Thursday, January 20, 2011

Houtson Trust Lawyer Discusses Having the Right Tools for the Right Job

By: Kimberly Hegwood, Houston Trust Lawyer

A will is a simple legal document which describes what should happen to your assets upon death...and it is, frankly, not enough for most families. That is because the actual distribution is controlled by probate, without a plan in place. Upon your death, the will becomes a public document available for inspection by all comers. And, once your will enters the probate process, it is no longer controlled by your family, but by the court and probate attorneys.

Oh, this can be cumbersome, time-consuming, expensive, and an emotional trauma--all added on to a family's time of grief and vulnerability. Con artists and others have been known to use their knowledge about the contents of a will to prey on survivors. This, as you can imagine, must be avoided at all costs.

What is great about a Living Trust, is that it actually avoids probate and keeps everything totally private--because your property is owned by the trust. That way, technically there is nothing for the probate courts to administer! Whomever you name as your "successor trustee" gains control of your assets and distributes them exactly according to your instructions.

And one more big thing: a will does not take effect until you die, and is therefore no help to you with lifetime planning. As we all start to live longer, this is an increasingly important aspect of these considerations. A Living Trust can help you preserve and increase your estate while you are alive, and offers protection should you become disabled.

A few questions I often receive as a trusts lawyer in Houston:

"Who are the trustees for my Living Trust? Can I be one?"

YES. In fact, most Living Trusts have the people who created them acting as their own trustees. If you are married, you and your spouse can act as co-trustees. And you will have absolute and complete control over all of the assets in your trust. In the event of a mentally disabling condition, your hand-picked successor trustee assumes control over your affairs, not the court's appointee. That's nice peace-of-mind!

"Does a Living Trust help me to avoid income taxes?"

NO. You see, the purpose of creating a Living Trust is to avoid living probate, death probate, and reduce or even eliminate federal estate taxes. It is not a vehicle for reducing income taxes (see an accountant for that!).

In fact, if you are the trustee of your Living Trust, you will file your income tax returns exactly as you filed them before the trust existed. There are no new returns to file and no new liabilities are created.

We manage these trusts for our clients -- and we update them too! ( More on that in a  future Note, perhaps.) So, if you want to set one up (and I don't blame you), send me an email, or give us a call: 281-218-0880 -- and we will get this process started for you.