People in Texas may develop trusts for a number of different reasons. A living trust is a way for people to preserve property by changing ownership of their resources. Assets used to fund trust are less vulnerable to creditor claims or forced liquidation after a lawsuit against an individual.
A living trust allows someone an opportunity to control those assets themselves initially before transferring authority to a different trustee when they die or their health declines. Trusts help people qualify for benefits, protect their most valuable resources and allow their property to transfer to others without involving the probate courts after they die.
What do people establishing a living trust as Texas residents need to do?
Choose the type of trust
There are two main categories of trusts that people can start. There are irrevocable and revocable trusts. As the name implies, an irrevocable trust is usually not subject to modification after the trustor funds the trust initially. The terms that they set remain ironclad in most cases even if their circumstances change. Revocable trusts, on the other hand, are subject to adjustment while the trustor is still alive. There are benefits and drawbacks to both types of trusts. People can also establish a living trust either as an individual or as part of a married couple. Choosing the right type of trust is important.
Establish funding for the trust
A trust exists to manage and distribute resources. Assets ranging from the trustor’s primary residence to their financial resources or business holdings can help fund the trust. What assets people use to fund the trust depend on what they hope to accomplish with the trust. Many people transfer assets that they want to protect from creditor claims, litigation or probate proceedings. Other people use financial resources or even life insurance policies if the goal of the trust is to provide themselves and others with structured financial support.
Select the right trustee
Frequently, a trustor is the initial trustee. They intend to administer the trust on their own behalf initially. They may need to name a succession trustee to take over their role when they become incapacitated or after they die. Some people even arrange for a different trustee to assume authority during their retirement years so that there aren’t disputes about when they become too incapacitated to manage that responsibility themselves.
Establishing a living trust can offer numerous benefits when done properly. Texas residents who want to protect themselves and their loved ones may need assistance as they make choices about the living trust they want to establish. Seeking guidance is, therefore, generally wise.