What Is the Difference Between a Trustee & a Settlor on a California Revocable Trust?

Since the 1980s, revocable living trusts have become a standard tool in California estate planning, according to the Toews law firm. The creator of the trust is called the settlor, trustor or grantor; the trust administrator is known as the trustee. The two roles are different legally, but in living trusts, the settlor will usually serve as the trustee as well.

Function

When a settlor creates a living trust, she places some or all of her assets into it and names the beneficiaries who will receive the assets after she dies. Because the beneficiaries are identified outside of the settlor's will, they can receive the assets without waiting to go through probate. The assets may still be subject to estate tax, however.

Trustee Duties

The trustee's duties begin with a reading of the trust documents to learn what assets the trust contains. She must register the assets in her name as trustee and, if the trust contains any California real estate, notify the county assessor for wherever the property is located. The trustee must manage the assets in accordance with the trust documents and for the good of the beneficiaries. When the settlor dies, the trustee or successor trustee must take care of any estate tax on the trust before distributing the assets.

Identification

By making herself the trustee of her revocable living trust, a settlor can retain control of her assets until she dies and the assets pass to the trust beneficiaries. The settlor could choose to appoint someone else as trustee, however. The settlor will also name a successor trustee to disburse the trust assets after the settlor's death.

Benefits

There are other ways besides a living trust a California settlor could use to keep assets out of probate, such as giving them as a gift before his death. If a parent gives title to his house to one of his children, however, his child could legally have him evicted. By making himself trustee, the settlor remains in control of the trust property as long as he lives, and avoids any gift taxes on the transfer of assets during his life.

Types

Living trusts can be either revocable or irrevocable, California attorney Milton Berry Scott states. The settlor has the authority to dissolve a revocable trust, but amending an irrevocable trust requires a court order. In California, trusts are assumed to be revocable unless the trust documents specify otherwise.

Features

To create a trust, the settlor must draw up the appropriate California legal forms, which can be found online for downloading. In order to transfer real estate into the trust, the settlor must file a quitclaim deed conveying title to the trust. To transfer bank, brokerage and investment accounts, the settlor will have to contact the institutions and arrange to put each account into the trust.

References

About the Author

A graduate of Oberlin College, Fraser Sherman began writing in 1981. Since then he's researched and written newspaper and magazine stories on city government, court cases, business, real estate and finance, the uses of new technologies and film history. Sherman has worked for more than a decade as a newspaper reporter, and his magazine articles have been published in "Newsweek," "Air & Space," "Backpacker" and "Boys' Life." Sherman is also the author of three film reference books, with a fourth currently under way.