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

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.

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