Am I someone who needs a trust, and how do I start one? The attorneys at Wood Edwards LLP simplify creating a living trust in Texas.
We serve individuals with estates of all sizes throughout Texas and the Dallas-Fort Worth Metroplex. Our attorneys offer flat-fee, professional estate planning services while still giving you personal attention.
Once we understand your goals, we can tell you if a living trust is right for you or your family.
What Is a Living Trust in Texas?
A living trust is a legal device used to manage real or personal property. The benefit of a trust is that your trust document determines what happens to your property, not your will. In a living trust, the person forming the trust, known as the settlor or grantor, places property in the control of a trustee. The trustee administers and distributes property to the beneficiaries according to the settlor’s instructions. Property granted by a will must go through probate, but property distributed through a trust avoids probate.
An attorney will recommend either an irrevocable or revocable trust. Most living trusts are revocable, so you can change them at any time. A revocable trust also allows you to name yourself as the initial trustee and beneficiary so you can manage the trust in your lifetime. Upon your death, control of the trust passes to another trustee to administer it according to your wishes.
What Is the Difference Between a Living Trust and a Will?
A will is a legal document that describes how you want to distribute your property after you die. A will must undergo a legal process called probate. During probate, a judge ensures the will accurately reflects your wishes. The probate court also checks that you executed the will according to the law and when you were of sound mind.
Like a will, a living trust outlines how you want your assets distributed after death. However, because you place property into the trust before your death, the trust instrument doesn’t need to be validated by probate. Your beneficiaries won’t need to wait to receive a distribution. Additionally, you can place conditions on the transfer of ownership. For example, you can require your daughter to graduate from law school before she receives your house. You can still use your will to distribute any property not covered by the trust.
What Are the Advantages of Living Trusts?
A revocable living trust lets you control what happens to your assets during your life, incapacity, and after death.
Forming a revocable trust means you can make changes to it during your lifetime. Although the trust holds ownership, you can still use the property. For example, you can keep living in your home, pay your mortgage, and deduct the interest from your taxes.
A trust can help your family manage your estate if you become incapacitated. You don’t have to worry because you’ve already written instructions and transferred your property to the trust. The successor trustee automatically takes control of the trust when you become incapacitated or die. Additionally, banks are more likely to accept trustee actions without requiring more documentation than power of attorney documents.
While probate is not usually a long or expensive process in Texas, a trust helps your loved ones avoid any unnecessary delays. Distributing your out-of-state property by trust stops multiple courts from probating your property. Trusts escape many typical objections to wills, like incapacity or undue influence. Additionally, placing your business in trust means the trustee can continue operating the business after your death.
One final benefit is for those who value their privacy. Before administering a will, the personal representative must file an inventory and assessment of the estate with the court. Court documents become public records, including your will. If you don’t want the public to know what is in your estate and who inherits it, you can use a trust to pass on your property.
What Are the Downsides to Living Trusts?
While forming a trust has the benefit of avoiding probate, it’s not always the best estate planning tool for your situation.
Forming a trust requires more time and effort than executing a will. In addition to executing the trust document, you must fund the trust by transferring the property title to the trust. The costs of hiring an attorney to create and fund the trust can exceed the potential savings of avoiding probate.
A living trust also offers no flexibility after you die. Your beneficiaries can’t add assets you forgot to include or never retitled. Finally, a trust doesn’t allow you to assign a legal guardian for your minor children or grant someone medical power of attorney.
How Much Does a Living Trust Cost in Texas?
The cost of establishing a living trust is proportional to the time your attorney spends preparing the trust document and transferring assets into it. As you and your lawyer review your estate plan, they’ll get to know you and determine the best ways to achieve your goals. As a result, your final costs will be influenced by many variables, such as:
- How many assets you need to have retitled,
- Your objective for forming the trust,
- Your financial and tax situation,
- When and how you want the assets distributed,
- Whether you need to appoint a person to manage a child’s assets,
- Expenses related to the property, and
- Trust provisions and complexity.
Many people believe that a living trust is only for the wealthy. While forming a living trust does come with an upfront cost, it can save you in the long run. Your family can receive their inheritance without paying for probate representation.
How To Set Up a Trust in Texas
An online trust form or generator promises to save you money, but there is no guarantee that it will do what you want or be compliant with Texas law. When Wood Edwards prepares your trust, you get the convenience of online service while still benefiting from a lawyer’s experience and knowledge. We’ll walk you through every step so that your trust is properly formed and funded.
The first step in setting up a trust is drafting and executing a trust document. To be enforceable in Texas, a revocable living trust must:
- Appoint a trustee to manage the trust, but you can name yourself;
- Name a successor trustee for when you pass away;
- Describe the property you want to place in the trust;
- Name the trust’s beneficiaries; and
- Explain how the trustee should allocate the property to the named beneficiaries.
Additionally, a trust is only formed once you fund it. Funding a trust describes the process of assigning property ownership to the trust. You must perform a different procedure depending on the type of asset. For real estate, you must prepare a deed. You must place the trust’s name on your brokerage or bank account. To add proceeds from life insurance, annuities, and retirement plans, you’ll name the trust as your beneficiary. Remember that any income you add to the trust must be reported on your tax return when you are the beneficiary.
Wood Edwards: Trusted Estate Planners in Texas
A living trust is an important estate planning tool. It can help your family avoid probate and lets you control what happens to your property during and after your life. When you meet with our estate planning attorneys, they’ll review your options for managing your estate.
If creating a living trust is the best option for you, we’ll help you execute and fund your trust. We offer flat-rate fees for all estate planning documents and services. We get to know every client to help you identify potential issues and the most efficient estate plan for your family.
Contact us today to get started on planning for your family’s future.