Hey there, everyone. This is Bridget MacKay from MacKay Dressler Law Firm, and I just wanted to answer some of the most common questions we get about trusts.
So, the first one is, will a trust avoid taxes? And that answer is sort of maybe, mostly no. So, your regular income taxes that you pay, if you get a trust, it’s not going to help with those. But it may help with things like estate taxes. So, if you passed away, the IRS actually wants to tax you on what you’ve made in your lifetime. And sometimes a trust can help manage the impact of that on your family. And the third tax that we address is property tax. So, some of you are familiar with Proposition 19, but basically, it requires all real property, when passed, to be taxed and reassessed for the base taxes for property taxes. And sometimes a trust can have the tools you need so that your loved ones can maybe avoid that tax. So those are the small areas in which a trust can help with taxes, but they could have a big impact on your family and your life.
The second question is, is a trust only for the rich? And that is a firm no. Besides, I mean, who’s rich? Is it like billionaires now at this point? I remember in my childhood, a millionaire was like a really rich person. I feel like that’s kind of changed. Most of our houses are approaching that value. So no, it’s for everybody. If you love your family and you want to protect your family and you want those tough, scary transitions we all are going to face in life to go as smoothly and easily as possible, then you’re going to want to get a trust.
Question number three: If I set up a trust, can I be my own trustee? Yes, that’s what happens when we first set up the trust. You or you and your spouse are the trustee, so you’re totally in control of all of your assets, even though the trust is there. The thing you need to understand about a trust is once you set it up, it doesn’t mean you know, this entity takes over your assets, and you no longer can make decisions, and you are losing control of your money. It actually is quite the opposite. You still maintain all the control you’ve had over your assets and your money, and you still file your tax returns the same way; it’s just there as a standby document. It’s just in case something happens, you have this plan that’s going to get deployed and help your family.
Question number four is, if I move my assets to a trust, can I still buy, sell, and have control of them? Well, I kind of just answered that in question three. Yes, you have total control over everything. It’s only if you die or you become incapacitated, such that you can’t manage your financial affairs, that someone else takes over. But they only take over on behalf of you. And so they do have to listen to your direction and follow the rules that you’ve laid out in your trust. And that’s the last question. Oh, there’s a last one.
Five. What happens to assets left out of a living trust? This is actually a really important one. And I’m going to answer that in another blog.
If you enjoyed this content, check out our other video blogs on our YouTube page: https://www.youtube.com/@mackaydressler
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