While the simplicity of a Will driven estate plan in Texas is most favored, some situations dictate using a trust instead. Navigating the details of a trust in the pursuit of crafting an optimal estate plan can be overwhelming. All 50 states have different systems of probate. The ultimate purpose of probate is to transfer your assets. Texas has one of the best systems for transfering assets. If you are concerned with whether a Will or Trust is right for your estate, you can reach out to us and we can help you put together a plan that uses the right legal documents to match your needs.
To start, let’s basic difference between a Will and a Trust in simple terms, so you can get a basic idea of what’s out there.
Wills executed in Texas can be relatively easy to probate. If the will contains proper language appointing an “independent executor” and contains “self-proving affidavits” from 2 witnesses over the age of 14, then your estate should be in an out of probate in a jiffy. If you do not have a will, or it does not appoint an independent executor, or is not self-proving, in that event THE LAWYERS WILL GET ALL THE MONEY.
An independent executor need only make application to the court for admission of the Will to probate, and do an inventory and appraisement. If no debts or taxes are due, the estate may then be distributed to the devisees (devisee is a fancy lawyer word for “heir”). Technically heirs and devisees are different, but you will have to pay me to explain all that. Another term is beneficiary (another fancy lawyer word for who benefits from the Will). The benefit to not having debt is that only the beneficiaries see the inventory.
Thus, an estate driven by a Will does not require a great deal of management, allows the individual to maintain ownership of assets until death, can be simple, private and relatively inexpensive.
Generally, a trust is a legal instrument that transfers title to designated property from the owner, called the settlor, donor or grantor (settlor), to a trustee, who holds the property for the beneficiaries of the trust. The settlor can also serve as the trustee, thereby enhancing control over the trust during the life of the settlor. In such a case, a successor trustee is usually named in case the grantor dies or is incapacitated. Depending on the size or complexity of
the trust, the trustee, or cotrustee, might
be an institution, so as to bring more expertise to the position.
When utilizing a trust for your estate plan there are several considerations. Once created, all property belonging to the settlor must be transferred into the trust. This includes real estate, financial accounts, vehicles and any other property. Over time, as property is sold and/or acquired, the trust must be utilized and the property placed in the trust name.
If you are seeking tax relief from the trust, then you will not be able to act as the trustee. Additionally, you may not be able to amend the trust. Many folks are not comfortable giving up control of their assets.
Another consideration are the homestead, disability or over 65 exemptions effecting your property. In order to maintain these exemptions, the trust will need to contain specific language. It may not be possible to maintain all these exemptions.
Trust are popular in many states because of different property and tax law. However, what works in one state, may not be the best in your state (Texas).
There are many different types of trust and one might be appropriate in your plan, but there is lots of misconceptions about trust.
If you considering an estate plan, you should sit down with an attorney experienced in estate planning to assist you in making sure which estate plan is correct for your needs. We have the experience and would be glad to help you in this regard.