Archive for May, 2013

Key Facts You Should Know about Living Trusts in Texas [Part II]

Monday, May 20th, 2013

This is the second part of our two-part blog covering key facts that Texas residents should know when constructing an estate plan with a living trust. While living trusts provide a valuable tool that can accomplish a range of goals, every person’s position is somewhat different so there may be some situations where a living trust is less necessary. While we attempt to address many of the key issues that people should know about a living trust in this blog, we offer a free consultation which is the best way to learn about your specific situation.

Drafting a trust document is only part of the necessary steps involved in setting up a trust.

This point is very important because many people that rely on non-attorneys or computer programs to draft trust documents never actually transfer their assets into the trust. This process of actually setting up the trust by transferring your assets into the trust is the only way to make the trust effective. If this step is skipped, your trust document will be disregarded so your assets could pass by intestate succession to someone other than who you intended.

Trusts can protect the assets in your estate from your creditors or those of your beneficiaries.

Depending on how you set up a trust, you can place assets out of the reach of your creditors or those of your loved one’s creditors. If you set up an irrevocable trust, you have essentially already passed the assets to the beneficiaries of the trust protecting the assets from your creditors. If you set up a spendthrift trust, you can structure the trust to protect assets passed to your beneficiaries from their creditors.

A living trust provides a more effective way to appoint someone to manage your financial affairs in the event of incapacity.

If you are involved in a car accident or suffer a serious medical condition so that you are temporarily medically or physically incapacitated, a living trust offers an effective tool for allowing someone to access your accounts and manage your finances while you are incapacitated. While a durable power of attorney can accomplish the same objective, many financial institutions are more apprehensive about acknowledging the authority of a power of attorney than a living trust.

A living trust allows you to maintain control over your assets.

When a person sets up a living trust, the trust can be set up so that it is a revocable living trust, which means that it can be changed, modified or even eliminated based on the wishes of the person setting up the trust. The person who is creating the trust can also be the trustee, which means there is no loss of control over one’s assets. This flexibility can make a living trust a highly attractive estate planning tool.

The need for a guardianship can be avoided by setting up a living trust.

If you suffer a sudden catastrophic medical condition so that you are incapacitated, your family could be forced to go through the cost and complexity of the guardianship process so that someone is appointed to manage your financial affairs. This process can be costly and time consuming, but the existence of a living trust makes this unnecessary as the trustee or alternate trustee will exercise authority over the assets in the trust if you become incapacitated.

At our Arlington estate planning law firm, Mr. Reino carefully evaluates your estate to create an estate plan that is appropriate for your specific situation. If you have questions or need estate planning documents prepared, we invite you to contact us at 817.303.2133 or send us an email at tom@tomreinolaw.com so that you can set up an initial consultation.

Key Facts You Should Know about Living Trusts in Texas [Part I]

Monday, May 6th, 2013

Many people think estate planning is something that only seniors need to worry about because it involves the transfer of assets to one’s heirs when one dies. Although there is some truth to this understanding of the function of estate planning, this emphasis only covers a small portion of what estate plans can accomplish. In addition to succession planning, estate planning documents like a living trust can provide asset protection from creditors, incapacity planning in the event of a serious accident and tax relief. In this two-part blog post, our experienced Texas estate planning attorneys at the law office of Thomas D. Reino have provided an overview of some basic facts everyone should know about a living trust.

A living trust can protect you and your family from the administrative delay, hassle and expense of probate.

One of the most important functions of a living trust is to avoid the probate process which can be costly. The time lag associated with the probate process can also be difficult for your loved ones if you are the primary family breadwinner. In this situation, those you leave behind may be left in a difficult financial predicament if they must wait for administration of your estate for access to funds to cover living expenses. A living trust is already set up prior to a person’s death so there is no delay or hassle with probate proceedings.

While a living trust can be a very effective way of avoiding probate, it is not the only option. Assets like real estate, bank accounts and insurance policies may be held in “joint tenancy with right of survivorship” or have an identified beneficiary. If an asset is titled in this way, it will automatically pass to a loved one without the need for probate regardless of whether you have a living trust. However, there are advantages and disadvantages to both strategies so you should speak with an experienced Texas estate planning attorney about which approach is best suited for your individual situation. It is important to note that many assets cannot be titled this way so even if you rely on the joint tenancy approach for some assets this will not cover all of your estate.

A living trust may save you money and avoid taxes but not necessarily.

While the probate process can be costly, Texas has an expedited process that can make probate relatively inexpensive. While a trust can avoid the expenses associated with probate, the cost of setting up a trust may be comparable to this expedited probate process in Texas so it is important to obtain legal advice regarding which approach is more suited to your needs. The cost of setting up a trust also is increased because you will need a special type of will called a “pour over will” along with the trust. The function of this special kind of will is to ensure that assets not specifically placed in trust are still covered in your estate plan. The living trust may also help with estate tax avoidance depending on the size of your estate.

At our Arlington estate planning law firm, Thomas D. Reino carefully evaluates your estate to create an estate plan that is appropriate for your specific situation. While this blog post provides answers to some common estate planning questions, the best way to get more detailed information is to contact us at 817.303.2133 or send us an email at tom@tomreinolaw.com so that you can set up an initial consultation.