What is a Living Trust?
What are living trusts? How do they work? Should you establish a living trust? For specific, personalized advice regarding a living trust, or to prepare a living trust for yourself and your loved ones, you’ll need to schedule a consultation with a Texas living trust attorney.
A living trust ensures that after you’ve passed away, your assets and properties go where you want them to go. No one knows what tomorrow may bring, but establishing a living trust is a way to help prepare for your life savings to go to the right people at the right time instead of to the wrong people or at the wrong time. It can also help decrease the likelihood that your assets will be subject to the time delays and publicity associated with the public probate process.
Living trusts also let you determine how your assets are handled while you’re alive. Should you set up your own living trust? That answer hinges on your personal circumstances. A Texas living trust lawyer can share the insights and advice that will assist you in making an informed decision.
What is a Trustee?
A living trust lets a “trustee” – someone you’ve named – have control over specific properties and assets. While you’re alive, you can be the trustee, or you may choose to designate another party you trust. The vast majority of the time, you’re the trustee of the trust that you established.
Your trustee may be a family member, a close friend, your attorney, or your bank’s trust department. The trustee manages your living trust’s assets on your behalf. The trust also names your beneficiaries and instructs the trustee regarding how your assets should be managed.
Who Will Be Involved With Your Living Trust?
The parties involved with your living trust are:
- The “grantor/trustor/settlor” (that’s you) is the person creating and placing assets in the trust.
- The “trustee” is the person or entity designated to fulfill the terms of the trust.
- A “successor trustee” is named in case your first trustee cannot or chooses not to serve.
- “Beneficiaries” are the parties who benefit from the living trust.
How Do Living Trusts Work?
After you’ve established your living trust, you’ll need to make sure that your assets are titled properly. For some assets, you’ll simply name the trust as the beneficiary. For other assets, you may name the trust as the present owner. Different size estates and goals dictate the unique titling for your unique circumstance. Too many people simply want to retitle everything in the name of the trust presently, but that’s not always the best situation given the time, expense, and/or risk involved with potentially doing so. Often, you will need to work with bankers, investment companies, LLC managers, etc. to make sure your assets are properly titled and styled. You’ll typically need to provide a copy of the Certificate of Trust (AKA Certification of Trust, AKA Declaration of Trust).
What Are the Advantages of Having a Living Trust?
In Texas, a living trust provides you with a number of advantages including but not necessarily limited to:
- Avoiding the probate process: In this state, assets that belong to your living trust are not subject to the probate process. Your beneficiaries will receive their inheritances sooner (probate can take 6 months or a year or longer), and they will not have to pay any probate costs.
- Keeping your affairs private: In the probate process, a last will and testament and often the value of your estate become matters of public record. A living trust allows you to keep those matters confidential.
- Avoiding confusion about who acts on your behalf: Your living trust document specifically names the successor trustee who has the legal right to act on your behalf after your death or if you should become incapacitated.
What Decisions Will You Have to Make?
When you prepare your living trust with the help of a Texas living trust attorney, that attorney will advise you and help you to:
- Select a trustee to manage the trust’s assets and properties upon your death: You may designate a trustee to manage the trust, or you can name yourself as your own trustee and select a successor trustee to manage the trust after you’ve passed away.
- Select the right type of trust to establish: If you are unmarried, a single living trust is probably best. Married couples typically set up a joint living trust so that jointly-owned as well as personally-owned properties and assets may be transferred into the trust.
- Determine which properties and assets that you want to transfer into your living trust: Some of your properties and assets may be transferred into the trust, while others may simply name your trust as the beneficiary and still others may name a person (or people) as direct beneficiaries thus bypassing the trust and probate process.
Can You Establish Conditions for an Inheritance?
With a last will and testament, when you leave properties or assets for a minor child, absent testamentary trust provisions, on the child’s eighteenth birthday, the child will often take control of those properties and assets. For that reason many people will create a testamentary trust in their Will that prolongs the distributions over a period of time, and that’s also why many people choose to instead set up a revocable living trust.
You can require the child, for instance, to complete college, to attain a specific age (21 or 25, for example), or you can set any other reasonable requirements for the child before the child may have control of the funds in the living trust. Often times, the trust will dictate that the child will receive distributions over time with certain ages and milestones for certain distributions.
When Should You Prepare Your Living Trust?
No rules govern who should have a living trust or when that trust should be established. The smart step to take is to schedule a consultation as soon as possible with a Texas living trust attorney.
How Will Your Attorney Help?
Finally, you’ll need to consider avoiding the pre-printed forms and “do-it-yourself” estate planning kits that are available online. Ask an attorney who focuses on estate plans and living trusts to help you personalize your trust and avoid the potential mistakes and pitfalls. We see tons of mistakes when people show us the DIY documents that they created, or attempted to create, online.
A Texas estate planning lawyer will explain your options for estate planning, personalize your trust, and ensure that your trust is effective, compliant with Texas law, and right for you. But with so many estate planning lawyers in Texas, how do you select the right one?
Mike Massey Law is Here for You
At Mike Massey Law, an estate planning attorney will help you establish – or help you revise – a living trust that protects your goals and clearly conveys your instructions. To serve you effectively, the offices of Mike Massey Law are located in both Austin and Houston and can serve most any Texas resident.
We can’t know the future, but an attorney with Mike Massey Law can help you prepare for whatever the future brings.
To learn more about living trusts and estate plans, or to begin preparing your living trust, promptly call Mike Massey Law in Houston (713-489-7360) or in Austin (512-400-4430).