When you’re thinking of creating an estate plan, most of us just think about writing a will. However, there are other facets to an estate plan, and a trust is one of them.
Why would you need a trust? Here are four good reasons to create one.
Children and Other Beneficiaries
One of the primary purposes of establishing a trust is to provide financially for your children and other dependents. You can set up your trust in such a way that you can allow for the distribution of funds for support, education, medical care, and maintenance for your family. If you have other dependents, you can use the trust to provide for them, also.
One reason people use trusts in this way is that they can direct their trustee to distribute the funds on a schedule or for a specific purpose. If you have a child that is a spendthrift, for example, and you suspect that should that child obtain their entire inheritance at one time, they’d blow it, you can direct the trustee to make periodic distributions.
A trust will allow you to plan your future and that of your spouse. You and your spouse may wish to establish a trust even before you get married to ensure that you each have access to resources before the wedding in the event one of you should pass away. You may use the trust to secure the family home and protect it from personal liabilities. The trust can be used to hold the house for your kids and designate who has the right to live in it.
Upon your death in Texas, unless your estate is very small, your will must go through probate. Probate is a process that is a matter of public record. All the assets your will includes will be in the public record for all to see.
Many people wish to have a greater degree of privacy about the extent of their assets. This is where a trust comes in. When you create a trust, the assets included in the trust do not go through probate. The trustee can distribute the assets directly to the beneficiaries. If you don’t want the world to gain an idea about the size of your estate, placing your assets in trust is the way to go.
Most of the assets inside a trust are not subject to estate tax when they are distributed to the designated beneficiaries unless the deceased individual’s estate is over the federal estate tax threshold, which was $11.7 million in 2021.
A trust is an essential tool to protect and manage your estate. Working with a skilled attorney, establishing a trust is a process of determining how your assets will be managed in the course of your life and beyond. Call the Law Offices of Stephanie Hon at 512-334-6725, so we can discuss the process and benefits of establishing a trust to help manage your estate.