If you are a Texas resident embarking on estate planning or have decided to help your parents protect their assets, you will most likely consider one or more trusts as part of the process. One of the biggest concerns is whether setting up trusts will help survivors avoid going through probate.
How trusts can help avoid probate
Revocable living trusts are powerful estate planning tools that you can place assets in to avoid probate. When anyone places assets in a trust, they no longer own them. The trust becomes the owner of those assets, and when correctly set up, probate is unnecessary. Your beneficiaries will automatically receive the designated assets. When a person passes away, a will must go through probate to ensure that assets go to designated heirs. Any trust you create stipulates who will receive the assets, and after your passing, an administrative trustee manages your trust, not the court. This individual will perform necessary tasks such as collecting assets from policies and accounts, paying outstanding debts and distributing assets to beneficiaries.
Even though trusts are designed to avoid probate, new assets purchased after the trust is set up must be transferred to it to avoid probate. The additional assets must go through probate if this process isn’t completed. To help ensure this problem doesn’t happen, consider setting up a pour-over will when you set up the trust.
Developing a comprehensive estate plan
Revocable and irrevocable trusts are only one element of a comprehensive state plan. If you have considerable wealth, you may want to weigh the advantages of different types of trusts that best meet your situation. Establishing trusts will avoid the lengthy probate process, which frequently comes with hefty fees.
In addition to writing a will, other essential estate components include creating a durable power of attorney for finances and healthcare and a living will, which states your wishes regarding life support and end-of-life care. You should frequently review these documents and modify them as necessary to ensure that they meet your current needs. You can also add trusts as necessary.