Setting up a trust is a joint estate planning technique many people use to protect their assets and provide for their loved ones. A trust is a legal arrangement where one person (the trustee) holds property for the benefit of another person (the beneficiary). Trusts can be used to provide for children or other family members who need support, to minimize taxes, and to protect assets from creditors. However, setting up a trust can be complex and requires careful planning.
1. There Are Different Types of Trusts
Before setting up a trust, it's essential to understand that there are different types. The most common types of trusts are revocable and irrevocable trusts. A revocable trust can be changed or revoked by the person who set it up during their lifetime, while an irrevocable trust cannot be changed or withdrawn. Other types of trusts include testamentary trusts, set up through a will, and special needs trusts, designed to provide for the needs of a disabled beneficiary.
2. You Need to Choose a Trustee
The trustee is the person or entity responsible for managing the trust and its assets. When choosing a trustee, it's essential to choose someone who is steadfast and has the skills and knowledge to manage the faith effectively. You can select a family member or friend, a professional trustee such as a bank or trust company, or a combination of both.
3. Trusts Have Tax Implications
Trusts can have tax benefits, but they can also have tax implications. For example, income earned by a trust is subject to income tax, and some trusts may be subject to estate taxes. Working with an estate planning attorney and a tax professional is important when setting up a trust to minimize taxes.
4. Trusts Can Protect Assets
One of the most significant advantages of setting up a trust is that it can protect assets from creditors. By placing assets in a trust, they are no longer in your name and, therefore, are not subject to seizure by creditors. Trusts can protect assets from lawsuits, divorce, and other legal actions.
5. It's Important to Review and Update the Trust Regularly
Once you have set up a trust, reviewing and updating it regularly is important. Changes in your personal or financial situation, changes in the law, or changes in your beneficiaries' needs may require changes to the trust. Reviewing and updating the trust can ensure it continues achieving your estate planning goals.
Houston & Fort Worth Trust Litigation/Administration Attorneys
If you're considering establishing a trust to manage your assets, protect your wealth, or provide for your loved ones, Keith Morris & Stacy Kelly, Attorneys at Law in Houston, Texas, can guide you through the process. Our expertise in estate and probate law ensures that your trust is tailored to your unique needs and complies with state regulations. Don't navigate the complexities of trust creation alone; contact us today at (713) 636-5339 to secure your legacy and achieve peace of mind.