Estate Planning Lawyer Arlington, TX
What is a trust you might be wondering? As explained by an Arlington, TX estate planning lawyer from Brandy Austin Law Firm, PLLC, a trust is a financial relationship between one party known as the ‘trustor’, who is creating the account, and the ‘trustee’ who is getting the account. There are six broad categories of Trusts: living or testamentary, funded or unfunded, revocable or irrevocable.
A living Trust is a document that an individual’s assets are provided in a Trust during their lifetime, however, if they were to pass they would have named a beneficiary who the Trust would then go to. A testamentary Trust or a will Trust, is a document that specifies how the person’s assets are to be distributed following the individual’s death.
A revocable Trust is where a trust can be changed or terminated by the trustor during their lifetime, and a irrevocable Trust is the opposite, the trustor can not change the document once it has been established. Living Trusts can be revocable or irrevocable whereas testamentary Trusts or will Trusts can only be irrevocable. To many people irrevocable Trusts are the most appealing. The reason why they are more appealing is because since it can not be altered it can be permanently moved out of the trustor’s name and it also allows for estate taxes to either be minimized or avoided.
Funded & Unfunded Trusts
Lastly, we have funded or unfunded Trusts. Funded Trusts are Trusts that have assets put in by the trustor over the course of their lifetime. Whereas an unfunded Trust can be funded upon the death of the trustor or could still remain unfunded. Unfunded Trusts are the least liked component of Trusts.
Many people believe that Trusts are only for those who are wealthy hence the term, ‘Trust Fund Baby.’ It is recommended that people besides the wealthy class use Trusts, it can provide great benefits. The benefits that can be provided are control, avoiding probate, privacy and the ability to plan for a situation in which you become incapacitated. It can provide control by being able to dictate where the funds go and in what time whether you are still alive or after you pass. Another benefit is, with a living Trust, specifically in Texas, you can avoid going through probate. Also, Trusts are administered by the court so anything that is in a Trust is private record, unlike a Will. The last benefit is the incapacitated planning, if you have a trustee assigned to your Trust they do not need to go through the court to be granted guardianship of your assets.