Revocable Living Trusts
Most people know what a will is, but many do not realize wills are not the only document you may need when implementing a comprehensive estate plan. A revocable living trust—sometimes simply called a living trust—is a legal entity created to own your assets and ensure they are transferred to your designated beneficiaries, but it can do this faster and more cost-effectively than a will.
The person who forms the trust is called the grantor. In most cases, they also serve as the trustee of this type of trust to control and manage the assets they’ve transferred there.
At Anderson Estate Planning, we will guide you through the creation of a revocable living trust. You will feel confident your loved ones will receive your assets as quickly as possible after you pass away.
What Is a Revocable Living Trust?
The term “revocable living trust” is used to describe a trust you create during your lifetime, and usually for your benefit. It evolves throughout your life as assets and family circumstances change (i.e., you amend your revocable living trust throughout your life to address these changes).
How Do Texas Revocable Living Trusts Work?
- Grantors: The people who create a revocable living trust are called the grantors or the trustors. Grantors reserve the right to terminate a revocable trust—that’s one of the reasons it’s called “revocable.” They can remove assets from the trust at any time, use the trust’s income for themselves or another beneficiary, change beneficiaries, sell the trust assets, or transfer more assets into the trust. Grantors retain full control of the trust.
- Trustees: Grantors also designate the original trustee and successor (backup) trustees. The person serving as trustee controls and manages all assets in the trust for the benefit of the trust’s beneficiaries. Successor trustees serve after the original trustee ceases to act due to illness, incapacity, or death.
- Beneficiaries: Grantors also determine who will be the beneficiaries of the trust. There can be different beneficiaries under different circumstances. For example, a married couple may be the lifetime beneficiaries of a trust they have created for themselves. Their children might be the beneficiaries of everything remaining in the trust after the deaths of both parents.
It is critical to transfer your assets to your revocable living trust because only those assets will avoid probate (see a more detailed explanation on “funding” below).
Why Should I Create a Revocable Living Trust in Texas?
There is a common misconception trusts are for the wealthy. However, the main reason people use trusts is for control. Assets attached to a trust allow you and your estate to:
- Avoid probate court upon your illness or incapacity because your successor trustee will have immediate access to the trust’s assets to take care of you.
- Avoid probate court upon your death, which permits your successor trustee to distribute the trust’s assets directly to your designated beneficiaries in a faster and less expensive manner.
- Maintain privacy that is forfeit when Wills, inventories of assets, and lists of creditors are filed in public probate proceedings.
- Ensure your assets remain in the right hands.
Funding Your Texas Revocable Living Trust
Funding your revocable living trust means the trust owns—or is the beneficiary of—all your assets. As the trustee, you still maintain control over all the assets. You should transfer ownership of assets like real property, mineral interests, bank accounts, and brokerage accounts to the trust. The trust should be named as a primary or secondary (if an individual is a primary) beneficiary of life insurance policies, retirement accounts, annuities, and anything else that has an associated beneficiary designation. Most law firms will not transfer assets to your trust for you. At Anderson Estate Planning, we do that for every client who creates a trust with us.
You will not need a separate tax ID number, nor will you be required to file a separate tax return for the trust, after completing the funding.
A knowledgeable estate planning attorney can help you fund your trust properly.
Create a Revocable Living Trust with Our Help at Anderson Estate Planning in Dallas-Fort Worth Today
If you create and maintain a comprehensive estate plan, your family will not have the burden of dealing with the courts and complicated legal issues while they are grieving.
Contact us at the Anderson Estate Planning in McKinney, Texas, today at (469) 207-1529 to schedule a consultation.