Explore the Benefits and Drawbacks of Trust Creation with Help from an Experienced Texas Estate Planning Attorney
Choosing an estate planning vehicle that offers the maximum benefit for your family can be difficult, especially with so many different options available. At the Hailey-Petty Law Firm, PLLC, we understand the challenges associated with choosing and creating the proper estate planning tools. We also understand how important it is to cut through the confusion and identify the tools that best fit your family’s needs.
With that in mind, Attorney Hailey-Petty offers the personalized guidance you need to explore the benefits of a wide range of estate planning tools, including:
- Testamentary Trusts
- Revocable Living Trusts
- Irrevocable Life Insurance Trusts
- Special Needs Trusts
Testamentary Trusts, also commonly referred to as will trusts, are estate planning strategies that transfer property and assets following the death of the grantor. Testamentary Trusts are useful tools for individuals and couples seeking to preserve the bulk of their estate for loved ones. Testamentary Trusts offer many benefits, including:
- Managed gifting: Testamentary Trusts are viable options for individuals wishing to pass assets to a minor child. During the trust creation process, it is possible to create an asset distribution schedule that spreads payments to minors over a period of time until they reach a responsible age, rather than giving them a single lump sum.
- Protection from creditors: Testamentary Trusts protect your assets from creditors. Upon your death, assets held within a Testamentary Trust are not subject to be used to repay the creditors of your designated beneficiaries, meaning that the maximum amount of your estate possible is passed to your loved ones.
- Flexible trustee designation: Testamentary Trusts allow you to designate a trustee of your choosing. This means that you have the power to choose a trusted friend, family member or advisor to manage your estate following your passing.
Revocable Living Trusts
Commonly referred to simply as Living Trusts, Revocable Living Trusts have become a popular estate planning strategy for Texans. Revocable Living Trusts offer a wide range of benefits, including:
- Asset distribution: Much like a will, Living Trusts allow the grantor to lay out their wishes regarding the distribution of his or her assets. Living Trusts allow the grantor to preplan the distribution of a wide range of assets, including bank accounts, real estate and more. Any assets held within a trust are exempt from the probate process, further protecting them from inadvertent distribution or state involvement in the actual distribution of the assets.
- Incapacity planning: While Powers of Attorney are always recommended as part of an overall estate plan, the best incapacity planning tool is a revocable living trust, which allows a designated person to manage Trust assets if you become incapacitated.
- Probate avoidance: Texas probate proceedings are among the most straightforward and easiest to deal with in the country. Avoiding probate altogether, however, further reduces the stress your loved ones may feel upon your passing. All assets held within a Living Trust are protected from probate, making it possible for your loved ones to avoid court involvement altogether.
Irrevocable Life Insurance Trusts
Purchasing life insurance coverage is a great idea for many individuals and families wishing to protect against unforeseen future events. Unfortunately, life insurance can cause problems when the unforeseen happens – many families find themselves facing large tax burdens and difficulty managing the large lump sum payout common with life insurance benefits.
Creating an Irrevocable Life Insurance Trust offers many benefits, including:
- Tax protection: Irrevocable Life Insurance Trusts separate insurance policy payouts from the remainder of your estate. This helps to reduce the amount of your assets subjected to estate taxes, thereby allowing you to pass the maximum amount of the estate on to your loved ones.
- Strategic distribution of assets: Even the most responsible and right-minded individuals may struggle to manage a large sum of money. Trusts strategically distribute assets, relieving your loved ones of the burden of managing a large windfall while ensuring their financial security for years to come.
Special Needs Trust
Individuals with loved ones requiring care for physical or mental disabilities should carefully consider the creation of a Special Needs Trust. Special Needs Trusts place a trustee in charge of the administration of your assets – this individual is responsible for ensuring that your loved one receives the quality medical care and support necessary to lead a safe and happy lifestyle.
Special Needs Trusts offer many benefits, including:
- Providing ongoing support: Since your loved one’s care is managed by the trustee, their care is assured for the life of the trust. This prevents your loved one from having to obtain care for themselves or manage any of their own finances.
- Protecting SSI or Medicaid eligibility: Individuals who inherit lump sums exceeding $10,000 may lose eligibility for Medicaid and SSI benefits. Since your loved one never directly receives the full amount of the trust, Special Needs Trusts prevent this loss of eligibility.
Only by talking with an experienced Texas estate planning lawyer will you be able to explore the full array of options available in your unique situation.
Schedule a free consultation with Attorney Hailey-Petty to discuss your unique Texas trust concerns.
To fully understand the drawbacks and benefits each type of trust offers you and your family, it is important to discuss your unique situation with a Texas trusts lawyer. Attorney Hailey-Petty proudly represents individuals, couples and families throughout the Austin area.
To schedule a free consultation to discuss your trust concerns with Attorney Hailey-Petty, call 512-253-7555 or contact our firm online today.