you cancel protection within 30 days, you will receive a full refund of any fee paid.

*Car Depreciation: How Much Value Will a New Car Lose? CARFAX, Nov 9, 2018.

2Your purchase of MEMBER’S CHOICETM Guaranteed Asset Protection (GAP) is optional and will not affect your application for credit or the terms of any credit agreement you have with us. Certain eligibility requirements, conditions, and exclusions may apply. You will receive the contract before you are required to pay for GAP. You should carefully read the contract for a full explanation of the terms. If you choose GAP, adding the GAP fee to your loan amount will increase the cost of GAP. You may cancel GAP at any time. If you cancel GAP within 90 days you will receive a full refund of any fee paid.

3Mechanical Repair Coverage is provided and administered by Consumer Program Administrators, Inc. in all states except CA, where coverage is offered as insurance by Virginia Surety Company, Inc., in WA, where coverage is provided by National Product Care Company and administered by Consumer Program Administrators, Inc., in FL, and OK, where coverage is provided and administered by Automotive Warranty Services of Florida, Inc. (Florida License #60023 and Oklahoma License #44198051), all located at 175 West Jackson Blvd., Chicago, Illinois 60604, 800.752.6265. This coverage is made available to you by CUNA Mutual Insurance Agency, Inc. In CA, where Mechanical Repair Coverage is offered as insurance (form MBIP 08/16), it is underwritten by Virginia Surety Company, Inc. Coverage varies by state. Replacement parts may be used or remanufactured. Be sure to read the Vehicle Service Contract or the Insurance Policy, which will explain the exact terms, conditions, and exclusions of this voluntary product.

See Vehicle Service Contract/Insurance Policy for any state variations.

DP, GAP, MRC-3430172.1-0121-0223

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