What are trusts, and why are they important in estate planning?

Have you ever heard the term “trust fund kid”? It usually brings to mind someone raised in wealth, enjoying every luxury thanks to their parents’ financial planning. Lavish lifestyles, endless support, and a future secured by money held in trust until adulthood—it’s a familiar story. But behind the stereotype lies a powerful estate planning tool. So, what are trusts really? Trusts serve as legal tools that help you protect your assets, control how they’re distributed, and provide for your loved ones—regardless of your income or background. You don’t need to be ultra-wealthy to benefit from creating one.

Why trusts aren’t just for the wealthy or elderly anymore

The other circumstance that may call to mind the term trusts is one involving elderly people who are in the final stages of their lives and just need to put the finishing touches on their end-of-life planning. This could involve some wealth, as we talked about in the prior paragraph. After all, older people tend to have more money than younger people, just by, they have lived longer and have had more of an opportunity to accumulate some degree of wealth. An elderly person can create a trust to prepare for how their property will be distributed or protected after they pass away. It seems like the prudent thing to do- like double-checking that you did shut the garage door before you left the house for work in the morning.

You may be in a position where you can benefit from having a trust set up than you may realize. Estate planning is all about the specific circumstances that you have now and anticipating what the future may hold for you and your family. That’s the tough part- trying to offer an educated guess as to what the future has in store for your family is not easy. It certainly takes some planning and some forethought. Estate planning may make little sense in your mind right now, but the thing is, time marches on. It is not something that only rich people or only older people should consider. I’d even make the argument that you’ve made some mistakes along the way if you are older and wealthy but have not begun to plan for your future estate needs. The time to engage in this type of planning is now.

What is trust?

A trust is a fiduciary agreement included in your estate plan, allowing someone else to manage your assets in your best interest. This person, called a trustee, can be an individual or a firm like a bank. Like attorneys or financial planners, trustees have a legal duty to act responsibly on your behalf. While you’re alive, the trustee may follow your guidance, and after your death, they must carry out the trust’s terms—whether that involves distributing funds or selling property. A trust provides valuable security for anyone looking to protect and manage their assets effectively.

You do not need to have a huge or valuable estate to potentially benefit from the creation of a trust. The attorneys with the Law Office of Bryan Fagan see all the time people whose first reaction to estate planning is to be dismissive of how the process can benefit them as individuals. Many people assume they don’t need a trust because their assets are modest or they’re still relatively young. Maybe later- once they have built up some wealth or some years of their life- will they do something to plan for their future estate needs? However, for now, they believe estate planning isn’t necessary or beneficial for their situation.

Don’t make the mistake of putting off estate planning. Creating a trust not only benefits you but can also greatly help your family. You can’t always wait for a better time—none of us knows when our final moments will come. While it may feel like estate planning only matters after death, that’s exactly why it’s so important to act now. The effort you invest today can make a lasting difference for your loved ones tomorrow.

Benefits of creating a trust

Creating trust has many advantages for you and your family, potentially. First off, creating a trust puts your estate in a position where it would not have to go through probate. A probate court judge oversees the legal process of probate, ensuring the estate pays its debts and distributes property according to the law. Usually, this involves hiring an attorney, paying court costs and fees, as well as requiring a great deal of patience from parties involved in the process. By creating a trust, you can likely put your estate and your family in a position where they do not need to go through probate just to have property and assets distributed to the correct parties. Your family and other beneficiaries under the trust will appreciate that, for sure.

Next, trusts can help maintain privacy for your family when it comes to estate planning and property-related matters. Going through probate is not only time-consuming but it can also be a situation where any interested party (or random person) can come to view the proceedings of the probate court as they pertain to your case. Rather than having the matters be kept in-house for your family to consider probate court proceedings force what should be family issues into the open for all the world to see. This is not ideal especially if your family has any issues that you would like to keep private- and what family doesn’t if we are being honest with ourselves?

Why creating a trust is a smart and selfless choice

Property is kept safe in a trust. Yes, mistakes and malfeasance happen all the time in our world. This is one of the risks that we take doing anything in life- nobody knows exactly what will happen in the future. Control is an illusion that we work hard to convince ourselves of in many areas of life. However, creating a trust to house and then distribute your property is a great way to help ensure some degree of protection for the property that you own. Imagine the alternative. If you pass away and have done nothing to plan for your end-of-life circumstances, you will be relying upon the state to divide up your property through a probate court proceeding.

Even if your family can manage to avoid probate and simply divide up the property between itself that doesn’t exactly give you a ton of confidence given that you have no idea how or who will oversee that. Better to be the one to exert some control over the property that you worked so hard to accumulate. This isn’t so that you can be greedy or hardheaded. Rather, you know your family and your circumstances better than anyone.

As a result, you know what you have and who could benefit from it better than anyone. Creating trust is the ultimate way for you to lay out a game plan for end-of-life circumstances and how you think your property can best benefit those around you. This isn’t done to prop you up as some great person or anything like that. It is the purest form of nobility- to perform an action that you do not stand to benefit from, but rather, stands to benefit those in your life such as your family.

