A trust attorney’s specialty is straightforward: creating legal trusts. However, the process of establishing a trust isn’t always as clear, but having an experienced trust attorney to guide you through the process is a sure way to simplify things.
In short, a trust is a legal arrangement between a trustor (also known as a grantor) and a trustee. This legal relationship allows a grantor to transfer assets and property to a trustee who then manages the distribution of those assets to the beneficiaries named in the trust.
There is more than one type of trust, which have different restrictions on transferring assets and vary in their flexibility. An attorney experienced in trust-making can assess your circumstances and help you determine what kind of trust best suits you. As well, a trust attorney can prepare all necessary legal documents, make sure the trust is properly administered, advise you on tax planning and how to avoid the probate process, and any other asset protection you may want to consider.
If you are contemplating whether a trust is right for you and your estate, reach out to The Farias Law firm to discuss your options. Call 713-364-3942 today for an initial consultation.
What Is Involved in a Trust?
Trusts use specific legal terms to describe the individuals and components involved such as grantor, trustee, trust document, and trust assets.
Grantor – The grantor, also known as the trustor, donor, or settlor, is the individual who creates the trust.
Trustee – The trustee is the party who becomes responsible for handling and distributing the trust. The trustee doesn’t have to be one individual, it can be multiple people as well as a private business or company. A trustee becomes responsible for any legal or investment choices for the trust, so it’s important to choose a trustee carefully. In some cases, an individual can be the trustee of their own living trust.
Trust document – A trust document is a written document that establishes the terms of the trust. This document typically includes the names of any beneficiaries but can vary in detail depending on the grantor’s wishes.
Trust assets – Any property, money, stock, real estate, or insurance policies can be considered trust assets and will be the transferred property in the trust.
Types of Trusts
In Texas, there are a handful of valid trusts a grantor can create, including:
Much like it sounds, an irrevocable trust cannot be either modified or revoked after it’s been created, except in specific and limited circumstances. In an irrevocable trust, the grantor is permanently transferring ownership of the trust assets and in doing so loses all control of those assets. However, an irrevocable trust is not counted as part of the estate when it comes to estate taxes, which is a common reason a grantor chooses this type of trust.
Other purposes for an irrevocable trust can involve tax planning, protection of assets, as well as creating a charitable trust.
Opposite to the irrevocable trust, a revocable trust can be altered or revoked at any point by the grantor. The grantor continues to have control over all assets stated in the trust and is entitled to change the terms of the trust, modify beneficiaries, or make any other changes they wish.
Revocable trusts are a common alternative to traditional wills because they help a benefactor avoid the probate process. (The probate process is the legal procedure of processing and distributing an individual’s assets to their beneficiaries following their death.) Probate can be a long and costly process, whereas a revocable trust can streamline the transfer of assets following death, allowing a family to finalize the logistics of a death faster and focus on their mourning.
Along with avoiding the probate process altogether, a revocable trust can offer individuals greater privacy, flexibility, and control of their assets. Privacy, because revocable trusts are nonpublic documents, whereas a will becomes a public record following the probate process. Flexibility, because they are subject to modification at any point by the grantor, and management, because they offer control of the assets in the case the grantor becomes incapacitated.
On the flip side, a revocable trust doesn’t offer much protection when it comes to creditors or legal judgments, and any assets that aren’t properly administered into the trust can still be subject to probate.
A grantor can create and fund a living trust in their lifetime. These trusts tend to be established to protect an individual’s assets and direct the distribution of such assets after the grantor’s death. Living trusts can be irrevocable or irrevocable, but either way can help individuals avoid the probate process.
Once a living trust is established, the grantor can determine what assets will go into it, which will transfer the control of those assets to the trust. Assets in a living trust are only transferable to beneficiaries following the grantor’s death.
Testamentary trusts are established under the terms of the grantors’ will. This type of trust is activated following the grantor’s death, and all assets that are transferred to the trust must go through the probate process. A testament trust can be altered if a will is altered.
What Is Needed to Create a Trust?
To make a trust in Texas, the following elements are needed:
- Grantor’s name – The full legal name of the individual who is creating the trust and will be transferring property and assets to the trust.
