Trusts are estate-planning tools that can replace or supplement wills, as well as help manage property during life. A trust manages the distribution of a person's property by transferring its benefits and obligations to different people.
The basics of trust creation are fairly simple. To create a trust, the property owner (called the "trustor," "grantor," or "settlor") transfers legal ownership to a family member, professional, or institution (called the "trustee") to manage that property for the benefit of another person (called the "beneficiary").
Trusts create a "fiduciary" relationship running from the trustee to the beneficiary, meaning that the trustee must act solely in the best interests of the beneficiary when dealing with the trust property. The grantor may act as the trustee himself or herself, and retain ownership instead of transferring the property, but he or she still must act in a fiduciary capacity. A grantor may also name himself or herself as one of the beneficiaries of the trust. In any trust agreement, however, the trust cannot become effective until the grantor transfers the property to the trustee.
Trusts fall into two broad categories, "testamentary trusts" and "living trusts."
A testamentary trust transfers property into the trust only after the death of the grantor. The testamentary trust is not automatically created at death but is commonly specified in a will and so as a will provision, the trust property must go through probate prior to commencement of the trust.
A living trust, also sometimes called an "inter vivos" trust, starts during the life of the grantor, but may be designed to continue after his or her death. This type of trust may help avoid probate if all assets subject to probate are transferred into the trust prior to death. A living trust may be "revocable" or "irrevocable." The grantor of a revocable living trust can change or revoke the terms of the trust any time after the trust commences. The grantor of an irrevocable trust, on the other hand, permanently relinquishes the right to make changes after the trust is created.
Irrevocable trusts transfer assets before death and thus avoid probate. However, revocable trusts are more popular as a means of avoiding the probate process. If a person transfers all of his assets to a revocable trust, he owns no assets at his death. Therefore, his assets do not have to be transferred through the probate process. However, trusts avoid probate only if all or most of the deceased person's assets had been transferred to the trust while the person was alive. To allow for the possibility that some assets were not transferred, most revocable living trusts are accompanied by a "pour-over" will, which specifies that at death, all assets not owned by the trustee should be transferred to the trustee of the trust.
Although a grantor may name himself as trustee of a living trust during his lifetime, he should name a successor trustee to act when he is disabled or deceased. At the grantor's death, the successor trustee must distribute the assets of the trust in accordance with the directions in the trust document.
Call your Amarillo estate planning attorney today
Not sure how to ensure your estate planning is the best it can be for you and your loved ones? Don't worry. Many people have similar questions and go through the same line of questioning when deciding how to make their estate plan. It can be and often is critical that you get legal help understanding the basics of the estate planning process. The best way to get this understanding is to contact an experienced estate attorney near you. Stop and take a breath and call an Amarillo attorney who has had decades of experience. Pick up the phone and call Amarillo Attorney Bill Cornett. Bill is your choice as an experienced estate planning attorney in Amarillo and the Texas Panhandle. Don’t waste another minute. Call him today.
Your most important action may end up being the phone call that you make to your Amarillo estate planning attorney lawyer. In the Texas Panhandle that call should be to Amarillo attorney Bill Cornett. Whether you need assistance with a will, administration of an estate or a contested probate, contact the Law Office of Bill Cornett. Be smart…remember these phone numbers (806) 374-9498
or (800) 658-6618.
Bill Cornett, Amarillo Attorney, with Cornett Law Firm offers affordable, qualified services as an experienced personal injury lawyer, probate attorney, family law attorney, criminal law attorney, DWI attorney and divorce attorney. Bill also has experience in estate planning and agriculture law. Sit down with Bill at his office located at 612 S. Van Buren St. in Amarillo TX by calling (806) 374-9498 or (800) 658-6618 TODAY to schedule a free consultation.
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Bill Cornett grew up on a farm in Knox City, Texas. He received his Bachelor of Science in Agricultural Economics from Texas Tech University and his Doctor of Jurisprudence from the University of Houston Law School. Bill was licensed to practice law in the State of Texas in 1973.