Who hasn’t heard the phrase “trust fund baby” applied to the child of a celebrity or wealthy business leader? It’s certainly true that trusts are used extensively by wealthy families. But it’s also true that trusts should be used by more people, including those whose bank accounts aren’t bursting at the seams.
Many types of trusts are available in Texas, but revocable living trusts—often simply called living trusts—are the most popular, so we’ll focus on them in this article.
How Does a Revocable Living Trust Work?
As its name implies, a revocable living trust operates while the person who created it is still alive. The person who creates it is called the grantor. The “revocable” part refers to the fact that you can make changes to the trust after it is created. There are irrevocable trust as well, which we may discuss in the future.
When you work with a Texas lawyer to create a trust, here is roughly what you can expect:
- You discuss your goals with the lawyer, who then drafts the documents.
- After the trust is created, the lawyer helps you transfer ownership of assets to the trust.
- You name a trustee to manage the trust during your life (most people name themselves as trustee).
- You also name a successor trustee to take over trustee duties after you die.
- You retain control of the trust assets during life.
- When you die, the assets are distributed to whoever is specified in the trust.
Why Trusts Benefit Everyone, Not Just the Rich
No matter what your financial position may be, living trusts can provide you and your family several important benefits that aren’t necessarily tied to money:
- Control: Assuming you name yourself as trustee, you retain control of your assets while you are alive. Plus, the trust allows you to dictate how your assets are dispersed when you die. For example, you can create a trust provision that says you want your child to have Asset X, but not until she turns 21. Or you can set it up so that $1,000 a year is paid to your favorite charity every year. The possibilities are wide open.
- Probate avoidance: Texas probate can be surprisingly efficient, but it can still be costly and many people are better off avoiding it. With a living trust, your assets do not go through probate, saving your family the time and expense of going to court.
- Privacy: Trusts are administered out of court, so the details of the trust do not enter the public record. This is much different from what happens with a will. Wills go through probate court, which makes them a matter of public record.
- Incapacity planning: If you become incapacitated, your successor trustee steps in to manage your assets without the need for a court-supervised guardianship. This saves considerable time and expense. It also means that the person you want, instead of the person a probate judge wants, makes personal and financial decisions for you.
Is a Trust Right for You? Ask Our Texas Attorney.
You don’t have to be rich to benefit from a trust. Talk to an estate planning lawyer at the Law Office of Tawana H. Gray in Fort Worth about your goals and we can help you decide if a trust makes sense for you. Call 817-270-9975 or contact us online to schedule a consultation.