You should consider all available options when creating an estate plan. A living trust can protect your assets while you’re alive and the trust can transfer automatically to named beneficiaries upon your death or incapacitation. It’s a valuable part of estate planning to ensure your loved ones receive the property you want them to have if something happens to you.
A living trust differs from a will because it doesn’t become effective when you die. It’s effective from the moment you create it while you’re still alive.
You can also appoint yourself as the trustee so you can continue to manage it throughout your lifetime. You can determine which assets you want to be held in trust and amend the legal document when necessary. For example, you might choose a beneficiary to receive a specific property but need to change the designation if they pass away before you.
There are multiple advantages and disadvantages to creating a living trust. You should consult an experienced estate planning lawyer to determine whether a living trust is right for you. Below are the pros and cons of establishing a trust for your estate plan so you can decide whether it will satisfy your wishes.
Pros of a Living Trust
You could benefit from a living trust in multiple ways. Some of the advantages of creating one include:
- Asset protection if you’re incapacitated – If you become incapacitated and can’t make decisions for yourself, a living trust can keep your assets safe. It also protects your beneficiaries. Appointing a successor trustee allows that person to control the trust and distribute your property according to the instructions you included in the legal document.
- Avoid probate – You could avoid probate by creating a revocable living trust. Probate can be a long process. When a loved one dies, you must go through probate court for a judge to validate the will and allow for the distribution of the assets. A living trust doesn’t have to go through probate, so your successor trustee can automatically transfer the assets to your intended beneficiaries upon your death.
- Maintain privacy – Any part of an estate plan that must go through probate becomes a matter of public record. That means anyone could search online for the documents and find out what assets your relative left behind. If there’s a living trust, which does not go through probate, your named beneficiaries can keep the matter private, so no one knows which property they’re receiving.
- Prevent irresponsible spending – If you’re a parent, you want to know you can take care of your child even after you’re gone. However, many people don’t know how to manage their money responsibly. You might worry your child won’t know how to manage the high-value asset or significant amount of money you left for them. Fortunately, a trust allows you to appoint a guardian to control your child’s spending.
Cons of a Living Trust
Although a trust offers various benefits, there are some drawbacks to creating one. The most common disadvantages of a living trust include:
- Time-consuming work – If you want your assets to be distributed to your beneficiaries without going through probate, you must transfer them to your trust. It can take some time to decide which property you want to hold in trust and go through the necessary measures to transfer those items.
- No protection from creditors – If you have a revocable living trust, creditors can go after the assets to satisfy your debts after you die. That means it could take some time for your family to receive the remaining property, if any, after the creditors take what they need.
- Confusing documents – Unfortunately, if you don’t create a clear and detailed trust, there might be some confusion about the distribution of assets upon your death. If it conflicts with your will or another document in your estate plan, your beneficiaries could face a contentious court battle.
- Money. The initial costs of creating and funding a trust are more than is required to create a will. Additionally, the assets you hold in trust could be subject to estate and income taxes.
Contact Staubus and Randall
If you’re considering setting up a trust as part of your estate plan, you should contact the Dallas estate planning lawyers of Staubus and Randall today. We can review your assets and other information to determine whether a trust is right for you. Our legal team understands the importance of protecting your property and heirs when you pass away or if you become incapacitated. You can depend on us to protect your interests and create an estate plan that meets your needs.
Call Staubus and Randall at 214-691-3411 for a free consultation with one of our Dallas estate planning attorneys or reach out to us online.
A living trust can be a vital part of creating an estate plan. You could reap various benefits by setting up a valid and enforceable living trust. It can protect not only your assets but your family as well.
A living trust is a legal document you can establish to protect your assets during your lifetime. Your appointed trustee has the authority to manage any property and assets you move into the trust and eventually transfer them to your named beneficiaries as outlined in the document upon your death or incapacitation.
Everyone knows they should create a last will and testament. Unfortunately, many people don’t understand how beneficial a living trust can be.
If you’re considering your options during estate planning, you should review the main reasons below for why you should create a living trust.
You’re Unable to Make Decisions for Yourself
Creating a living trust protects any assets you transfer into the trust during your lifetime so your loved ones can have access to them if you become incapacitated. It’s a good idea to set up a living trust if you have a terminal illness, cognitive disease, or are older.
If something happens to you and you can’t speak for yourself, the trustee you choose can manage your trust on your behalf.
