Creating a living trust in California may seem as simple as picking a trust name, choosing a beneficiary, and appointing trustees. In reality, there are many more decisions that take place during the trust creation process. One such decision is whether or not to use what is known as a “common pot.” The following is an overview of this type of living trust.
What is a common pot trust?
“Common pot trust” is a term used to describe a trust that holds the trust property in one lump sum until all of the beneficiaries reach a certain age or until some other pre-determined event occurs. For example, if your beneficiaries are your three children, the trust assets can be held in a common pot until the youngest child reaches age 25. At that time, the assets can be divided into three separate shares.
What is unique about a common pot trust?
A common pot trust allows your chosen trustee to distribute the assets in a manner that may not be equal to all beneficiaries. While this may seem like a negative trait, it allows your trustee increased flexibility. For example, if one child has a learning disability, the trustee could use funds from the common pot to pay for special tutoring without having to set aside equivalent amounts for the other children.
Is a common pot trust right for everyone?
No. Just like with all other estate planning documents, every situation is unique. Your California living trust should be tailored to meet your specific needs. Fortunately, an experienced Orange County trust lawyer can help guide you through this decision-making process in order to create the trust that best fits your family.
For more information about living trusts, view our free guide, Understanding the Revocable Living Trust - In Language that Anyone Can Understand in 8 Minutes. To learn more, contact the Orange County trust attorneys at the Law Office of James F. Roberts & Associates, today. Call our office at (714) 459-5481 for a consultation.