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.
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 iare 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.
Do you have questions about Trusts? Speak directly with attorney Scott Steinbach at 972-960-1850 for a free consultation.
The Steinbach Law Firm can prepare a Trust to help protect your assets.
Our fee is $300.00.
R. Scott Steinbach is AV Preeminent rated by Martindale-Hubble. Peer rated for Highest Level of Professional Excellence.