Category: Trusts

Who Needs to Consider Trusts for their Children in Houston?

There are a lot of reasons to consider setting up trusts for your children, but trust and estates lawyers in Houston see far too many cases where this just is not done.  One of the biggest reasons for not setting up a trust could be that you feel you do not have enough assets to warrant one.  We hear about “trust fund babies” and automatically think of the super wealthy, not regular folks like ourselves.

Really, though, even those in the middle class should be thinking about setting up trusts for their children.  Even if you do not have a lot of extra money lying around, you have other assets that can quickly add up in value.  Add to that the payout from a life insurance policy, and you suddenly realize that you have quite a bit of financial worth that might be left behind to children who are not ready to handle it.  Anything more than about $100,000 is reasonable to consider putting into a trust for children.

What Does the Trust Do?

When you set up a trust with your trust and estates lawyer in Houston, you will discover that there are many different ways to use this tool.  One of the most important benefits of a trust is that it allows you to stipulate how your children will use the money you leave behind.  If your intention is for your kids to use the money for college, but they want to use it to buy a sports car instead, what is to stop them?

In your case, the trust is what can stop them.  You can implement restrictions on how the money is spent.  You can, for example, determine that the funds in the trust are designated for specific functions, such as paying for education or day-to-day expenses.  In some cases, there is a designated adult to help keep things on track, although this person must be chosen wisely.  In other cases, the parent sets age limits on the trust, assuring that the children do not have access to the money until they have more time to mature.

Protecting the Trust

Another reason to consider a trust is to protect your children’s money from misuse by the adult in charge of the funds.  In the case of a “custodial” account, the person in charge can have a lot more say in how the money is spent.  This could translate into frivolous expenses, including paying himself or herself an unrealistic amount to “manage” the funds.  With a trust, however, the person in charge (the “trustee”) is held more accountable and is required to follow your wishes.

If the trustee does manage the funds poorly, it is also possible that your child would have some legal recourse, as the trust is a legal contract.

Talk to a Houston Trust and Estates Lawyer

The best way to determine if a trust is right for you and family is to talk to a Houston trust and estates lawyer.  Our attorneys are available to sit down with you to review your estate plan and consider how a trust or other estate planning tools can best meet your needs.  To schedule a planning session, call us at (281) 218-0880 and mention this article.

Pros and Cons of Wills and Living Trusts | Harris County Will and Trust Lawyer

As a Harris County will and trust lawyer, I realize that those of us in the estate planning industry often use technical language or “legal jargon” that is hard for most people to understand when setting out to get their affairs in order.  In fact, even the words “estate planning” can confuse people by making seem like you only need to plan if you have a large estate.  Not true!

There are other terms that you have probably heard along the way that can be equally confusing, as they are similar in theory, but different in execution. For example:

  • Estate planning versus Asset Protection
  • Healthcare Directive versus Advanced Directive versus Living Will
  • Power of Attorney versus Executor of an Estate

However, there are probably two estate planning terms that you will hear more than any other; trust and will.  These are key documents that do essentially the same thing, in theory. They both specify your last wishes and appoint someone to carry them out. However, there are reasons you would choose one over the other and sometimes you might choose both!

Hopefully we can help you understand the basic differences so that you have an idea of which legal tool (or combination of tools) would be best for you and your family.

Living Trusts

Pros

  • Ensures privacy, keeps your affairs out of the public record and helps you avoid probate.
  • If you own property in another state, a living trust may keep you out of that state’s probate court.
  • Some trusts offer protection from creditors, lawsuits and predators during your life.
  • You can designate a person who can take over management of your assets in case you are unable to function or incapacitated during your
  • You may not need to hire a lawyer when it comes time to distribute your assets.

Cons

  • A living trust can be more expense to set up initially.
  • You will also have to transfer ownership of all assets that are placed in the trust.
  • It can make it more complicated if you want to refinance property.
  • You cannot create a guardian for your children in a living trust. (However, you would be able to add a designation of guardian to supplement your trust that would take care of this.)

Wills

Pros

  • Setting up a will is less expensive and much simpler.
  • Creditors can only bring claims against your estate for a certain period of time.
  • You may name a guardian for your children.
  • You do not need to transfer any property.

Cons

  • After probate, your will becomes a matter of public record.
  • Probate can be take years to resolve and can be expensive.
  • A will does nothing for you while you are Your loved ones will be unable to manage or transfer assets using your will if you are incapacitated and/or unable to function.

