Many Texas residents have heard of wills, but are unfamiliar with revocable living trusts. Revocable living trusts allow you to have a say in how your property will be handled while you are living and after you pass away. If you choose to set up a revocable living trust, you will transfer various assets into the trust’s name and assign a trustee to manage the property within the trust.
Benefits of a revocable trust
The revocable living trust has many advantages including:
- Ability to make changes – Because it is a living trust, you are allowed to make changes to it as many times as you want to while you are still alive.
- No probate for trust property – Any property that was transferred to your trust is now no longer part of your estate, and therefore does not have to go through the lengthy and costly probate process.
- Handle your affairs if you are incapacitated – If you have a revocable living trust and become incapacitated, a named trustee will be able to handle your affairs immediately and you will not have to wait for the court to order a guardian.
- Provides control – If you are putting assets aside for a young child or someone who you worry will mishandle their money, you can adjust the terms of the trust to restrict how much they get and when.
- No public record – As long as no property is put in your trust after you death, it will not be a part of the public record.
Detriments of a revocable trust
However, revocable living trusts can also have some disadvantages, albeit not many. For example:
- Costly – Revocable living trusts have high set-up fees and regular maintenance fees that you must pay on a yearly basis.
- Not safe from creditors – Assets in a revocable living trust are not safe from creditors, as they can force the termination of the trust to acquire any assets in the trust.
- Taxable property – Trust property is still yours in the eyes of the IRS. Therefore, you will have to report any income from the trust on your tax return.
As you begin the estate planning process, it’s easy to get lost in the countless number of options available to you to protect your assets. An estate planning attorney can help you review your options and help determine if a revocable living trust is best for you.