Not only will you ensure that your assets are protected and that they will be administered per your wishes, but you are sparing loved ones from making difficult decisions while they are grieving which could affect their judgement.
Don’t plan by default. Without a will or living trust in place, the state of Texas will determine how your wealth will be distributed upon your death and add additional expense that will reduce the value of the estate. Having a will in place and the type of trusts that fit your specific needs will lift a heavy burden off the shoulders of your family.
What is a will?
In simple terms a will is a legal document distributing someone’s as-sets according to their wishes after death. A will should be at the top of your list when it comes to end of life planning, but despite what many people think, a will has limitations and may not protect your assets to the extent that you need. A will also has no legal authority until it is presented in Probate Court and deemed valid by the court, but it’s a great starting point.
What is a trust?
A trust is a legal agreement where you can place assets, have complete control over them while you are alive and dictate how they are distributed after your death or if you become incapacitated. Unlike a will, assets in a trust will not have to go through the Probate process. You can also employ trusts to aid you in qualifying for Medicaid if long-term nursing care becomes a concern. Trusts are not only for end of life but can be used to distribute assets or income before death as well. Usually, the beneficiaries are your family, but you can name anyone including charities. Many types of trusts exist and each has a specific purpose. Because of their versatility, you can accomplish estate planning goals using trusts that would be impossible with a will alone. You also gain privacy as well as control. Trust administrations don’t involve courts or judges meaning details of the process are not public record like they are in Probate.
Here are some of the steps you should consider when it comes to planning for the future of yourself and your family.
Without a will, Texas state law determines how all your assets will be divided among your family. With a will, you make the important decisions regarding what family and friends receive on your behalf easing the stress of the Probate process. Having a will in place gives your family time to mourn without the added pressure and distraction of making immediate decisions about personal property or having to guess what your wishes were regarding your death.
It’s difficult to think about, but the possibility exists that you may be-come unable to care for yourself due to mental and/or physical limitations. You need to have someone in place who has your best interests at heart. A designated guardian’s purpose is to protect you during this period be it temporary or permanent and encourage independence if it is possible. Their authority is limited. Spouses have priority to serve as guardians, but others with no adverse interest can also fill this role.
Everyone at any age can benefit from a Revocable Living Trust that owns assets in their name such as a home. This legal agreement determines the ownership of those assets upon your death. Revocable Living Trusts help reduce or eliminate taxes on the estate, avoid Probate, and provide a single place to consolidate all of your assets.
If you care for a special needs child or are a parent of a special needs child or adult and you wish to leave assets to them, without a Special Needs Trust in place, you could jeopardize their ability to receive government assistance and benefits that would pay for their care. With this type of trust in place they will be able to qualify for government assistance and the inheritance will be available to supplement their income and provide a better quality of life.
If you have an IRA, this trust can provide creditor protection and minimize taxes for your designated beneficiaries. Annual distributions may be given over your beneficiaries’ lifetime providing a predictable, steady stream of income. If the IRA is distributed in a lump sum, a large amount of taxes will be due, but if left in a trust, it’s value will continue to increase.
