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Should you add a trust as part of your complete estate plan?

As we turn the calendar from 2017 to 2018, many of us make New Year's Resolutions to get organized and plan for the future. One simple way to get your affairs in order is to craft an estate plan with a qualified attorney. Texas readers understand the importance of creating an estate plan, which:

  • Sets out how you wish your assets to be transferred upon your death
  • Designates who can make your medical decisions when you are incapacitated
  • Stipulates whether you want to be buried or cremated

When most people think of an estate plan, they will first think of a Last Will and Testament. While a will is very important to most estate plans, it is far from the only tool used to carry out a client's wishes.

The benefits of a trust

It could be beneficial for you to establish a trust as part of your estate plan in order to have the full amount of protection you need. In fact, you've likely heard a family member, neighbor, or friend discuss the benefits of a trust.

But not all trusts are created alike--in fact, the trust that your neighbor has may be completely different from the one that you need. There are various different types of trusts, and there could be one that will allow you to protect your assets and meet some of your specific legal objectives. It may also be beneficial for you to explore the benefit of adding a trust to an existing estate plan.

Which type of trust is best for you?

In many cases, it is beneficial to establish a trust in order to set aside and protect certain assets for the benefit of a loved one. There are also trusts that can set aside certain assets for the care of a special needs loved one or even for charitable giving. You may benefit from an explanation of the different types of trusts:

  • An irrevocable trust is a trust that you will not be able to change, modify or adjust after its creation. This type of trust often provides significant asset protection from creditors.
  • A revocable trust is a trust that allows you to change it and adjust it as needed after its creation. Sometimes called a living trust, this trust can be beneficial when trying to avoid probate.
  • A special needs trust allows you to set aside money and assets for the care of a loved one who cannot care for himself or herself and not jeopardize that person's ability to receive government benefits.
  • A charitable trust allows the creator of the trust to designate assets for charitable purposes after his or her death.
  • An asset protection trust allows you to protect your assets from creditors.
  • A testamentary trust is built into a will and takes effect only upon your death.

The type of trust you may need depends largely upon your goals, needs and desires for your estate after your death. There is no "one-size-fits-all" trust form. Most trust agreements are very complex documents. It is important that the trust is drafted properly, because not all trusts may be amended or changed.

A plan custom-tailored to you

Your estate plan should meet your needs and allow you to achieve your goals. It is smart to update your plans after major life changes, as well as evaluate your new estate planning needs from time to time. It could be beneficial for you and your beneficiaries to establish a trust or add other protections to your estate plan. If your New Year's resolution involves organizing your financial affairs, an estate plan is a great place to start.

 

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Plunk Smith, PLLC
1701 Legacy Drive, Suite 2000
Frisco, TX 75034

Phone: 972-370-3333
Fax: 972-294-5274
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Plunk Smith, PLLC
Plunk Smith, PLLC