To determine whether your estate planning could benefit from the creation of a trust you would need to be able to look at your circumstances and decide where you are with your finances, what sort of potential beneficiaries exist in your life, and what sort of goals you have with your money after your life. There are no wrong answers to this question but there are “less good” ones. We are going to explore what trust is and what benefit there may be to you in creating one.
The first thing that is worth mentioning here is that creating a trust can be money that is not well-spent in some situations. This is a key reason why the attorneys at the Law Office of Bryan Fagan recommend that you talk with an experienced estate planning attorney who can guide you with advice which is based on your specific circumstances. We will try to inform you today with details about estate planning and trusts, but we will not be able to give you specific information about your life unless you speak to us today for a free-of-charge consultation.
Trusts are a specialized estate planning device that may not be worth it for you to create. Working with an experienced estate planning attorney, someone who has advised many people in circumstances like yours is what you should be attempting to find for yourself. I can save you some time and point you toward the attorneys with the Law Office of Bryan Fagan. Our team of experienced estate planning attorneys is exactly what you need to be able to find out what estate planning tools should be included in your toolbox.
For today’s blog post, we are going to talk about a revocable living trust as the most used method of trust creation. First, I will mention that overall having a will is all you probably need when it comes to estate planning. A will is perfect if you have a moderate-sized estate and would like to avoid the probate process. In Texas, a will can allow your executor to administer the estate without having to go through probate. This is known as an independent administration. Having an experienced attorney can also help because the attorney can get with any beneficiaries under your will to determine whether the transfer of assets can be accomplished without having to go through probate. This can save time and money. For most people, it is unnecessary to probate their estate.
Another concern that some people have as they go through different planning elements for their estate is the idea that an estate tax may become an issue for their beneficiaries or heirs. An estate tax can gobble up a significant portion of a person’s estate after he or she has passed away. If you have a small-sized estate, then the idea of the government taking any percentage of your estate can be extremely frustrating to contemplate. Fortunately, Texas does not have an estate tax, so this is not a good reason to set up a living trust or a trust of any kind, for that matter.
On the federal level unless you have a relatively large estate then there is no need for a living trust, either, when it comes to trying to avoid estate taxes. You need to have an estate valued north of $12 million to become eligible for an estate tax on your property after you pass away. Of course, the government may change this over time and could pass legislation to do so. At this moment, however, it is still the case that only relatively large estates are subject to an estate tax. Even in instances where you do have an estate large enough to fall prey to estate taxes it still may not justify your setting up a revocable living trust. This is because within estate planning there are several ways for you to minimize exposure to estate taxes. Contact one of the Law Office of Bryan Fagan’s estate planning attorneys today to learn more about those methods and which ones may be relevant to you.
Joint tenancy with the right of survivorship is a method of avoiding probate that you can choose to utilize for a range of different assets which may be contained in your estate. Frankly, this is a more straightforward tool to utilize when compared to a trust when it comes to trying to set up an estate plan for yourself. You can place different types of property and assets into this designation and the key thing to understand is that the property passes directly to the person who is named as your joint tenant. You and your attorney can investigate something called a transfer on a death deed to facilitate the easy passing of property to another person after your death without probate or delay.
Again, having a will makes life so much simpler when it comes to passing property to the people/entities that you want. Living trusts have received favorable news coverage in recent years for doing the same thing- with good reason. However, a will does not mean that you will need to go through a lengthy and costly probate process. One, you may not even need to go through probate. Two, the probate process is shorter than it used to be which means that a will could be the perfect estate planning vehicle to take you where you want to go. Selecting the right person to be the executor of your bill can be a great benefit to you and your family, as well. You can start to think about a person who will be able to follow your wishes, and the law and use good judgment when doing so.
Finally, a living trust can be a pain to deal with because you need to add your assets to the trust as you acquire them. Having a property that you want in the trust but have not added the property to the trust yet defeats the purpose of having the trust in the first place. If you intend to create a revocable living trust, then you need to make sure that all your assets are transferred into the trust immediately upon acquisition. Or you can acquire the title to the property in the name of your trust. If you do not follow these steps, you could find yourself in a situation where you have trust but also a probate process to go through. This adds to the expense and time required to handle your affairs after your passing.
Why could trust be necessary for you?
If your property is in Texas as well as other states then it may be a good idea for you to have a trust. Even if you own property in multiple Texas counties it still may be a good idea for you to have a trust set up. Passing title to property located in another state can be cumbersome but having a trust can facilitate that process for you. This is commonly done in situations where the person who is doing their estate planning owns oil and gas interests in a state other than Texas. However, a trust can make the transfer of property from you to another person easier for all sorts of real property in addition to mineral rights.
