If you were making a list called “Words That Everyone Uses but not Everyone Understands”, the word “trust” would be on that list. Most people have a general idea of what a trust is, but not everyone understands when they should consider having one.
Isn’t a Trust Just for Rich People?
No, it isn’t! There are situations in which “regular people” benefit from having a Texas trust! In addition, a Last Will and Testament often includes language which leaves property “in trust” to a minor child or grandchild.
What is a Trust?
A trust is a legal way to put assets aside and control how they are managed or distributed. In other words, trusts don’t just happen on their own. The person who owns the assets needs to take the time to set it up and make some rules about how it will work.
Why Would I Want a Trust?
There are some good reasons to take the time to set up a trust.
- For tax reasons. A trust may help reduce a tax burden.
- Trusts are important when property can’t be given directly to a beneficiary. For instance, the beneficiary may be a minor child, a person with a disability, someone with other medical issues, or someone who does not have the maturity or desire to manage their financial affairs. In this case, you can leave your property “in trust” for them.
- To simplify the estate process. Assets that are passed on in trust may avoid probate court.
What Type of Trust do I Need?
First of all, you will have two initial choices: a) you can set up the trust to take effect when you die; or b) you can set up a trust that takes effect while you are still living. You would put assets into the trust now, with the eventual beneficiary or beneficiaries getting the assets. These are often called “Family Trusts” or “Living Trusts”. Your attorney will ask you questions to determine your goals and understand your financial picture.
Who is Going to be the Trustee?
You will need to choose a Trustee. The Trustee is appropriately named because it needs to be someone YOU trust! The Trustee has fiduciary duties to meet under Texas law. Under the law, the Trustee is forbidden from dishonesty, theft, and other actions that would harm the Trust or the beneficiaries.
You can also choose an “Alternate Trustee” in case your first Trustee can’t or won’t act for you.
How Can I Decide What I Need?
An estate planning attorney who is experienced in Texas wills and trusts can help you decide the kind that is right for you. Remember, you don’t have to be deceased for a trust to benefit your family. Living trusts are very common, and are helpful to a lot of people. If you set up a trust that functions while you are still alive, you may even choose yourself as Trustee. In Family Trusts, it is common to choose spouses as “co-trustees”, to serve together. Or, one spouse may serve as Trustee, with the other spouse as “alternate trustee”.
What Information Should I Bring to my Consultation?
Bring a list of your assets, including real estate, bank accounts and other property. In addition, you should think about how you want your estate to be distributed when you are gone. Write down any specific questions or concerns that you have.