Even if you’re young and healthy, creating a living trust is an excellent idea in case you’re involved in a traumatic accident, such as a car crash, and end up in a coma. You won’t be able to inform your family of your wishes or how to pay for your medical bills and other expenses. However, granting your trustee access to the trust allows them to manage your funds without the need to go to court.
You’re Responsible for the Care of Minor Children
If you want to ensure your child’s future, you can hold specific property in your living trust to have transferred to them when they reach the age you designate.
Some people decide 18 years old is the right age to give their kids access to their assets. However, others might think that’s too young for someone to be responsible for managing their own finances and choose to transfer assets out of the living trust and to the children once they reach 25 or even 30 years old.
When you establish a living trust, you can be the trustee yourself and appoint a successor trustee in case something happens to you, or you can decide who you want to be the trustee. The trustee manages the assets held in trust until they can transfer them to your children based on the directions you left behind.
You can also include specific terms regarding which assets your children can access and at what ages. For example, you can create a payment plan for your kids to receive a predetermined amount of money every month starting at the age you decide. That way, they can’t spend the funds frivolously all at once.
Your Beneficiaries Won’t Have to Go Through Probate
Probate can be a complicated and time-consuming process. It involves a probate judge validating a deceased’s person’s estate and allowing the beneficiaries to receive the assets outlined in the legal document. Unfortunately, that means it could take weeks or even months before your heirs can use the funds and additional property left to them in your estate plan.
With a living trust, your beneficiaries can avoid probate and gain immediate access to your assets upon your death, incapacitation, or another specified event without going to court for authorization first.
Keep Your Private Matters Private
If your surviving relatives have to go through probate to receive your assets, your estate becomes a matter of public record. Anyone can look up the information online, preventing your estate from remaining private.
If you set up a living trust, your family avoids the probate process and can manage your assets privately. That means no one will have the ability to search for the assets you owned when you died and your named beneficiaries that took ownership of them after completing probate.
Contact an Experienced Estate Planning Attorney
You don’t want your loved ones to struggle if something happens to you. You want to ensure they’re taken care of if you’re no longer able to care for them whether you pass away or become incapacitated. Creating a solid estate plan can protect your property and family and give you peace of mind knowing your heirs will receive the assets you left for them without any obstacles getting in their way.
If you’re thinking about creating a living trust, you should speak with an experienced and knowledgeable estate planning attorney from Staubus and Randall. We can review your assets to determine whether a living trust could be beneficial for you. Call us today at 214-691-3411.
Although trusts are designed to operate without any court supervision, trust beneficiaries have the right to file suit to enforce the express terms of the trust, as well as to enforce the legal duties owed to them by the trustee, referred to as “fiduciary duties.” Among these fiduciary duties owed to each beneficiary (including “remainder beneficiaries” who have only a future right to income or principal distributions) are the following:
- Duty of full disclosure
- Duty to account
- Duty to keep and maintain accurate trust records
- Duty of loyalty (including the duty not to self-deal)
- Duty to make the trust property productive
- Duty to reasonably exercise their discretion
Beneficiaries to whom any of these duties have been breached have legal remedies which they can have enforced by a District Court, or in a larger county by a “Statutory Probate Court” (such as Dallas, Tarrant, Collin, Denton, Harris, Bexar or Travis Counties). Some of these court-ordered remedies include the following:
- Compelling the trustee to take an action
- Enjoining the trustee from taking an action
- Ordering the trustee to pay back money or to restore property
- Ordering the trustee to provide a detailed accounting
- Suspending or removing the trustee
- Denying the trustee’s compensation
- Awarding a judgment against the trustee for actual and punitive damages
- Having the Court supervise the trust and oversee all transactions
In addition, beneficiaries can invoke the power of a court to seek an increase in the amount of their distributions from the trust, to modify the terms of the trust, or to terminate the trust and have the trust assets distributed outright. When a trust owns an interest in a limited partnership or a limited liability company, the trust litigation may involve claims against the general partner or managers of those entities, in addition to the trustee.
The fiduciary duties imposed on trustees have been described as one of the highest duties imposed by law. Trust beneficiaries have significant remedies, and the court has extremely wide latitude in enforcing those duties, and in awarding attorneys fees to such beneficiaries incurred in enforcing those rights.
For more information on trust litigation, please visit the firm website, srllp.com, where you may download a white paper entitled “Trust Code Toolbox for Locking Down the Runaway Trustee.”