The issue that you will run into if you own property in other states is that, if your property is not held in a living trust, your family may want to run your will through a probate court in each of the states where you own property. That may be an ok plan in some states but in many other states, this is an idea that can seriously delay your case given how long probate can take in various other states. Placing assets in a living trust can save a great deal of time and money for your family after you pass away. Remember- it’s not you that stands to benefit primarily from your actions in this regard. It’s your family and other beneficiaries who are the ones who will be much better off for your having done so.
If you are someone who knows that you have problems with self-control and taking care of your money, then a living trust may be exactly the tool that you are looking for when it comes to managing your finances. One important thing is to know your limitations. Taking care of your money is what a trustee can do for you. You would need to be able, to be honest with yourself about these limitations to put this sort of structure in place. However, if you have not yet learned how to manage your money then a trust could be the sort of arrangement that ends up saving you money in the long run.
Trusts are also a way to keep your private matters between you and your beneficiaries. It could be that you have family members that are not living a life that you approve of or that is healthy for him or her. However, you still want those people to be able to inherit property from you. In that situation you can put conditions on the property that person can inherit. A condition precedent means that a person must have pre-qualified for inheriting property from you by doing (or not doing) something beforehand. That condition could be not using drugs or alcohol. Or the condition precedent could be that the person needed to have graduated from college before you pass away to receive any property.
Figuring out if trust is a good idea
I cannot recommend highly enough that you reach out to an experienced estate planning attorney to determine whether a trust is a good idea for you. An attorney will be able to help you work through your specific circumstances to figure out whether a trust is worth the hassle for you. The assets that you own, the people who are your potential beneficiaries, and the goals or concerns that you have are all relevant to discuss with that attorney. An attorney with our office can help you separate fact from fiction in your estate planning journey. A consultation with our office is free of charge.
A good piece of information to have at your disposal is when you come to speak with one of our attorneys you should bring with you an inventory of the property that you own. An inventory is just a list of the property that you own. This includes personal property, investments, real property, and anything else that you are aware of. Start by going through your home, your closets, garage, storage units, and anywhere else in and around your home. Next, you can organize your investments by type and include those on your list. Finally, your real estate portfolio (if you happen to own any) is what can also be included in this list. This will be the attorney you meet with a better idea of the property you own. From there, he or she can give you different information that can help you decide whether a trust is right for you.
One piece of information that I think is important to share with you is that having a trust can be a good thing, but you should work with an attorney when creating one. There are ways to create a trust yourself or even to go to a website to build a trust. However, you cannot be sure that the trust is going to comply with the laws of Texas or that your trust is being created in a way that will minimize disruptions later in life. You cannot be sure that your trust has even been created unless you work with an attorney. There is a process you need to follow, and it is slightly more complicated than drafting a will.
What are the basic types of trusts in Texas?
If you are of sound mind and the trustee of your trust can act in the best interests of the beneficiaries of your trust, then you are off to a good start. If you or your spouse are aging or of questionable disposition or state of mind, then you may need to think twice before creating a trust. That trust can be challenged by a beneficiary or another person, potentially. In closing out today’s blog post I wanted to go over with you a few of the different types of trusts that you can choose to create here in Texas.
A testamentary trust is the type of trust that is created within a will. Once you pass away the trust would be in effect. Keep in mind that this type of trust cannot be changed once you pass away but can be changed as much as you want while you are still alive. A lot of times you will see testamentary trusts created when the person whose will is being written has minor children that need to be accounted for. Once those children reach age 18 the person can then remove the language in their will which covers a testamentary trust.
An irrevocable trust cannot be changed or have additional property added to it. People create these types of trusts to avoid estate taxes and if you want to plan for disability purposes. On the other hand, a revocable trust is set up to allow you to name a trustee to distribute your assets whenever you choose. You can make changes to a revocable trust while you are still alive.
Charitable trusts are set up to allow you to name a non-profit or other charity as your beneficiary. How the property needs to be divided and distributed is also covered in a charitable trust. Another altruistic type of trust is called a special needs trust. If you are the caretaker for a special needs child or adult, then you may have concerns about how that person is going to be cared for after you pass away. A special needs trust can help you to set up an estate plan for caring for a special needs individual.
With so many options, so many factors and so much depending on your specific circumstances at play it can be difficult to figure out whether a trust is right for you. When you have questions on estate planning matters there is no better source of information for you than the attorneys with the Law Office of Bryan Fagan. Reach out to us for information and options on your estate planning future.
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 and probate law.