- Names of trustees – This can be a single individual, multiple people, or an entity that will then be responsible for managing the trust and distributing the assets to the beneficiaries.
- Names of beneficiaries – Beneficiaries are the people or entities who will be receiving the assets in the trust.
- The type of trust – A grantor must decide whether the trust will be revocable or irrevocable, or if it will be testamentary (created by a will) or a living trust (created during the grantor’s lifetime).
- Terms of the trust – Terms of a trust should be specific and clearly explain how the assets will be distributed, including all conditions and restrictions on that distribution, and the responsibilities of the trustee.
- Trust assets – A thorough list of all assets that are for the trust including any real estate, bank accounts, investments, and personal property.
- Signatures – A trust must be signed by both the grantor along with two witnesses who are not related to the grantor or involved in the trust.
These are the typical components of a trust, but depending on the specific type of trust you wish to establish, the requirements can vary. An estate planning attorney can ensure that you have met all legal requirements and your trust will be tended to as planned.
How Can a Trust Attorney Help You?
Attorneys practicing in trusts have experience in all estate planning areas, and can not only help you create your trust from start to finish but can guarantee that your interests are fully considered along the way. Our Trusts lawyers can help you:
Assess necessary documents – A trust attorney can help you draft and review any estate and trust-related documents, ensuring that you meet all legal requirements and deadlines.
Determine the type of trust – An experienced trust lawyer will know how to help you determine which type of trust is best for you depending on your assets, property, family members, and benefactors involved.
Transfer assets and administering the trust -Transferring and administering assets are crucial parts of the trust creation process and a qualified attorney will know exactly how to ensure this is done right.
Choose trustees and beneficiaries – Determining who will be beneficiaries is ultimately the purpose of a trust, and selecting a trustworthy trustee is vital to the integrity of the trust. An attorney can ensure that your assets will be in trusted hands and that those included in the trust have been fully assessed and screened prior to finalization.
Modify trust terms – If your circumstances change for any reason, and you wish to alter the trust in any way, a trust attorney can help you address trust alternation promptly.
Plan for taxes – It’s crucial to consider how estate taxes may affect you in light of a trust or will. In the case that your estate is larger than the federal estate tax exemption, it’s almost certain you will owe estate tax.
Similarly, if you plan to give assets to a grandchild or other descendants 37.5 years your minor, in a quantity greater than $11.4 million per person, a generation-skipping transfer tax will be applied which sits at a 40 percent rate. An estate planning lawyer can help assess what taxes may apply to your assets, and how to minimize those rates as much as possible.
Texas Trusts FAQ
Does a Living Trust Bypass the Probate Process?
Yes, a living trust is commonly seen as an alternative to a will and can allow the transfer of assets without going through the probate process.
What Is the Difference Between a Will and a Trust?
Both wills and trusts are ways to legally establish what you wish to happen with your estate following your death. However, wills are typically processed through probate which can be both slow and costly for your family and will become a part of public records. Whereas a trust remains private and allows for a swift transfer of your estate to your beneficiaries. Wills and trust both have their pros and cons, we recommend discussing your circumstances with an estate planning attorney to determine which route is best for you. Your lawyer can explain any tax consequences of either method, and the difference between using a living trust and creating a will in your particular case.
How Much Does it Cost to Create a Trust in Texas?
Depending on the complexity and features of a trust, attorney’s fees can vary. Along with attorney costs, a trust can involve other expenses such as filing fees, notary fees, and fees for transferring assets. The Farias Law Firm can provide you with a general idea of the cost for your trust after reviewing your case.
Speak With Our Trust and Estate Planning Attorneys Today
Our attorneys at The Farias Law Firm are well-versed in estate law and know how to best protect your assets from taxes and administration costs, along with how to help you avoid the lengthy probate process.
Our estate planning lawyers can review your case, determine what are your best options, guide you through the process of forming a trust, and most importantly ensure that your interests are taken into consideration and protected throughout.
At The Farias Law Firm we offer a range of legal services, so whether you’re considering creating a trust or will, wondering how to navigate probate, or have questions regarding any other estate planning objectives, our law firm can help.
Call today to discuss your circumstances with a Farias Law Firm estate attorney. Dial 713-364-3942.