A trust is created when someone (the grantor) conveys assets to another (the trustee), to hold and oversee their assets until such a time as they are handed over to the beneficiary. The funds from the trust may only be distributed upon the grantor’s death, in some cases. However, some trusts may be set up to pay out to the beneficiaries while the grantor is still alive.
A trust works much like a will in that it is an estate planning tool used to control who receives your assets upon your death. Unlike a will, which must go through the probate process after you die, a trust is designed to avoid the need for probate by transitioning control of the estate from you (as trustee during your lifetime) to your successor trustee after you die. It is true that the probate process can be expensive and, in general, can take several months to complete. However, there is a price to be paid for this supposedly streamlined, economical process, and it is called the time value of money.
A Sugar Land trusts lawyer at Romano & Sumner can help you determine what type of trust arrangement is right for you. There are several types of agreements that a qualified trust and estates attorney can help you create, depending on your preferred arrangement and the assets involved.
The essential concept of a trust is that the trust, as a legal entity, owns the trust property. Typically, successor trustees are named to assume trust management duties upon specific triggering events designated in the trust. At such a time, there is no change of ownership (title remains at all times with the trust); there is only a change of management.
A trust can be explained in parts as follows:
Trusts may be revocable (able to be changed or revoked by the trustor after creation) or irrevocable (permanent upon creation and unchangeable).
There are several reasons an individual may decide to set up a trust. It is important to understand that the property a trust encompasses is not limited to cash alone. It can also be used to manage other assets such as real estate, investments, cars, homes, and more.
Trusts are often a preferred choice for individuals who want to reduce taxes on their estate upon their death or do not want their estate to go through the drawn-out probate process. Another notable benefit of a trust is that it allows the grantor to create stipulations for how trust assets will be paid out to their spouse, children, or other beneficiaries upon their death.
It should be noted that trusts often involve high costs to the grantor and setting one up can be quite elaborate. There are also significant tax implications to consider. Anyone who is thinking about setting up a trust should speak with a local legal advisor to discuss the variety of trusts someone can create and the benefits and potential drawbacks of each.
While Texas recognizes a few types of trusts, there are some essential criteria that a trust must meet overall to be legally enforceable. The grantor must formally intend to establish a trust and possess the mental competence to do so. The trust must specify its beneficiaries as well as the assets to be encompassed therein. Further, the trust must be established on lawful grounds, and not contain any provisions that would otherwise require unlawful conduct on the part of the trustee.
One kind of trust, known as a testamentary trust, can be established as part of the individual’s will. For example, a testamentary trust may stipulate that the trustee maintains the grantor’s assets until the beneficiary reaches 21 years of age, upon which the recipient will receive the property contained in the trust.
Revocable trusts and irrevocable trusts also are two common kinds of trust arrangements. In a revocable trust, or living trust, the grantor can modify or terminate the trust during their lifetime. As its name indicates, however, an irrevocable trust means that the grantor cannot alter it at any point after it is established.
Creating a revocable or irrevocable trust can also allow someone’s assets to bypass probate upon their death. A legal representative in the Sugar Land area can review the possible benefits of each kind of trust and advise which one may be most appropriate for their circumstances.
If you are considering whether a trust may be a useful estate planning tool in your situation, you should speak with a Sugar Land trusts lawyer. A practiced attorney can give you more information about the trust options available for your case based on the nature of your assets and your purpose behind creating the trust. Call to book an appointment to discuss your estate planning needs with Romano & Sumner today.
Romano & Sumner – Sugar Land, TX Attorneys