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A living trust is a useful estate planning document that places assets and property in trust for the benefit of you and your beneficiaries.
Upon your passing, the beneficiaries listed in your trust receive distributions of your estate according to the trust terms.
Upon creation of the living trust, you are the named settlor (the person who sets up and puts assets in the trust) and usually the initial trustee (the person who manages the trust).
When you pass or if you become incapacitated, the individual you named your successor trustee handles the distribution of your estate under the terms of your trust.
During your lifetime, your living trust is fully amendable and revocable. You may change or revise your trust as often as you like.
Many individuals have multiple amendments to their trust outlining changes to beneficiary designations, real property acquisitions, and updated trust account information.
You may also revoke the entirety of your trust and create a new trust. A living trust enables you to create a specific plan for the distribution of your estate in line with your exact wishes. Setting up a trust in Texas is an easy task to complete with the assistance of an experienced estate planning attorney.
What Is the Difference Between a Will and Trust?
There are many differences between a will and a trust. There are multiple advantages for creating a trust over a will.
Avoiding Probate
The main advantage of having a living trust in Texas is avoiding probate. Even with a valid will, your estate will need to go through probate. Probate is a legal process where the court supervises the distribution of your estate upon your passing by reviewing, verifying, and enforcing the terms of your will.
The process is lengthy, and the distribution of your assets in your estate may not occur until the court concludes the probate and issues an order.
Privacy
When probating an estate, it becomes a matter of public record. A trust is a private document. The named successor trustee can supervise the distribution of assets in your estate privately and without court intervention.
Cost Savings
Even with a will, your estate will be probated. Probate processes can be expensive, and those costs will be paid out of your estate, leaving your beneficiaries with less.
Harder to Contest
Trusts are more difficult to contest than wills and provide greater security that, upon your passing, your exact wishes will be honored.
Why Should I Have a Living Trust?
There are many reasons why someone should set up a trust.
The most important reason to have a living trust is the control it gives you over the assets in the trust.
Although the assets named in the trust become the property of the trust, you continue to have complete control over those assets during your life.
The trust assets may be used to support you during your life, support others during your life, and support beneficiaries upon your passing. The customized characteristics of a living trust make it an attractive feature for individuals with a range of estate values.
Trusts also provide financial protection as the trust owns and manages your assets.
Trust ownership also protects your assets in the event you become incapacitated. Many design their living trust to use trust assets for the care, maintenance, and support of the settlor.
The power of a living trust in Texas transfers on death or incapacitation. In a way, the trust behaves as a power of attorney.
What Are the Elements of a Living Trust?
The most important aspects of a trust include the following.
Successor Trustee
The named successor trustee to your trust is the person you choose to handle the distribution of your estate upon your passing. An appointed trustee owes the beneficiaries to a trust the highest degree of loyalty and full disclosure.
If the trust provides for a staggered distribution or the trust property is for a minor child, it is the duty of the trustee to hold and maintain these trust assets for the benefit of the named beneficiaries.
Beneficiaries
The named beneficiaries to your trust are those individuals who will receive distributions from your estate. A living trust permits you to determine the manner of distributions from your estate as you wish. For example, a trust can hold money for minor children until they reach a certain age.
A trust may also provide specific details as to how beneficiaries may use trust assets. For example, a settlor may provide that education is the only permitted purpose for monetary distributions from the trust.
Assets
A trust must be funded to be deemed valid. Typically, people place real property, business ownership interests, and other significant investments into their trust. You will need to decide what assets you wish to place into your trust.
Do I Still Need a Will?
Yes. Although you have created a living trust to avoid probate, all complete estate plans also include a will. Generally, your will would direct that any property existing outside the trust at your death be transferred to the trust.
This ensures that the property will be distributed according to the trust terms in the event you forget or don’t have an opportunity to transfer recently acquired property into your trust. If your will transfers all of your remaining property into a trust, then none of your estate will need to be probated.
How to Set Up a Living Trust
If you would like to set up a living trust in Texas, you will need to sign a written trust document before a notary public. A trust is not valid until you transfer property into the trust. Proper funding of a trust requires the execution of deeds and other title documents.
Living Trust Questions? The Curley Law Firm Has Answers
A living trust may be the ideal estate planning tool for protecting, handling, and determining the distribution of your estate.
The Curley Law Firm will guide you through how to set up a living trust to focus on your specific goals. Actualizing an estate plan encompassing your wishes for the future while protecting your assets is the primary goal of The Curley Law Firm.