Why using a trust to control future property distribution makes sense

Creating a trust allows you to decide exactly how and when your property will be distributed. You take control of the process, set clear conditions, and ensure your assets go to the right people at the right time. Rather than simply releasing property with no plan in place, a trust has certain conditions that you can set up to distribute property upon the passage of certain events or simply after a certain amount of time has passed. For instance, consider a situation where you have a nephew who you know is studying to be a doctor.

You can create a condition in your trust that directs your nephew to receive a few thousand dollars only after he graduates from medical school. This condition precedent sets clear terms for when and how the funds can be released—whether to help with bills, student loans, or a new vehicle. It ensures the money serves a specific purpose and aligns with your intentions. This is not being a controlling person or an untrusting person. Rather, it allows you to be able to offer a benefit to your family with specific expectations set up in advance.

Finally, imagine passing away without completing any estate planning. You’ve spent years building your property, but you leave behind no instructions on how to distribute it. In that case, a probate court judge will follow the Texas Probate Code and divide your assets between your spouse and adult children. If your children are adults, the court will release the money to them with no structure or guidance on how to use it. That may not affect them negatively—or it could cause serious harm, depending on their circumstances.

Why creating a trust can protect loved ones from financial harm

Most people would struggle to develop a plan for how to handle a large distribution of money all at once. A person must have a lot of self-control to be able to develop a plan for how not to waste those assets. If you know that your children or your immediate family struggles with money in a way that could be harmful to them, then this could be your wake-up call to create a trust to prevent them from harming themselves. Unfortunately, if your children have an addiction issue or any other kind of problem in their lives, the assets that become yours after your passing could wind up being extremely detrimental to their well-being. Rather than put them in that type of situation, you could create a trust that only distributes money to them after they reach certain age milestones or other circumstances come to pass.

For example, you may want to hold off on releasing money to your child until after he or she has been able to live sober for ten years. Or you may set up a condition in the trust that your son could only receive money once he has completed a financial planning course that you have already paid for. These are hypothetical situations, of course. I don’t know your specific circumstances at all, but I wanted to outline what may make some sense for you and your family moving forward. The plan that your family develops will almost certainly look different than what I have outlined for you today. However, having a plan of any sort puts you and your loved ones in a better position than having no plan at all.

What is the profile of a person who should have trust?

Ultimately, many people—from all walks of life—can benefit from creating a trust. We’ve already looked at several examples where an average family in Southeast Texas could gain real value from this kind of planning. That said, it’s helpful to understand what types of individuals might be ideal candidates for establishing a trust. Think of this as a general outline rather than a strict rule. Even if your situation doesn’t match these characteristics exactly, you may still be able to provide lasting benefits to your family by creating a trust tailored to your unique needs.

Why placing real estate in a trust can protect both property and people

If you own a home or multiple real estate properties, consider creating a trust. A trust lets you set clear conditions for how and when beneficiaries receive property. Handing over a million-dollar home to someone unprepared to manage or sell it can lead to stress, damage, and lost value. With a trust, you create a structured plan for distribution and include instructions on how to maintain the property until the transfer. This approach protects both the property and the person you want to support.

If you have assets that are valued at over $250,000 then you may want to consider having a trust. For some of you reading this blog post you may look at that number and think that $250,000 isn’t a large enough estate to fool with trust creation. On the other hand, others of you may look at $250,000 and think that we may as well be talking about $250 million in your circumstances. Wherever you are on your wealth-building timeline we need to consider that the size of your estate matters. If you have no property at all at this moment, then you should not consider creating a trust other than one for your children if they are minors. However, if you do have some assets and concepts like avoiding probate matters to you then trust creation should be a consideration for you and your family.

Why creating a trust can bring peace of mind to your family

Creating trust and placing certain property within it can be something that puts your family at ease and provides peace of mind for your family after you pass away. To be sure, when a loved one passes away, there is a lot to consider. You have all the logistical concerns of an end-of-life event, but also the emotional ones, as well. By creating trust, you enable your family to focus on one another and their memories of you rather than financial concerns and other “practical” considerations. Leaving a legacy like that can be one of the most profoundly generous and noble gifts that you can provide to them over and above anything that you do within the trust itself.

In conclusion, understanding what trusts are is essential for anyone looking to take control of their estate planning. Trusts offer more than just a way to pass on wealth—they provide structure, privacy, asset protection, and peace of mind. Whether you’re safeguarding your legacy, caring for loved ones, or avoiding probate delays, a well-crafted trust can help you achieve your goals with clarity and confidence.

The first step towards creating a trust or any life estate plan is to simply learn about the process. Scheduling a consultation with one of our attorneys is a great way to do that with no risks or strings attached.

Questions about the material contained in today’s blog post? Contact the Law Office of Bryan Fagan

If you have any questions about the material contained in today’s blog post, please do not hesitate to contact the Law Office of Bryan Fagan. Our licensed estate planning attorneys offer free-of-charge consultations six days a week in person, over the phone, and via video. These consultations are a great way for you to learn more about the world of Texas estate planning law as well as about how your family’s circumstances may be impacted by the filing of a probate case.

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