If living trusts are not always cheaper and faster in Texas when would you use one? To understand the common uses for living trusts in Texas it may be helpful to understand some basic concepts for how a living trust works. First, a trust expressly states who will be controlling the property that is held in trust. Second, a trust should set forth the basic rules for how trust property will be managed and the extent of the trustee’s powers to control that property. Third, the trust should set forth the conditions and procedures for when control of the trust property will be transferred from the current trustee to a successor trustee. Fourth, and finally, a trust works like a contract; therefore, a properly drafted trust does not require a court order to transfer control of trust property. From these principals we can extrapolate some instances in which a living trust will be a useful and cost effective estate planning tool.
Multi-State Property Owners. Living trusts can be utilized to avoid the necessity of probating an estate in multiple jurisdictions. Probates are a state court proceeding that are only valid in the state in which they are filed. Therefore, if a descendent owns property in multiple states it may be necessary to probate that will in multiple states in order to transfer the property owned in each state. The additional court costs, attorney’s fees and delay resulting from probating a will in multiple states can often be avoided by utilizing a living trust that is valid in all states and does not require court action to transfer property that is owned in multiple jurisdictions.
Issues of Looming Incapacity. Living trusts can be very effective for transferring management of assets in cases of looming incapacity. Because trusts can transfer property without court intervention, we can fund a living trust prior to the onset of a disease, disorder or genetic predisposition that may impair your (or a loved one’s) cognitive abilities. The living trust will allow the property owner to control his or her own property while their cognitive abilities remain and provide for a transition of the control of that property upon once the owner is no longer capable of making their own financial decisions.
Privacy Issues. Living trusts can be utilized to maintain a measure of privacy. Although recent changes to Texas law have improved on the privacy afforded in probate proceedings, an inventory of property owned by the decedent. This inventory must (at a minimum) be provided to the decedent’s designated beneficiaries and heirs and may need to be filed as a matter of public record. However, property held in living trust is not subject to the same disclosure requirements. Accordingly, a living trust can be utilized when the decedent owns specific items or types of property that he does not wish to disclose to the general public or all of his beneficiaries and heirs.
The Strong Firm P.C.
Phone Number: 281-367-1222
Fax Number: 281-210-1361
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