Estate planning is an increasingly common practice among Texas residents and others around the country. More people are coming to the realization that planning for the future is not limited to the wealthiest investors. The goal for many when developing a plan is to ensure that their heirs can avoid the probate process. By doing this, most hope to save both time and money. Financial experts recently discussed a method to minimize the time for probate.
One popular suggestion is to establish a testamentary trust if a person does not need or want a revocable trust. While probate may not be avoided, a testamentary trust can greatly shorten the process. After liabilities of the estate are paid, the assets are distributed to the heirs by the executor of the trust.
The mechanics of the trust are fairly basic. A will is established that leaves everything to a testamentary trust. The same person is appointed as both the executor and the trustee, and the trustee must pay all liabilities of the estate. When the testator dies, the executor is able to distribute all proceeds of the estate to the trustee, who is the same person. The trustee may then administer the estate within the trust.
For even complicated trusts, the probate process is relatively simple. Unlike traditional probate accounting, the executor is not required to make disbursements, resulting in less complicated record keeping. There are, however, some disadvantages to a testamentary trust. Some people may view it as more complicated since there is a intermediary involved between the executor and the beneficiaries. Nevertheless, many financial counselors are recommending its use to those who choose not to use a revocable trust.
Whether someone wants his or her heirs to avoid probate or want to better protect financial investments, estate planning is crucial. It would be beneficial to contact a knowledgeable Texas attorney for help in developing a specifically structured plan. A lawyer familiar with estate administration can provide valuable insight on the many options available, then develop a plan that best meets a client’s needs.
Source: wealthmanagement.com, “Using a Testamentary Trust to Simplify Probate“, Walton Davis, June 6, 2017
