A will and a trust are important legal instruments used to convey property to your loved ones upon your death. So how do you know which one you need, and do you always need both?
What are the benefits of a trust vs. a will in Texas? This page will explore the benefits and drawbacks of having both a will and trust in your estate plan.
The attorneys at Wood Edwards LLP offer simple estate planning services backed by our experience and client-centered approach. When you meet with one of our attorneys, they will get to know you and explore the best options for your needs.
We offer flat fees for our services and can help you plan your estate entirely online. With Wood Edwards, you get to establish a personal relationship with your estate planning attorney while benefiting from our simplified approach.
What Is a Will in Texas?
A will is a legal document that explains a person’s wishes about who should inherit their property after their death. You do not have to have a will for your family to inherit your property. If a person does not have a will, Texas intestate succession laws divide their property up between their surviving spouse and children.
However, when you make a will, you can specify a different division, including disinheriting a child, giving property to other relatives or friends, or giving to charity.
After you pass away, your executor will submit a copy of your will and an application to the probate court so they can begin managing and distributing your estate. The purpose of the probate court is to protect your property and facilitate the administration of your will.
First, a judge makes sure your will was properly executed and meets all of the legal requirements. They may interview witnesses and examine your mental state at the time you wrote the will to accomplish those tasks.
Next, the court authorizes the executor to use your estate property to pay your bills, taxes, and expenses. After creditors are paid, the executor can distribute the remaining assets to your beneficiaries according to your wishes. The executor also has to report an accounting and inventory of your estate to the probate court, which becomes a public record.
What Is a Trust in Texas?
A trust is another option for distributing your property after you die. Trusts can be “living” trusts or “testamentary” trusts. A living trust requires you to transfer property to the trust during your life. A testamentary trust has property transferred into it by a provision in your will. A trust will be managed by a trustee.
Creating a trust requires you to execute a document with instructions for how the trust assets should be distributed and placing the property under the trust’s control. The person who creates a trust is called the “settlor” or “grantor,” and the person managing the trust is called the “trustee.”
Trustees have specific legal duties, like caring for the trust property and following the trust document. A person who receives trust property is called a “beneficiary.” The trust document will name a beneficiary or beneficiaries who will receive the property upon your death.
In estate planning, you will encounter two types of living trusts: revocable and irrevocable. Irrevocable trusts cannot be changed once executed, but they may offer tax benefits and protect the trust assets from creditors.
On the other hand, as the name suggests, you can change a revocable trust. Revocable trusts also allow you to name yourself as both a trustee and beneficiary of the trust during your lifetime, so you can keep using your property. Upon your death, control of the trust passes to the successor trustee who will then distribute the property to your beneficiaries.
Creating a trust is more complicated than executing a will and has additional upfront costs. However, the property held in trust does not have to go through probate when you die. This can save your family time and money because they do not have to wait for probate to be completed to receive the property.
The Benefits and Drawbacks of a Trust vs. a Will in Texas
When you write a will, you can specify how your property will be distributed and do not have to worry about transferring ownership to a trustee. You continue to own and control that property until you die. For example, you can grant half of your assets to your spouse and half to your daughter, but you still own those assets while you’re alive.
When creating a trust, you must place property into the trust. Problems can arise when you forget to include an asset or transfer a title. When you use a will to distribute your property, you do not have to worry about retitling and transferring property. A will is also usually simpler to prepare, so it will cost less than establishing a trust.
On the other hand, trust assets avoid probate. Because the trust document contains instructions for the successor trustee, they can distribute your property automatically. Your family can avoid a will contest in probate and receive their assets quicker. If you own property out-of-state, a trust can help your family avoid going through probate in multiple states.
Additionally, a trust can give your family access to your assets if you become incapacitated or disabled. You can organize the trust so the trustee can manage the trust when you are unable to. You can also use a “pour-over” provision in a will to transfer assets into a trust after your death. Or, you can place some assets into a trust and use a will to distribute the remaining assets.
Do I Need a Will or Trust?
Most adults should create a will to ensure their family is cared for after their death. Only an attorney can tell you if you could also benefit from a trust. When you choose Wood Edwards for your estate planning, we will get to know you and your financial goals. We work with our clients to find the most efficient solutions to their estate planning needs.
Whether you need a will, trust, power of attorney, or medical power of attorney, we can help. We offer reasonable, flat fees for our services, backed by our decades of experience. You can expect personal service and practical advice to protect your family and assets. We also connect with clients online and can help you plan your estate from the comfort of your home.
Contact us today so we can start helping you plan for your family’s future.