Part of planning McAllen wills and trusts includes what type of these documents will you use. There are several wills you can use. A trust is an arrangement that allows trustees to hold assets on behalf of a beneficiary. Before diving into the various trusts available to include in a Texas will, we are going to go over some rudimentary terms to give a better understanding of what’s ahead:
- A grantor is the creator of the will, also known as a trustor.
- A trust is a legal document created by a trustor that directs their assets to whoever they wish to be a beneficiary.
- Trustees refer to an entity or person responsible for managing and distributing the assets in the trust. There may be one or several trustees that can be private or business (like a bank).
- Trust assets are transferred through the trust, including bonds, stocks, and other retirement or investment accounts.
Why Seek to Establish a Trust?
Here are just a few of the benefits of establishing a trust document.
- Probate Avoidance
- Protection of Your Legacy
- Maximizing Tax Exemptions
- Managing Asset Distribution
5 Most Common Trusts that Exist within Texas
There are many types of trusts to choose from, but we’ve summarized and simplified them down to five of the most common trusts in Texas.
- Living Trusts are traditional and created while the trustor is still alive. Assets are transferred into the trust by the grantor and finally distributed from the trust to inheritors of the estate after the grantor dies. Living trusts are as valid as a will, and assets in a trust cannot be challenged in court.
- Revocable Trusts may be changed or revoked entirely at any time by the grantor. Unless the grantor authorizes someone to modify the terms of the trust, the trust may not be altered after the grantor’s death. Assets held in revocable trusts are not subject to probate, yet they are included in the grantor’s taxable estate.
- Irrevocable Trusts allow the elimination of assets apprehended in trust from the grantor’s gross taxable estate. Assets placed into the trust cannot be removed, and any changes to the terms mean the distribution of the assets to the beneficiaries cannot be completed. Unalterable trusts provide advantageous tax protections for high-value assets such as life real estate, insurance policies, and annuities.
- Educational Trusts are used by grandparents or parents who wish to fund their child/grandchild’s future education. Policies built into the trust allow the money to be used just for that envisioned purpose.
- Rotten Trusts: are presented to children over time. There is a thirty-day window in which the recipient of that asset must take its claim. These special assets are seen as gifts, but the grantor’s estate is not seen as one and cannot be in a rotten trust.
Learn more about how we can help advise you on all your trust decisions here. We have the legal representation that’s skilled and qualified to tackle your toughest questions.
Call Us Today
Our McAllen probate lawyers are here for you. Our firm concentrates its focus on a variety of legal matters such as trusts. Our legal team is ready to help you resolve any issues you face step-by-step. Contact us online or call 956-287-7555 for a consultation and estimate.