Living trusts safeguard a grantor’s property while they’re alive and determine who receives certain assets when they pass away. When you create a living trust, you transfer ownership of your property to the trust while maintaining control as the trustee.
Living trusts can benefit Texas families who want to avoid probate, maintain privacy and ensure smooth asset transfers to loved ones. You might consider a living trust if you own substantial assets, have minor children or want to protect your legacy from public scrutiny.
How living trusts work
Creating a revocable living trust in Texas starts with drafting a document that names you as the trustee, designates beneficiaries and outlines how to manage assets. You’ll then transfer ownership of selected assets into the trust by changing titles and deeds.
If you become incapacitated, a successor trustee you choose will manage these assets and distribute them according to your wishes after death.
Assets commonly placed in living trusts include:
- Homes and real estate
- Bank and investment accounts
- Business interests
- Valuable personal property like jewelry and artwork
- Vehicles and boats
- Stocks, bonds and mutual funds
Two primary types of living trusts are available. Revocable trusts allow you to make changes or dissolve the trust during your lifetime, maintaining complete control. On the other hand, irrevocable trusts generally cannot be altered but offer greater asset protection and potential tax benefits in exchange for surrendering control.
Advantages and disadvantages to consider
Not everyone in Texas needs a living trust. A will may provide sufficient protection for those with modest assets and straightforward wishes. Before deciding, weigh the pros and cons carefully.
Benefits of living trusts include:
- Avoiding probate court proceedings
- Maintaining the privacy of your financial affairs
- Providing seamless management if you become incapacitated
- Potentially reducing estate taxes with certain irrevocable trusts
- Faster distribution to beneficiaries
- Harder to contest than wills
Potential drawbacks to consider:
- Higher upfront costs than creating a will
- Administrative work to transfer assets into the trust
- Ongoing management responsibilities
- No tax advantages with revocable trusts
- Complexity that may not be necessary for simple estates
- Need for additional documents like pour-over wills
The right choice depends on your situation, including your assets, family circumstances and long-term goals.
Seek guidance on whether you could benefit from a living trust
Every family’s estate planning needs differ based on financial situations, family dynamics and personal goals. What works for your neighbor might not be the right solution for you.
A thorough review of your assets, family circumstances and objectives with a knowledgeable attorney can help determine whether a living trust is appropriate for your needs.
A skilled estate planning lawyer can explain how Texas laws specifically affect your estate planning options and help you create a comprehensive plan that protects what matters most to you.