Many clients come into my office wanting to set up a trust. In the state of Texas, trusts are a common tool that clients use to protect their assets. Trusts can be an excellent estate planning device, but they are not the best option for everyone.
What is a trust?
A trust is part of an estate plan. A trust is a fiduciary agreement that ensures that an individual’s assets will go to specific beneficiaries. One party, known as the trustor, gives a third party, known as the trustee, permission to hold assets on behalf of a beneficiary. Trusts allow individuals to direct how they want their assets to be distributed to beneficiaries in the event of their death.
Who benefits from a trust?
Trusts can benefit a variety of people, depending on their unique goals.
A general rule of thumb is that if you have enough money to live on until you’re 99 years old and you have $5 million left over, a trust is definitely a good choice to avoid inheritance tax issues. Trusts can also benefit individuals whose specific goals include wanting to keep a property separate without commingling it into any type of community estate.
Which type of trust is best?
There are several different types of trusts, such as revocable, irrevocable, living, and testamentary. The best type of trust to choose varies depending on a variety of factors. These factors can include individual goals, age, disabilities, or desires to keep businesses and income as separate property. Additionally, a trust may need to be reformed during an individual’s lifetime as life goals and circumstances change.
How do I know if a trust is the right tool for me?
There are many other tools available for estate planning, such as family partnerships, limited liability companies, corporations, and wills. The right estate planning tool depends on your unique needs and goals. The best way to determine which tool is right for you is to meet with an experienced attorney who can assess your specific situation.
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