What is a Trust?
A trust is essentially a contractual agreement. The parties to the agreement are the grantors/settlors (the people setting up the trust), the trustees (the people managing the trust), and the beneficiaries (the people who receive income or other benefits from the trust).
What Benefits does a Trust Offer? What are the Disadvantages?
One of the benefits of a trust is that it can be used as a tool to avoid probate. If all of a person’s assets are included in a trust, there is nothing that must be distributed through that person’s will. Therefore, there is no need to go through the probate court system for the property to be distributed. There are many kinds of trusts and each have their own benefits and potential draw backs. The main potential disadvantage of trust is that it costs more to set it up and administer than to just to set up a will. However, there are situations in which a trust is advantageous. The attorneys with Payne, Powell, and Truitt consult with each client and come up with an individual estate plan that best meets our client’s needs.
What Components Make up an Effective Trust?
It depends completely on the type of trust established. A revocable living trust avoids probate, but such a trust does not give any asset protection from creditors or otherwise. An irrevocable living trust does provide asset protection, and it can be designed to pay the settlors income from the trust or not. There are also special purpose trusts that can be used for family members with special needs or for particular property, like rental property.
Can I have more than one Trust?
Yes, although it is not common outside of trusts for a particular purpose, like gun trusts or for rental property.
What would you say to someone who is afraid of losing control of their assets if they don’t own them anymore?
We have the same concern. That is why we consult with each client and work to meet that person individual needs. We work to ensure that there are several options available so that you can choose the level of control you want and still have the advantages of holding the property in trust.
Does a trust always have assets in it?
Every trust is created with some amount of assets because a trust cannot exist until it is funded. In some cases, it is simply a small amount of money used to initially fund the trust. After the initial funding, then other property can be purchased by the trust or transferred to the trust.
Are Assets held in a trust protected from creditors?
We design trusts to meet the needs of our clients. Some clients want immediate asset protection, which would require the establishing of irrevocable living trusts. Some clients are less interested in asset protection, and more interested in using the trust as a way to avoid probate. That trust would be a revocable living trust.
Why would you recommend a trust as a basic strategy for proper estate planning versus other methods?
Using a trust is more sophisticated than a basic estate plan with a will, but it is not the solution for every client. We meet with each of our clients so that we can tailor the estate planning, including potentially the use of a trust, to that individual and his or her family.
For more information on trusts in Texas, contact us Payne, Powell, and Truitt today so that one of our attorneys can guide you and will help you come up with an estate plan.