No matter what the size of your estate is, you will have a lot of decisions to make when creating an estate plan. One option that will be discussed is a Living Trust. A Trust is a tool for passing property and assets directly to beneficiaries upon your death without the need for probate. There are many advantages to a Trust over a Will, but you will need to decide what kind of Trust best serves your needs.
What a Trust Can Do That a Will Can’t
With a Last Will and Testament, you can state your wishes for how you would like your assets to be distributed upon your death. You can also designate guardians for your children. However, a Will has to go through probate court after you die before your heirs receive anything.
With a Trust, your assets are transferred into the Trust while you are still alive and become the property of the Trust. You will state your wishes about how the assets will be distributed upon your death as in a Will, but you have more options available to you for how heirs will receive the assets. For example, property can be held by the Trust until an heir turns a certain age. You can also state your wishes for how your assets should be used if you become incapacitated and unable to make decisions for yourself. This cannot be accomplished with a Will.
Revocable or Irrevocable: What Is the Difference?
The first decision you will have to make once you have decided to place assets in a Trust is whether a Revocable or an Irrevocable Trust will provide the benefits you need. Each offers certain advantages, and your estate planning attorney can help you determine which is the better option for you.
- Revocable Living Trust. With a Revocable Trust, the Grantor, or person who sets up the Trust, can also be the Trustee, or person who controls the assets. As the Trustee of your own Trust, you are still in complete control of the assets. As the name indicates, a Revocable Trust can be revoked or changed at any time.
- Irrevocable Living Trust. In this type of Trust, the Grantor and Trustee may also be the same people, but based on the type of Irrevocable Trust, these can provide asset protection unlike a Revocable Trust. This type of Trust is often used to plan for long-term care, as assets in an Irrevocable Trust do not have to be used to pay for a nursing home and can help the Grantor qualify for need-based benefits such as Medicaid or Veterans benefits.
Advantages of a Revocable Living Trust
If you can express your wishes for what happens to your property after your death with a Will, why should you turn your assets over to a Trust? Here are several important advantages:
- Avoiding Probate. Assets held in the Trust do not have to go through Probate. Probate is a public process and can take many months to complete.
- Avoiding estate taxes. If you have an exceptionally valuable estate (over $5.49 million for an individual or $10.98 million for a couple), you can avoid estate taxes with a Revocable Living Trust.
- Planning for incapacity. If an accident or illness leaves you unable to express your wishes, the successor Trustee of your Revocable Living Trust can make decisions on your behalf, based on your wishes, as stated in your Trust.
How assets and property are transferred into the Trust depends on the type of asset. Transferring real estate deeds, opening new bank accounts, and filling out transfer forms will be necessary to fund your Trust.
How an Estate Planning Attorney Can Help
For many people, the wishes they have for their heirs can be accomplished with a simple Will. However, others will need a Revocable Living Trust to protect their assets during their lifetime and to distribute them according to their wishes after they are gone. Our estate planning team will work with you to help you understand the best options for you, given your unique situation. Contact one of our Texas offices in Texarkana, Longview, Tyler, and Paris to schedule a consultation.