Common Questions
(click questions below to reveal answers)
1. Is it true that if I have a Trust, my family can avoid probate?
Yes, but only if all of your assets have been put into the trust before you die.
But, the more important question may be “what is your reason for wanting to avoid probate”? Many people have been to a marketing seminar where it has been suggested that it’s a good idea to avoid probate. That simply is not good advice that is applicable to all people. Probate in Texas is usually inexpensive and an easy process. Creating a trust and managing it can be costly, cumbersome, somewhat time consuming, and the practical application is often misunderstood. You should consult with an attorney who is knowledgeable in this area and thoroughly discuss your particular situation.
2. What are some of the purposes of a Trust?
(1) A trust can be used for tax planning purposes by transferring wealth out of one’s estate, without giving the beneficiary immediate control of the assets. Consultation with an attorney, a CPA and/or a tax-attorney should be considered if the value of an estate is in the millions of dollars.
(2) A trust can be used to hold and manage assets for minors (under 18) or incapacitated beneficiaries who do not have the legal capacity to hold and manage assets for themselves.
(3) A trust can be used to hold and manage assets for a child beyond the age of 18, and until such time as such child is older and more capable of managing assets on his or her own.
(4) A trust can be used to hold and manage assets, and provide for a beneficiary who may be a spendthrift (someone who is likely to blow the assets); and to keep such assets from being seized by creditors.
(5) A trust can be used to insure that upon death, assets may be preserved for a child or children of a former marriage, while still allowing the assets to be used by a surviving second spouse for specified purposes.
(6) A trust can be used to provide for a beneficiary only if such beneficiary meets the certain standards specified by the person creating the trust. Such qualifications may include certain requirements relating to age, lifestyle, education, employment, refraining from use of drugs or alcohol, and, perhaps, limiting distributions for certain purposes, such as housing, transportation, medical, etc.
(2) A trust can be used to hold and manage assets for minors (under 18) or incapacitated beneficiaries who do not have the legal capacity to hold and manage assets for themselves.
(3) A trust can be used to hold and manage assets for a child beyond the age of 18, and until such time as such child is older and more capable of managing assets on his or her own.
(4) A trust can be used to hold and manage assets, and provide for a beneficiary who may be a spendthrift (someone who is likely to blow the assets); and to keep such assets from being seized by creditors.
(5) A trust can be used to insure that upon death, assets may be preserved for a child or children of a former marriage, while still allowing the assets to be used by a surviving second spouse for specified purposes.
(6) A trust can be used to provide for a beneficiary only if such beneficiary meets the certain standards specified by the person creating the trust. Such qualifications may include certain requirements relating to age, lifestyle, education, employment, refraining from use of drugs or alcohol, and, perhaps, limiting distributions for certain purposes, such as housing, transportation, medical, etc.
3. Can I be a beneficiary of a trust that I set up?
Yes.
4. Can I be the trustee of a trust that I set up?
Yes.