How is a Trust Defined in Texas?
A trust is a contract between the settlors (the owners who are moving the property into the trust) and the trustees (the persons in charge of managing the trust). It is an agreement on how certain property will be managed. Some trusts give the settlors more power than other trusts. A revocable living trust gives the settlors the most power over the property. An irrevocable trust gives the settlors less power over the property, but can still provide some income or principle to be paid to the settlors under certain circumstances..
What are the Benefits and Disadvantages Associated With a Trust?
There are not many disadvantages for revocable living trusts. It is a convenient and relatively inexpensive way to manage assets. The only disadvantage would be the initial cost of setting up the trust, but this is offset by the many advantages. First, a trust can be used to avoid probate. If you only have a will, then your family is required to go to court and probate that will before your wishes will be honored. A properly funded revocable living trust avoids the costs and time required to probate a will. A trust can also be used for future planning to protect the assets that will be distributed to the beneficiaries of the trust. Other types of trusts can protect assets from creditors while the settlors are still alive.
What Components Make Up an Effective Trust?
An effective trust is one that is properly drafted and is designed to do what you intended it to do. You may not know what you are getting if you just download some trust off the Internet. Most people who come to us with that type of trust thought they were getting something entirely different and are surprised when we tell them what it really means. An effective trust is also funded properly. If you have property that has not been assigned to the trust or titled in the name of the trust, then your intended beneficiaries will have to go to court before it is distributed to anyone.
Can Someone Have More Than One Trust?
Many of our plans have both a revocable and an irrevocable trust. The revocable trust contains the assets that the settlor needs to use for their daily living. The irrevocable trust contains those assets for which the settlors want more protection, such as a rental property or other income producing property.
How Would You Advise Someone Who is Afraid of Losing Control Over Their Assets?
We design trusts that suit the needs of our clients. We agree that people should not give up control to assets they need for daily living. We review the asset situation of the client to design the best overall plan. Many times this includes keeping a certain amount of control over assets even if they are placed in an irrevocable trust. We can design an irrevocable trust wherein the settlor has control over how those assets are managed and can change beneficiaries at any time. We can also design protections for the settlor to give the settlor control over who the co- trustees are at any giving time.
Does a Trust Always Have Assets in It?
A trust must be funded on the day it is created. This can be a nominal amount or a larger amount. You can also design a trust to close when it becomes economically unfeasible to keep it open.
Are Assets Held in a Trust Protected from Creditors?
Whether assets are protected from creditors depends on the actual language of the trust. We can design a trust that has future asset protection for the beneficiaries. We can also design a trust that provides current asset protection for the settlor.
Why Would You Recommend a Trust as a Basic Strategy for Proper Estate Planning?
A revocable living trust is a solid basic strategy for estate planning. It is better than having only a will because a will must be submitted to a court and probated though the court system before it is effective.
For more information on Trusts In Texas, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (512) 288-3200 today.