Should I Set Up a Trust?~3 min read
The answer to the question “should I set up a trust instead of a Will?” often arises when people contact me for estate planning purposes. My answer to that question is one often uttered and not often deemed helpful by the recipient, and that answer is “it depends.”
When people think of a trust, they generally think, “I don’t want to avoid probate and that whole process for my loved ones.” What many people do not realize is that there are, in certain cases, probate alternatives. (See my blog “How Do I Avoid Probate?”). The purpose of this article, however, is to walk through the decision making and pros and cons involved in choosing a Will-based estate plan or a Trust-based estate plan.
Starting with the easiest deciding factor first—do you have out of state real estate (a vacation home, an inherited home, mineral interests)? If yes, you should create a revocable living trust to hold at least that out of state real property in order to avoid the possibility of having your beneficiaries need to handle an out of state probate as well as your Texas assets.
Beyond that factor, I ask clients to tell me about their family and family dynamics. Does either spouse have children from a prior marriage, but intend to leave everything to their surviving spouse and not those children? If so, this scenario eliminates probate alternatives as a Will would need to be probated in order for the surviving spouse to take title to those probate assets. In that instance, if the couple is concerned about ease of transition and firmly determined to make all efforts to avoid a probate, then I would move down the path of a revocable living trust.
Additionally, sometimes one spouse will have extensive separate property either inherited or acquired prior to marriage that they wish to be distributed separately to beneficiaries other than their current spouse and want to have that separation clear from the start. That spouse can create a living trust over which he or she is the sole trustee and name one or more of the intended beneficiaries as the successor trustee(s) instead of his or her spouse.
Beyond that, some couples may simply have it set in their minds that a living trust is what they prefer, and they are dedicated to making sure that they properly transfer all of their assets either to the trust or have pay on death designations either to the trustee of that trust or to named adult beneficiaries (depending on the type of asset). This includes the requirement that the couple remember to properly acquire future real estate in the name of the trust, as well as properly title new accounts and other assets.
I often have estate planning clients come into our scheduled meeting planning on setting up a revocable living trust (grantor trust) and leave with a Will package instead. Keep in mind that any tax planning trusts needed to minimize estate tax for taxable estates may be utilized as needed either in Wills or in living trusts. The same is true for trusts designed to keep a deceased spouse’s estate separate but usable by a surviving spouse only until the surviving spouse’s death, and also for trusts for beneficiaries that extend beyond the death of the surviving spouse. Bottom line is that the choice between a Will and a living trust is one that largely depends on personal preference and different family situations. There isn’t a one size fits all answer.
Contact TS Wright Law
If you have questions regarding Wills, Trusts or Probate, please contact Tiffany Wright at (940) 312-6896 to schedule a consultation. TS Wright Law is located at 620 West Hickory Street, Denton, Texas 76201.
