Setting up a Trust

Setting up a trust helps a person manage their property and assets. In creating this fiduciary arrangement, you are assuring your property is distributed according to your wishes after you pass.

Why forming a trust is important

There are many reasons for forming a trust. As part of a well-crafted estate plan, it provides for your family after you pass and states how they will receive their inheritance. Additionally, a trust may ensure the avoidance of probate. Probate is the legal process of authenticating a last will and testament, assuming the deceased has had a will prepared.

A pair of hands palm side up hold a little paper cutout of a family for Setting up a Trust

What is a Trust

A Trust is an entity set up by a written document that is used to own property, including cash.
The written document setting up the trust is referred to as a Trust Agreement.
Control of the property owned by the trust is given to a Trustee.
Benefits of the property are given to a Beneficiary.
The Trustee and Beneficiary may be the same person, but this is not recommended.
A person who sets up the trust is called the Trustor.
The Trustor can be the Trustee and can also the Beneficiary, but this is not recommended.
Trusts may be set up when the Trustor is alive or it can be set up in the Trustor’s will.
A Living Trust is a revocable or irrevocable trust which is set up while the trustor is alive.
Testamentary Trusts are revocable or irrevocable trusts. It is set up after the Trustor is deceased and is usually set up in the Trustor’s will.
Trusts may be set up for estate planning purposes or to take care of a special needs child after the parents are deceased.
A trust can also be used for asset protection if it is used properly.

Setting up a trust in Texas

A trust can be set up by an individual, group, organization or a corporation known as the grantor. It is established to hold assets or property for a specific person or group, which are called the beneficiary.

You may transfer real estate property into your trust. Additional documents may be needed.

Control of a trust is overseen by a trustee. In some cases this may be the grantor themselves or someone may be named as a grantor. This person might be a trusted member of the family, an acquaintance or a professional.

A trust consists of:

A grantor – individual, group or organization that sets up a trust.

The beneficiary – individuals or group benefitting by the trust.

A trustee – May be the same as the grantor, or a close friend or a professional controlling the trust.

Reasons for creating a trust:

There are many benefits for creating a trust in Texas, such as:

It may help manage your affairs in case of disability.
Trusts are difficult to contest.
Avoids probate (where a judge determines a will’s validity) and are considered more private than wills.
May determine how money or assets are used by beneficiaries. Especially those that have trouble making sound financial decisions.
May be distributed for a specific purpose like higher education.
May be used to give to charities.
Reduces or avoids estate taxes.
Help determine how difficult assets should be split.