Texas Revocable Living Trusts
Texas Revocable living trusts are a powerful estate planning tool in Texas. The Texas revocable living trust allows a person to distribute one’s assets in accordance with one’s wishes without the need for a costly and lengthy probate. Further, revocable living trusts can be written in a manner to protect those assets from your beneficiaries’ creditors. Therefore, it is important to retain a Texas estate planning attorney to prepare the Texas revocable living trust.
Some of the key persons named in a Texas revocable living trust include a settlor, trustee, and beneficiary.
A settlor, which may also be named a trustor or grantor, is the person creating the trust. For Texas revocable living trusts, assets must be placed into the trust. The settlor is usually the person placing the assets in the trust. However, depending upon the way the revocable living trust is drafted, others may also be permitted to place assets in the trust. One of the key components of a revocable living trust is the fact that it is revocable. The revocable nature of the trust means that the settlor can amend the trust at any time. Additionally, the settlor may move property in and out of the trust. Therefore, transfers into a Texas revocable living trusts are considered “incomplete” because of their revocable nature. Thus, moving assets into the trust and out of the trust do not cause any federal tax issues during the lifetime of the settlor.
Additionally, moving a Texas residential homestead into a Texas revocable trust does not violate a due on sale clause in a deed of trust. In fact, the Texas legislature has made this a law. Therefore, moving your home into a Texas revocable trust still allows the settlor to take advantage of the homestead property tax credits.
Most importantly, after the settlor dies, a Texas revocable living trust distributes the assets in the trust in accordance with the settlor’s wishes without the need to go to probate court. Further, the settlor may place conditions on the distributions. For instance, the settlor may require that a beneficiary reach a certain age before receiving the intended assets to be distributed to such beneficiary. Or, the settlor may place certain conditions upon a beneficiary to the extent that such restrictions do not violate the rule against perpetuities. Therefore, a Texas revocable living trust is a powerful tool to protect assets from a beneficiary’s creditors or waste.
In furtherance of the protection of assets in the Texas revocable living trust, a trustee is named to manage the trust. Usually, the settlor is the primary trustee. But, most Texas revocable living trusts name successor trustees to manage the trust after the initial trustee is no longer able to manage the trust. Further, the Texas revocable living trust can name multiple trustees for the trust or different trustees for different parts of the trust.
In conclusion, the Texas revocable living trust is a powerful tool to help a settlor avoid probate of their estate, protect the assets from a beneficiary’s creditors, protect the assets from a beneficiary’s whimsical spending habits, and distribute the assets in accordance with the settlor’s wishes.
The Law Office of Robert Newton, PC is a law firm located in Frisco, Texas, that practices in the area of estate planning, real estate, and business. Please feel free to contact the firm for a consultation. The above information was provided for information purposes only and not as legal advice.