Many people opt to put their assets in a trust for various reasons. From maintaining control over property to avoiding probate and maintaining eligibility for certain government programs, revocable living trusts in Houston are a valuable estate planning tool.
Unlike irrevocable trusts, these trusts are flexible, allowing you to bend them to your goals and needs throughout your lifetime. And once you pass away or become incapacitated, your plans become set in stone, allowing your family to benefit from a stress-free administration process.
If you’re considering adding a revocable living trust to your estate plan, talk to our trust lawyers at Your Legacy Legal Care. Our team can explain these estate planning tools in further detail and help you decide if they are right for you.
What’s the Purpose of a Revocable Living Trust?
In general, revocable living trusts are beneficial for people in Houston who are on second marriages or have minor children. This is because many people who wish to put their property into a trust want to leave things to their children or grandchildren, bypassing spouses and other heirs. As with any estate planning document, there are benefits and disadvantages to consider.
Benefits
For many people, avoiding the probate process is a key reason to create a revocable trust, as that process can be costly and time-consuming. Additionally, revocable trust planning gives you the ability to dictate how, when, and where your beneficiaries receive assets.
For instance, you can set up “what-if” situations or milestones for children or beneficiaries to hit. These documents provide a lot more flexibility and planning, allowing you to be as creative as you want when it comes to distributing your assets.
Drawbacks
The main disadvantage to creating a revocable living trust in Houston is the upfront cost to set it up. It takes a little more work on the front end to get it set up and time to put assets in the trust or change beneficiary designations. This can be overwhelming, but fortunately, our team is well-versed in the process and could help make it go smoothly.
Revocable Trusts Vs. Irrevocable Trusts
Two common types of trusts used in estate planning are revocable trusts and irrevocable trusts. Understanding the differences between these two types is crucial in developing a comprehensive estate plan that addresses specific goals and concerns.
The primary difference between revocable and irrevocable living trusts is that a revocable trust does not provide significant asset protection or estate tax benefits. The assets within the trust are still considered part of the grantor’s estate for tax purposes, potentially subjecting them to estate taxes upon the grantor’s passing.
Furthermore, irrevocable trusts can provide protection against creditors and legal claims, as the assets within the trust are considered separate from the grantor’s personal assets. This can be particularly beneficial for individuals concerned about asset protection and preserving wealth for future generations.
Who Owns the Property in a Revocable Trust?
When it comes to a living trust, you are still the proud owner of the property you place in it. It’s a legal document that allows you to maintain control over your financial affairs and assets. Since you retain ownership, any income or property generated by the trust is typically reported on your personal tax return.
By placing assets in a revocable trust, you can potentially reduce the size of your taxable estate, which can have significant benefits when it comes to estate taxes. So, in a nutshell, you can enjoy the perks of ownership while safeguarding your financial future through this clever estate planning tool.
How to Create a Revocable Living Trust
Creating a revocable living trust involves drafting a trust document that includes information about the trust’s assets, funding the trust, and the parties involved.
In Houston, there are five key players in the creation of a revocable living trust.
These include the:
- Grantor: the person setting up the trust (you)
- Trustee: the role of a trustee is to administer the trust during your lifetime (typically also you)
- Successor trustee: the person who will administer the trust upon your death or incapacitation
- Document: tells the trustee when, how, and what to do
- Assets: the property the grantor wants to place in the trust
As these documents allow for a little more creativity, you can be more specific regarding your wishes. For example, you could allow your funds to be spent on your child’s wedding up to a certain point, pay for your child’s schooling as long as they maintain a specific GPA, or help establish a business with specific guidelines. At Your Legacy Legal Care, we say, “If you can imagine it, we can draft it.”
Once the trust is established, you can begin to transfer assets to the trust, like personal property, bank accounts, insurance policies, etc.
It is a common misconception that you have to be wealthy in order to set up a trust, but that is not the case. Anyone can benefit from estate planning, and working with a trustworthy estate planing attorney could ensure you put together a plan that meets your specific needs.
Set Up a Revocable Living Trust With Our Houston Trust Attorney
Are you looking for a straightforward way to avoid probate and ensure all your assets are distributed according to your wishes? You may benefit from a revocable living trust.
Creating revocable living trusts in Houston does not have to be complicated or stressful. Our seasoned trust and estate attorneys can help you draft documents that accurately reflect your goals. Contact us today to book a consultation.
