- LGBT Community
- Client Portal
Part III: If you don’t have a WILL, the State of Texas has one for you!
Most of us have read an article, seen a television program or attended an estate or financial planning seminar describing the many benefits of Living Trusts (also called revocable trusts or inter vivos trusts). In fact, many people are led to believe that a Living Trust is the best option when it comes to planning for death or disability. According to the State Bar of Texas, “Living Trust sales are a growing area of consumer fraud”. Living Trusts can be an effective way for individuals to manage and pass their property, but it is important to be informed on the pros and cons of creating such a trust.
A Living Trust allows you to put your assets in a trust while you’re still alive. People often choose to serve as their own trustee, but you can select an individual or a financial institution to manage your Living Trust. When you pass away, become incapacitated or resign as trustee, a successor trustee takes over and manages your property for you or for your beneficiaries.
The most common claim by proponents of Living Trusts is that they avoid the probate process. That need is significantly reduced in Texas because our probate system is efficient and inexpensive if – and this is a big if – you have a properly written TEXAS-specific Will that allows for an “independent administration”. In many cases, it will cost you less to set up your Will and go through the probate process than create a Living Trust alone.
Furthermore, a Living Trust does not necessarily eliminate the need for probate. One of the complications of administering a Living Trust is that you must make sure that all of your assets are re-titled in the name of the trust. You would also have to title any after-acquired property in the name of the trust. Any asset that the trust does not “own” could possibly go through probate.
Therefore, even with a Living Trust you still need a Will, called a “pour-over” Will, whereby the assets you did not transfer into your Living Trust during your life will be transferred into the trust at your death.
For most people, a carefully drafted Will, prepared by a qualified Texas attorney, is an efficient and effective way to manage and distribute your property. An attorney may help guide you as to how to designate your assets, such as life insurance, bank accounts and retirement accounts, so that they do not have to go through probate. Additionally, a “Statutory Durable Power of Attorney” allows you to designate an individual to act on your behalf in you are disabled or incapacitated. Another document you can prepare is a “Declaration of Guardian in Event of Later Incapacity or Need of Guardian,” which names an individual to manage your person and property if you become so incapacitated or disabled that a guardian must be appointed.
Overall, the Living Trust isn’t guaranteed to save you money or taxes. Texas has inexpensive probate procedures for the size of most estates if you have a properly written Will. Also, if your records are well-organized, your assets are simple (not necessarily small, just easily identified), your beneficiaries aren’t likely to argue, and your probate court and lawyer are efficient, legal costs of probate might be so low that it costs less to pass the property through a Will than via a Living Trust. Finally, with a well-drafted Will, along with a Declaration of Guardian and Powers of Attorney, you can accomplish many of the benefits of a Living Trust in a less complicated and less expensive manner.
Learn more about our process for preparing your will and other documents.
Contact Us to start protecting your family and your legacy now.
Read some client testimonials to learn how Lorie helps!
PART I: Did you know without a will…
PART II: Not All Wills Are Created Equal
PART IV: (Conclusion) If You Don’t Have a Will, The State of Texas Has One for You!