Estate planning is an important step toward securing your future and providing peace of mind, both for yourself and your family. However, setting up your trust is only one part of the equation, and managing it is another. To get the full advantage of a trust, it is important to have the ongoing support of a skilled Texas estate planning lawyer.
MehaffyWeber can walk you through everything you need to know to set up and manage your trust so that it works smoothly for you. Our team can help you consider a variety of factors to determine the best options for your lifestyle and future goals. They can also help you understand the details of efficient trust administration in estate planning, what it entails, and how to maximize its benefits.
Types of Trusts
When setting up a trust, there are a number of different types you can choose from. Trusts created during your lifetime generally fall into two different categories: revocable and irrevocable trusts.
Revocable Trusts
A revocable trust is typically a trust created by you, reflecting you as primary or sole beneficiary and managed by you as trustee.. One of the biggest advantages of a revocable trust is that you are in full control of it and can make changes to it as needed as long as you have capacity and are alive. Upon your passing, no further changes can be made, and the terms of the trust are carried out per your wishes. Revocable trusts are also commonly known as living trusts.
Irrevocable Trusts
An irrevocable trust is typically created to compete a gift to one or more named beneficiaries. You may not make changes to the trust once it goes into effect. On formation of an irrevocable trust, your assets are no longer in your control but are instead owned by the trust as a separate legal entity and subject to its specific terms. There are several types of irrevocable trusts to choose from, and your lawyer will be able to provide counsel on which format best meets your needs and estate planning goals.
A Note About Taxes
Both types of trusts are taxable, but each is handled differently. Taxable income for revocable trusts will be assessed against the owner of the trust since the owner is in control of the assets. As a general rule, taxes for irrevocable trusts are paid for by the trust itself. However, other tax structures may also apply depending upon rights reserved and rights granted within the irrevocable trust.
Key Considerations for Trust Administration
The most critical part of trust administration is naming someone to serve as trustee who will manage and protect your various assets. The designated trustee is responsible for ensuring the trust is maintained and carried out according to the terms that govern it. They ensure taxes are paid, funds are distributed, and investments are managed, along with other responsibilities.
A trustee will also oversee that your wishes are carried out during your life and upon your passing. Given the importance of these responsibilities, it is essential that even if you nominate yourself, you nominate someone you trust to serve as your successor and who will fully understand what the position entails. Below is a closer look at what to consider when setting up your trust.
Select an Administrator
Setting up a trust involves transferring assets to another party for safekeeping. The trustee you choose should be someone you have faith in and who has extensive experience managing a variety of assets . You should be confident in their ability to carry out the responsibilities set forth in the trust in a timely manner.
The proposed trustee should also be able to coordinate and communicate with your beneficiaries throughout the duration of the trust’s lifespan. Your trustee can also help you handle incapacities and unforeseen circumstances affecting you and your beneficiaries. While your trustee can be an individual, a corporate trustee is often a wise choice for managing family personalities and navigating asset management and investment.
Identify Your Beneficiaries and How Your Trust Will be Executed
Your trust is designed to provide for your beneficiaries in the event of your death, so it is important to name the individuals, entities or charities who will receive distributions from the trust. Either you or your trustee should also notify those whom you have selected as beneficiaries.
Upon your passing, the trust’s assets are transferred according to the conditions you have outlined and the type of trust you have selected. The trustee distributes your assets and resolves any matters regarding your estate for which the trust has designated provisions. Having a plan for the formation and funding of your trust is an important part of managing your estate.
How Your Trust Will Accommodate Unexpected Events
If planned thoroughly, your trust can accommodate unexpected events. A primary benefit of a revocable trust is the ability to make contingency plans for a variety of sudden scenarios that might prevent you from managing or making decisions about your assets.
You can name alternate beneficiaries and trustees and include directions to provide guidance on what steps to take if adjustments need to be made. Your discussions with a lawyer can help you identify and prepare for unexpected life events within the provisions of your trust agreement so you can have peace of mind that your beneficiaries will not be negatively impacted.
Seek the Guidance of a Skilled Estate Planning Lawyer
Trusts are an ideal way to provide for those you care about while also avoiding the probate process after your death. However, trusts are multifaceted and require many considerations which are best handled with the advice and guidance of an estate planning lawyer.
Your lawyer will help you identify your goals and needs based on your specific situation and can draft your trust agreement to ensure your wishes are carried out. Your lawyer will also provide ongoing support and guidance so your trust operates properly and help you make adjustments as needed.
Protect Your Future With MehaffyWeber
MehaffyWeber can help you maximize the efficiency and effectiveness of your trust so that it fulfills its intended purpose. Our knowledgeable estate planning attorneys ensure that your assets are protected and managed in a way that best suits your needs. Contact us today to schedule a consultation and learn more about how our firm can help you plan for the future.