When it comes to managing your assets, we understand you want to ensure your affairs are managed with care and dependability. At the Law Office of Todd A. Wilson, we specialize in probate, trust, and will matters. Our trust creation services guarantee your assets will be directed as intended with a focus on privacy, expediency, minimizing any potential issues among beneficiaries, and trust laws in Texas. This page was designed to inform you on all matters of trust creation and how we can assist. Please contact our office with any questions or to request a consultation with a Texas attorney.
A trust is a way of establishing the direction of assets between a third party – commonly referred to as a “trustee” – on behalf of your designated beneficiary. Trusts are a popular option for wealth management, as they can provide a means minimizing estate taxes, shielding assets from creditors, safely passing on all assets to the beneficiary, or beneficiaries, of your choice. Trusts are a cornerstone of estate planning and ensure a smooth transition of assets between generations.
There are many reasons for creating a trust. These reasons vary based on the value and type of assets, the beneficiary’s status, probate avoidance, and so on. Below you will find a comprehensive breakdown of the various benefits of establishing a trust.
Dealing with a death in the family is already painful enough. Having your family deal with probate court proceedings after your death only adds stress and frustration. Probate court proceedings can tie up your property and other assets for months or even years. There will also likely be costly probate fees which will take away from the assets you are looking to transition. With a trust in place, you can circumvent these proceedings and spare your family the hassle and expense.
Who you outline as your beneficiary is a very common justification for creating a trust. For example, if your beneficiary happens to be a minor at the time of your death, the trust establishes a clear plan for asset and wealth allocation based on the terms you dictate. Another example is if the beneficiary manages money poorly, is incapacitated, or is underage. Essentially, a trust allows you to maintain some sense of control over your assets being transferred and the manner in which they are transferred.
An estate tax can be levied by the government on your estate once you pass away. This tax will apply to the assets you are trying to pass on to your designated beneficiary. Establishing what is known as an “irrevocable trust” – one in which a third party is designated as trustee – can be a handy way of minimizing estate taxes, as the trustmaker gives up ownership of the property funded into it, meaning those assets are not considered a part of the estate for estate tax purposes.
A special needs trust exists for when your designated beneficiary is either physically or mentally disabled. This type of trust allows them to receive income or assets from the trust without them affecting their public assistance disability benefits as provided by Social Security and/or Medicaid. Special needs trusts are a way of ensuring your beneficiary receives the assets and wealth associated with an estate without jeopardizing their existing benefits. Proceeds from this type of trust are typically used for medical expenses, transportation, payment for caretakers or caretaker facilities, and other pre-approved expenses.
If you own property in multiple states, you can ensure your beneficiary avoids numerous state probate proceedings and costs by including these properties in a revocable trust. As outlined in earlier sections, a trust helps your beneficiary get the most out of your estate by limiting their exposure to fees and taxes.
We live in an increasingly digital, open world. Privacy trusts may be beneficial if you intend to own property and are concerned about the ability of third parties to search for your home address. We can set up a privacy trust that will make it difficult for individuals to locate you through internet and property record searches. This can be extremely beneficial for public figures as well as individuals concerned about violent ex-husbands.
The primary difference between revocable and irrevocable trusts is flexibility. The terms of a revocable trust can be changed at any point after the trust is created. The trustmaker can add or remove beneficiaries as they see fit, change how they want certain assets allocated, and more. This type of flexibility sounds like a great option, and in many ways it is, but there are some downsides to these types of trusts. For example, assets in a revocable trust are still vulnerable to creditors, judgments, and taxes.
An irrevocable trust’s terms cannot be altered without first obtaining the consent of the beneficiary or beneficiaries. The terms of an irrevocable trust are cemented the minute the official document is signed. While these types of trusts do not afford the same type of flexibility, their main advantage lies in minimizing estate taxes. These trusts position assets outside of the trustmaker’s taxable estate, meaning that the assets will not be subjected to any estate taxes upon the death of the benefactor. The benefactor also avoids any tax responsibility for income generated by the assets included in the trust.
It is highly recommended that an irrevocable trust is set up with a qualified trust attorney.