Typically, you will act as the Trustee of your own revocable living trust. This is primarily the case where the purpose of your trust is to plan for possible future incapacity or to avoid probate at the time of your death. For most purposes, you will want to remain in control for as long as possible, and serving as Trustee of your own trust is one way to accomplish this.

In fact, aside from re-titling your assets in the name of your trust, generally once your revocable living trust is established, you should see no practical change in the way you live your life. Yes, you are the Trustee, but on a day-to-day basis, you will continue going about your life without any substantive change to how you handle the management of your assets.

If a client is suffering from a condition that necessitates the help of another person to manage their assets, it may be worth considering bringing on a Co-Trustee or being replaced as the Trustee for the purpose of assisting the client with his financial affairs. In this particular case, the Trustor generally retains ultimate control and has the power to remove the Trustee, if necessary.

Generally speaking a deceased person's unpaid expenses, including income taxes, are to be paid out of his or her probate estate. However, estate, gift, and generation skipping transfer taxes are doled out pro rata among the beneficiaries / heirs of the decedent, e.g., beneficiary of life insurance policies, IRAs, or other retirement accounts, and the surviving joint tenants of joint tenancy assets. That being said, it is fairly common for those with Wills and Revocable Living Trusts to specify that the expenses and taxes are to be paid out of the residue of the estate or trust estate. 

Although many trusts specify that expenses and taxes are to be paid out of the residue of the trust estate, one should consider whether that is a fair burden on the residuary beneficiary(ies) of the trust. If a large portion of your assets passes outside of your trust, for example, by way of a large retirement account, it may not be fair for the residuary beneficiary(ies) of your trust to be responsible for the taxes related to that retirement account. On the other hand, if the beneficiary of the retirement account and the residuary beneficiary(ies) of your trust are the same people, it would not matter since the same people are ultimately responsible for the taxes. 

Clients often use revocable living trusts to accomplish tax planning objectives. However, many of these objectives involve technical requirements that, if not complied with, defeat the Trustors intentions. Many times, the technical requirements are not met because of a clerical oversight or because the trust is not drafted in a way that carries out the Trustors' wishes. 

Luckily, the laws in California provide some relief in the form of statutory savings provisions that are intended to help Trustors preserve marital and charitable deductions. These provisions can be found in California Probate Code Sections 21500 - 21541.

It's important for a Trustee of a trust to understand the extent of his or her powers when it comes to distributing assets of the trust. Depending on the specific beneficiary involved, the Trustee may have more expansive or limited ability to distribute trust assets to that beneficiary.

Generally, the creator of the Trust (Trustor) has the ability to receive distributions for whatever he or she may want. However, after the Trustor dies, distributions may be limited for the purpose of maintaining creditor protection and minimizing tax ramifications for the beneficiary. Often, distributions will be limited to a so-called "ascertainable standard", i.e., limited to health, support, maintenance and education, and an independent Trustee may be used to accomplish these goals.

If a beneficiary intends to act as a Trustee of his or her own trust that was established as result of the death of the Trustor, it's important that the beneficiary's ability to distribute assets to himself is limited to health, support, maintenance or education. Using a broader standard may limit the beneficiary's ability to maintain creditor protection and avoid having the trust assets included in the beneficiary's estate for estate tax purposes.

If the Trustor wishes to ensure that he or she is provided with a certain level of care, it's advisable that specific provisions be included to that effect. Often, Trustors wish to remain in their home as long as possible despite increased costs. By including specific instructions, the Trustee may feel more comfortable in expending additional resources of the trust.