Why do I need a trust?

Trusts are the first topic that is likely to come up when discussing a California estate plan. But what is a trust and why is it beneficial to have one? This post will outline the basics of California trusts and explain why the vast majority of estate plans are built around a living trust.

What is a trust?
At its most basic, a trust is an arrangement in which one or more assets are held by one person for the benefit of another. The key persons in a trust arrangement are the Settlor (sometimes called the Trustor), who initially owns the assets to be held in trust, the Trustee, who holds title to and manages the assets according to the terms laid out by the Settlor, and the Beneficiary or Beneficiaries, who have the right to receive some or all of the assets, or the income that they generate, either immediately or at some potential future time.
 
In some trusts, the Settlor, Trustee, and Beneficiary are all different people. For example, if a parent transfers a sum of money to a financial manager to hold in trust for the benefit of the parent’s child, the parent is the Settlor, the financial manager is the Trustee, and the child is the Beneficiary. In other trusts, the Settlor can also be the initial Trustee, and even the main Beneficiary.
 
Is a trust a legal entity?
In California, a trust is not a legal person (like a corporation or municipality) with the ability to take legal action and hold property in its own name. Instead, a trust is a relationship that exists among the Settlor, Trustee, and Beneficiaries, governed by the rules provided by the Settlor when establishing the trust. As such, it is the responsibility of the Trustee to take any actions that are required to protect, manage, and use the assets held in trust for the benefit of the Beneficiaries.
 
Who can enforce a trust?
If a Trustee fails to abide by the rules of their trust, the Beneficiaries have the right to sue the Trustee and demand that the provisions of the trust are followed. Because the Settlor is also a Beneficiary in many trusts, Settlors can also take legal action to enforce their trusts when a Trustee is not complying with the provisions of the trust. In some instances, the Trustee may even be liable for money damages, if the Trustee breaches a fiduciary duty in a way that causes the Beneficiaries to suffer financial harm. Most of the time, however, a Trustee can be persuaded to take appropriate action without the need for a lawsuit.
 
A carefully drafted trust will include provisions for removing a Trustee when necessary, such as when the person serving as Trustee has become mentally or physically unable to perform their duties. Moreover, the Settlor of a revocable trust can typically remove a Trustee at any time by amending the trust to appoint a different Trustee.
 
For charitable trusts, the Attorney General has the primary responsibility for enforcing the trust to ensure that its provisions are being carried out, but a charitable trust can be drafted to give other charities or even individuals the power to enforce its terms.
 
What are the benefits of having a trust as a part of my estate plan?
The primary benefits of having a trust, rather than just a will, as the central part of an estate plan include avoiding the need to put loved ones or friends through the arduous and complicated probate process, facilitating smoother and cheaper transfers of assets following the Settlor’s passing, maintaining privacy around how assets are to be distributed, providing protections for young Beneficiaries or those who have special needs, allowing a successor Trustee to step in and manage the Settlor’s assets if it becomes necessary during the Settlor’s lifetime, and allowing for easier adjustment of the estate plan in response to changing life circumstances.
 
When a trust is created for estate planning purposes, the Settlor is the initial current Beneficiary, and also typically serves as the initial Trustee. These trusts can be drafted such that they are essentially invisible during the Settlor’s lifetime; the person who creates the trust has all of the same property rights and freedom to deal with their own assets that they had before creating the trust.
 
An estate planning trust typically only becomes relevant when the Settlor stops managing their own assets and the successor Trustee steps in. This can occur because the Settlor has become physically or mentally unable to manage their own finances, or because the Settlor has simply decided to step back and let the successor Trustee handle things, or due to the Settlor’s death. With a trust in place, on any of these events, there is a successor Trustee ready to quickly step in and manage the Settlor’s affairs.
 
Having a trust allows the successor Trustee to gain control of the Settlor’s accounts, property and other assets held in the trust, using relatively simple and quick processes which generally don’t require a court order. This means that a Settlor with an estate planning trust in place can feel secure in the knowledge that, should anything happen, their successor Trustee will be able to manage their assets and provide for the Settlor’s needs during life and then distribute the remaining assets to the Settlor’s chosen Beneficiaries.
 
Assets that are distributed via a trust typically do not need to go through the probate process, so the Beneficiaries are usually able to receive distributions much more quickly, cheaply, and with more privacy than would be possible with only a will.

Another important advantage of having a trust is that it allows the Settlor to manage assets for the benefit of certain Beneficiaries over a longer period, rather than simply giving them a lump sum distribution following the Settlor’s death. This can be used to provide for young Beneficiaries who need time to mature before being given the responsibility of managing their own assets, or other Beneficiaries who the Settlor believes would be better served by getting periodic income and support for necessities, rather than a one-time payout. Similarly, while a pet cannot be a Beneficiary, a trust can be used to provide for the care and support of one or more animals during their lifetimes. For pet owners who are unable to entrust their pets to friends or family, this is one way to ensure that their pets will receive the care that they need.

What should I do if I want to learn more?
If you are interested in getting more information about trusts or discussing whether a trust would be a useful addition to your estate plan, contact us today to schedule a consultation.

 
Copyright © Stone, Doyle & Heffel 2025.
 
This article is intended for informational purposes only and not for the purpose of giving legal advice. Nothing in this article should be taken as legal advice, and reading it does not create an attorney-client relationship.