When you create an estate plan for yourself and your family in Forney, you have multiple options and strategies. However, you may feel overwhelmed by the various tools you could incorporate into your estate family. In particular, you may wonder whether your family can benefit from including a living trust in your estate plan. As a result, it can help to understand how living trusts work and how they can benefit an estate plan to determine whether your family can use one to achieve your objectives.
What Is a Living Trust?
A “living” trust is a trust that a person – known as the grantor – creates during their lifetime. Most living trusts hold assets during the grantor’s lifetime. They may continue to hold those assets after the grantor’s death, or distribute them to beneficiaries designated by the grantor in the trust document. Living trusts differ from testamentary trusts, which are trusts created and funded by a grantor’s will.
Most living trusts are revocable, allowing the grantor to change the trust’s terms, add or remove beneficiaries, or revoke (terminate) the trust during their lifetime. However, a person may create an irrevocable trust, which the grantor or beneficiaries cannot change except in very limited circumstances, to obtain tax benefits or asset protection. In most cases, a grantor can serve as the trustee of their living trust during their lifetime, nominating a successor trustee to take over after their death if the trust continues.
Although living trusts can offer benefits a will cannot, they do not eliminate the need for wills. Most families with living trusts also have wills to address legal and financial matters that their trusts cannot.
Benefits of Living Trusts
Some of the primary benefits of living trusts include:
- Avoiding probate: A grantor can direct their living trust to terminate upon their death and distribute any remaining assets to beneficiaries. Trusts can pass assets without probate, allowing families to transfer wealth through a living trust to avoid the time and expense of probate.
- Privacy: Avoiding the probate process also allows families to maintain privacy in their legal and financial affairs, as trust administration does not involve a court-supervised process like probate.
- Incapacity protection: A grantor can designate a trusted loved one or advisor to serve as the primary or successor trustee, ensuring that someone will look after their assets if they become incapacitated.
When Might Your Family Not Need a Living Trust?
However, your family might not need the benefits of a living trust in certain circumstances, such as:
- Your family owns few or simple assets that can just as easily pass through a will or beneficiary designations
- You can take advantage of some of Texas’s more streamlined probate proceedings
- You have a young family that has yet to build significant wealth
Signs Your Family Should Create a Living Trust
Your family might consider incorporating a living trust into your estate plan if:
- You own significant assets like real estate, especially outside of Texas
- You want to develop an incapacity plan
- You have a blended family or complex family dynamics
- You want to protect inheritances for children, including inheritances to minors or loved ones with financial, legal, or personal issues
Contact Our Forney Estate Planning Attorneys Today for Guidance
Depending on your family’s circumstances, you might benefit from creating a living trust to help protect and provide for your loved ones in Forney. Contact Guest & Grey today for a free, confidential consultation with our Texas estate planning attorneys to learn more about living trusts and whether incorporating one into your estate plan can help protect your family’s interests.
