Protect What Matters With A Trust
A trust is a helpful tool to add to your estate plan. It can help you manage your finances and create a long-term plan to ensure your loved ones are taken care of. However, many people may not fully understand how a trust works in Texas. Here is some essential information about this useful asset.
How To Set Up A Trust In Texas
Whether you want to set aside money for your child or grandchild’s college tuition, leave property to your heirs or need a credit shelter, the basics of creating a trust are relatively straightforward. Setting up the trust involves naming a grantor, trustee and a beneficiary, describing the agreement and listing the assets involved for transfer.
An experienced attorney can help you create a trust and ensure it complies with all laws and regulations, from federal estate tax exemptions to state discrepancies.
Differences Between The Grantor Of A Trust And The Trustee
Many people may be confused about the difference between the grantor of a trust and the trustee. The grantor is the person or entity that creates the trust, i.e. you. The trustee is the person or entity the grantor names to manage the trust. Once the trust is created, the trustee technically owns the assets in the trust, but they have a fiduciary duty to manage the assets on behalf of the beneficiary.
A separate trustee, either a person, a board or an institution, is often named because trusts are often created as part of estate plans and executed after the grantor’s death.
What Is A Revocable (Living) Trust?
A revocable living trust is created during the grantor’s lifetime and the grantor (or creator) often serves as the initial trustee. Since the trust is created during the grantor’s life, they can transfer property into and out of the trust.
A revocable trust can turn into an irrevocable trust after the death of the grantor. A living trust can also be a part of a thorough estate plan.
What Are The Benefits And Disadvantages Of A Living Trust?
There are several pros and cons of creating a living trust.
A few benefits include:
- Avoiding probate. Assets in this kind of trust can be immediately distributed upon the death of the grantor.
- Can insure financial privacy after death since the assets do not go through probate and are not subject to public record
- Minimizes the value of the taxable estate. Assets held in a trust are not part of the estate.
- Allows the trustee to manage assets if the grantor becomes incapacitated in any way
- Less expensive than other trusts
- Gives the grantor control of how and when beneficiaries receive assets
Some of the disadvantages include:
- No asset protection. Assets in a living trust can still be accessed by creditors.
- Can interfere with Social Security and Medicare benefits
Living trusts have benefits and disadvantages for both the beneficiaries and the grantors. An attorney can better evaluate your situation and help you make decisions about what type of trust will best suit your needs.
Do Trusts Help You Avoid Probate?
One of the main benefits of a trust, and one common reason people choose to create them, is because the assets in a trust avoid probate. Assets held in a trust do not go through the court process and can be distributed immediately upon the death of the grantor, if those are the terms of the trust agreement. Avoiding probate also means that the assets in the trust are not publicly recorded and often avoid certain taxes.
Contact Us For Additional Help
A trust of any kind can be a useful, versatile tool for anyone looking into estate planning or protecting their assets. However, the process of creating one is fairly involved. An attorney from our firm can help people create a secure, effective trust. Contact us for more information and help with this. Call 210-987-3059 or use our online contact form to find out more.