There is quite a bit more to it, but this gives you an idea of the different techniques. If you really want a plan in place that will work when you need it, it is best to talk to a Harris County will and trust lawyer. Only an attorney that has had extensive experience can understand the nuances that could impact whether you have solid plan or simply a stack of paper that will not stand up in court. We help families throughout Houston gain the peace of mind that only comes with knowing your family will be okay no matter what. Call us today and mention that you read this blog and we will give you a free consultation so you can start the ball rolling on this important task.

Trust Lawyer in Houston Answers, “What is a Trustee?”

When you work with a trust lawyer in Houston to set up a trust, you will be asked to name a trustee. Before you can select someone for this important job, you need to fully understand the role and responsibilities this person will be given.

A trustee is the person who will manage the assets that are in your trust. Many people choose to be their own trustee and can continue to manage their affairs as normal. Married couples can be named co-trustees. In that case, when one dies, the other can continue to make financial decisions without any other legal steps needed.

You can also name a successor trustee. A successor trustee is the person who will take over your decision-making if you (or the co-trustee) are no longer able to do so. In some cases, several successor trustees are named in case the previous one is unable to serve. In other cases, people choose to select two or more adult children who will act together. Some people choose a completely unbiased corporate trustee, usually a bank or trust company, who will take over decision-making.

The following list contains some of the responsibilities that are required of a trustee:

  • Make decisions regarding assets in your trust. This typically involves managing the trust investments, property and making decisions that are in the best interest of the trust beneficiaries. Assets must also be managed according to the terms of the trust and governing law.
  • Keep detailed records for all of the trust transactions.  All transactions need to be accounted for by maintaining a record of receipts and other documentation.
  • Comply with all federal and state law requirements. It is critical that a trustee follows the terms of the trust documents and the trust creator’s instructions. Additionally, a trustee is responsible for complying with federal and state laws, meeting any reporting requirements, and filing federal and state taxes.

Administering a trust is often complicated and confusing. The trustee not only has to manage the details of the trust, they are also dealing with emotions and conflicts that can arise among the beneficiaries of the trust. That is why many trustees contact us to assist. We can help you avoid all of this by walking you through the entire trust administration process. Doing so will relieve you of tremendous stress and might help you avoid litigation brought on by unhappy beneficiaries.

Houston Will and Trust Lawyer Offers a Checklist for Trustees

If you have been asked to serve as trustee for someone’s trust, it is your responsibility to successfully carry out that person’s wishes, as well as follow state and federal laws. The role of trustee is an important one, and if you have never served as a trustee before, you may be thinking, “Where do I start?!” As a Houston Will and Trust lawyer, I hope to provide you some guidance in this area.

We get calls from concerned trustees often and understand that the job can be overwhelming. Our first bit of advice to you is: breathe!  You will get through this.  Next, begin working through the steps below.

  • Read the trust- The trust will have all the information you need to carry out the wishes of your loved one. It is important to read it carefully so that you fully understand what is expected of you.
  • Create a checking account for the trust- A checking account should be set up with the money from the estate. You will need funds to make distributions and payments, and you will want to keep track of them in a checking account that is solely used for purposes of the estate.
  • Think of the beneficiary’s interests- You have a fiduciary duty to the beneficiaries of the trust, so it is important to always think of their interest when it comes to the trust.
  • No personal finance dealings with the trust– This one may seem obvious, but it should still be stated that you should not borrow money or lend money to anyone from the trust.
  • Provide anyone listed in the trust with a report of annual account activity- You can simply provide a copy of the checking and investment account statements, or, if you wish, you can present a more formal trust report prepared by an accountant or attorney.
  • Invest trust funds prudently and productively– For this step we strongly suggest that you consult with an investment professional. It is important to invest the funds wisely and have a diverse portfolio, but steer clear of anything too risky.
  • Stay in contact with the beneficiaries– It is important to understand the needs of the beneficiaries since ultimately you are working for them. Keep them informed.
  • Be aware of any beneficiaries receiving public funds– If any of the trust’s beneficiaries receive public assistance, you need to make sure any proceeds of the trust do not jeopardize their benefits. This is especially important when it comes to adults and children with disabilities.
  • File annual tax returns

Being a trustee is a big responsibility and hard work. But the good news is that you do not have to do it alone. Our Houston Will and Trust Lawyers can help you through the process to make sure that you are taking the right steps. Contact us today at (281) 218-0880 to schedule a free consultation.