Should you have a living trust to avoid probate in Texas? If a living trust should not be used for avoiding probate, why should clients consider a living trust in Texas?
The Living Trust (or inter vivos trust) is a trust created during the settlor’s lifetime. Once the trust is created, the trustee manages the trust for the benefit of the named beneficiaries. Most commonly, these trusts are revocable by the settlor. Such a trust is often called a “Revocable Living Trust” and can be revoked or amended at any time by the settlor during the settlor’s lifetime.
Living Trusts gained tremendous popularity in recent years, primarily for their ability to avoid probate. If a person puts property into the Living Trust in Texas prior to death, since the person does not technically own those assets in the trust upon death, those trust assets pass directly to the trust’s beneficiaries outside of the Texas probate process.
However, in Texas, the probate process is comparatively inexpensive and hassle-free. As such, in most cases, a living trust should not be created merely to avoid probate; the trust creation and administration will often be more expensive and/or more burdensome than if the assets had just passed through the probate process.
While a living trust is often not ideal merely for probate avoidance, a living trust does have other advantages. First, many people do not want the whole world to know the size of the assets they own when they die. When assets pass through the probate process, anyone could find out the worth of the estate. A living trust, on the other hand, would grant privacy to the estate since the assets pass outside the probate process.
A living trust may also be advantageous when the settlor has property outside of Texas where the probate process isn’t as efficient, when the settlor is certain that his will is going to be contested in court, or when the settlor genuinely needs assistance managing assets (as is common with Alzheimer’s sufferers).
There are a myriad of legal and financial factors in choosing an estate planning tool. A living trust in Texas is recommended in some, but not all, clients’ situations. A dedicated trust attorney can help you weigh the pros and cons of a living trust in your particular situation. Consider contacting a lawyer for a consultation to help you choose the best variety of living trust or other estate planning tool for your unique situation.