Many people assume having a last will and testament is the centerpiece of any satisfactory estate plan. While they certainly have their benefits, having a will is far from the only piece of planning to consider. Trusts, in fact, offer a simple way to transfer assets to your loved ones while avoiding probate.
There are several reasons to establish a trust. In Texas, there are just as many types of trusts to consider, each serving its own purpose to achieve the goals you strive for. Learning how the different types of trusts work can help you decide which is right for your affairs.
Living trusts are those made by you (the “trustor”) during your lifetime. They include instructions for how assets or property can be used while you are alive. Living trusts allow you to benefit from the trust now while arranging for assets to be passed to a beneficiary upon your death. They are a great option for anyone hoping to prevent loved ones from going through probate proceedings. It is a better way to plan to prevent disinheriting children on second marriages.
Revocable and Irrevocable Trusts
Like a living trust, revocable trusts are created during your lifetime. It can be altered, changed, or terminated by the trustor at any time. Upon your death, a revocable trust can be transferred over to a successor trustee and other beneficiaries. Revocable trusts also help keep your affairs out of probate court, which allows your assets to be transferred out of the public eye.
Irrevocable trusts, on the other hand, have restrictions on what can be altered during your lifetime, nor can they be revoked after the trustor passes. Since this type of trust contains assets that cannot be moved back to the possession of the trustor, it can be incredibly tax efficient and provides asset protection. Irrevocable trusts are popular for this reason, and because it moves assets out of the trustor’s name and into the next generation. Hegwood Law Group allows you to remain in total control of the assets you fund into an irrevocable trust by making it a defective grantor trust, which will also allow you to plan for long-term care should it be needed in the future.
A charitable trust can help you earmark funds for your favorite cause or organization. There are two varieties: charitable lead trusts and charitable remainder trusts. A charitable lead trust allows you to set aside funds for a specific charity, with the remaining assets going to your beneficiaries. Charitable remainder trusts allow you to receive income from assets for a set period of time, with the remaining money donated to your preferred charity. In Texas, a charitable trust receives favorable tax treatment. Hegwood Law Group can set up a charitable trust that allows you and your loved ones to retain the income that is generated by the amount given to a charity.
Yes, you can even ensure your “fur baby” is taken care of in the event of your disability or death. A pet trust is similar to other trusts where you create a trust that designates a trustee and a caregiver as the beneficiary. The trustee ensures the funds are used for your pet’s needs and care. Your pet trust can include specific instructions such as provisions for financial resources, dietary needs, grooming instructions, veterinary care, and any other instructions you wish to provide to ensure the utmost care for your beloved pet.
If you are unsure whether a trust is right for your estate plan, you do not have to figure it out alone. By speaking with a team member at Hegwood Law Group, you will gain peace of mind knowing that you have all your bases covered. To discuss the options that best fit your needs, click here to schedule online or call us at (281) 885-8826.