Creating a trust is often part of estate planning. There are several types of
trusts available and whether you need one or not depends on your own
unique situation.
What is a Trust
Black’s Law Dictionary defines a trust as “a right of property, real or personal, held by one party for the benefit of another party.” Trusts serve many purposes and may be created so there are tax savings for you, the creator of the trust, and your beneficiaries.
When you create a trust, you transfer ownership of your assets to the trust.
For example, you change the deed to your home from you, John Doe, as
the owner of the property to “The John Doe, Trustee of the John Doe Living Trust” as the owner. You do this with all property you want to have managed by the trust.
You appoint a trustee in charge of managing the trust and ensuring your assets are distributed at your death to your beneficiaries according to the terms of the trust. You may name yourself as the Trustee to manage the trust during your lifetime, and you may wish to name another person or corporate entity to act as trustee upon your death. There are many types of trusts that can be established depending on your individual needs and goals.
Major Advantages of Trusts
There are many advantages to having a trust, particularly for individuals who own real estate, those who have minor children, and those who have children from previous marriages. Some specific advantages are:
- Avoid probate. The assets are immediately distributed to the beneficiaries according to the terms of the trust. This means no probate costs and fees and no lengthy wait for the probate court to approve distribution.
- Reduce taxes. Depending on the structure of the specific trust, there are generally substantial tax savings for you during your life and for your beneficiaries after your death.
- Privacy. Probate court is open to the public. Property in a trust is transferred privately to the beneficiaries.
These are just a few reasons why you may want to create one or more trusts as part of your estate planning.
Contact the Reecer Law Firm PLLC for Assistance
Dena Reecer, founder and owner of the Reecer Law Firm PLLC, is one of a few Texas attorneys who are Board Certified in Estate Planning and Probate Law by the Texas Board of Legal Specialization. If you are considering drafting any type of trust, contact one of our trust attorneys for more information about how we can help you.
