Wills and Trusts
Key things to consider when before deciding what kind of will and/or trust is right for you and your family:
- What are your goals for your estate after your death?
- What property do you own and what do you want to happen to it after your death?
- Do you want to avoid probate?
- Do you have privacy concerns?
- Are there people that you want to protect, either from themselves or others?
- Are there any charities or organizations you would like to donate to?
- Do any of your beneficiaries have special needs and receive benefits from the government?
- Are there any possible conflicts you would like to avoid?
- Do you have any other specific concerns?
Answering these key questions will help guide you to a well estate plan. It is essential to get the assistance of an attorney familiar with estate planning law and its intricacies. Your will and/or trust should be tailored to you to meet your personal and family goals.
Wills
Your will is an important document that all competent adults should have in place. It can be one of the most important documents you can leave for your family and friends after your death. A will can help reduce costs, protect assets for your loved ones, and make sure that the right people are inheriting your assets. Simply having a will does not require that your estate go through probate. Having a will, likewise, will not help you avoid the need for probate. Wills are specifically designed for the probate process. If there is a need for your estate to go through the probate process, a will can streamline the process and reduce attorney’s fees, court costs, and the time it will take to complete the process. It is important to speak to a professional who can guide you and make sure that the needs of your estate and family are met.
Types of Wills
Simple Wills
This type of will allows you to appoint an executor, direct where your stuff will go and help reduce the cost of probate for your friends and family. Families with minor children can also appoint guardians who can care for children should both parents be deceased. This type of will works well for those without estate tax concerns and want to make simple gifts to their beneficiaries.
Complex Wills
For some of us, a simple will does not provide the type of protection and planning techniques that will achieve our goals. Testamentary trusts created by this kind of will can help you achieve your estate planning goals. Asset protection trusts and special needs trusts for beneficiaries, marital protection trusts, and tailored trusts for minor beneficiaries are some of the benefits of having a complex will.
Tax-Planning Wills
This type of will is for those of us who have enough assets that will expose their estate to estate taxes. Right now, the individual exclusion amount is $11.4 million dollars. Your taxable estate includes cash, real estate, investments, life insurance, personal property items, etc. If the value of your estate combined is more than the $11.4 million dollar exclusion amount, your estate may owe estate taxes. This will incorporates tax planning provisions that will make sure that your assets will be distributed in a manner consistent with your tax-savings goals.
Handwritten Wills
Texas law provides for handwritten wills; this is also known as a holographic will. These types of wills require certain criteria to be considered valid. Often court disputes can arise from these types of wills where people fight over interpretation and whether it is a valid will. It is generally not advisable to have this type of will unless there is no other option.
Trusts
There are many different types of trusts. A trust is an agreement between the settlor (the person(s) creating the trust) and the trustee (the person(s) that will be managing the trust) where the trustee agrees to hold property for the benefit of a beneficiary or beneficiaries.
The trustee is given title to the property in the trust and is obligated to manage the property in a way that is in the best interest of the beneficiaries. Trustees are fiduciaries, which means that they have duties that are owed to the beneficiaries, including the duty not to self-deal and the duty not to co-mingle trust assets with the trustee’s own assets.
You do not need to be wealthy to receive the benefits of a trust. Each type of trust has its own benefits and requirements. When you are considering a trust for your estate plan, you should speak to an attorney who has experience with trusts and can guide you through the process to make sure it is set up properly and your goals will be met.
Types of Trusts
Revocable Living Trusts
With this type of trust the trustmaker retains the right to amend the terms of the trust and terminate the trust. This is one of the most common types of trusts. Revocable living trusts can provide probate avoidance and can be important you have real estate in multiple states to help your family avoid having to go through probate in each state property is located. Other benefits might include privacy protection and disability protection among other things.
Irrevocable Trusts
With an irrevocable trust, the person who creates the trust cannot undo the trust or amend any of the terms within it. With this type of the trust the beneficiaries have more rights. The most common use reason to have an irrevocable trust is to move assets out of the trustmaker’s name and control for asset protection and transfer to the assets to the next generation.
Testamentary Trusts
These types of trusts are created by a will or another trust. They are typically set up for the benefit of your beneficiaries to help protect them. These are great trusts for parents of minors who want to ensure the assets left to their children can be used for their benefit an not locked up. These types of trusts also can offer asset protection to your beneficiaries and protect beneficiaries who are receiving public benefits from being disqualified.
Tax Planning Trusts
Texas does not have an estate tax. There is, however, a federal estate and gift tax. Right now, the individual exclusion amount is $11.4 million dollars. Your taxable estate includes cash, real estate, investments, life insurance, personal property items, etc. If the value of your estate combined is more than the $11.4 million dollar exclusion amount, your estate may owe estate taxes. Tax planning may help eliminate or reduce your estate’s tax liability.