Potential clients frequently call our estate planning law office to ask about fees to set up a living trust.
My initial response is, “Why do you want a living trust?” Unfortunately, most people respond that they heard from a friend or seminar that everyone needs a living trust in Texas.
That’s not true. Everyone does not need a living trust in Texas.
Here Are Four Reasons NOT To Get A Living Trust In Texas
Bad Reason 1 – A Living Trust Won’t Do What You Want
People are misled into believing that a living trust will help with taxes. A living trust is not best for everyone in Texas.
Here are some of the common misconceptions about living trusts:
Misconception 1: A Texas living trust will avoid taxes. A living trust (often called a “revocable trust” or “revocable living trust”) is transparent in the eyes of the IRS. Since you typically exercise control over property in the living trust, the IRS usually ignores the trust and views the property as being owned by you personally. Therefore, there’s little tax benefit to a living trust.
Misconception 2: A Texas living trust protects all of my assets. Actually, you won’t get creditor protection from a living trust. If a creditor (like a credit card company or judgment creditor) wants to come after your property, it won’t matter that you’ve put the property into a living trust. Creditors can still reach assets held in a living trust.
Misconception 3: A living trust avoids probate in Texas. One of the most popular reasons to get a living trust is to avoid probate. However, probate is relatively cheap and easy in Texas. In fact, given the probate cost from our law office versus the cost for a living trust, having a living trust may cost you more in the long-run. Consider also that having a living trust is no guarantee that your family will actually be able to avoid probate after you die.
Reason Two – You Probably Won’t Handle The Living Trust Correctly
I have witnessed probate clients coming into my office with huge, expensive living trusts drawn up for a deceased parent. The client is hoping that probate won’t be necessary because of the living trust. However, in most cases, the deceased parent never did anything with the trust. The parent just paid a bunch of money to get a fancy trust, and then put the trust on the shelf to collect dust. As such, that expensive trust is completely and utterly useless.
If you’re going to use a living trust, especially to avoid probate, then you have to put ALL your property into the trust…bank accounts, real estate, everything. It is difficult to keep 100% of your assets in trust, especially over the course of many years.
Reason Three – Living Trusts Require Administrative Upkeep
As I mentioned, you can’t just hire an attorney to create the living trust and then set the trust on a shelf. Living trusts require ongoing work in order to work properly. For example, you’ll need to set up a bank account for the trust, deed your property to the trust, and put all property you acquire into the trust… for the rest of your life. You’ll also need to have a trustee to oversee maintenance of the property over the years. The trustee can be yourself or family, but you may end up needing a corporate trustee, which can be expensive.
Reason Four – The Experts Say You Probably Don’t Need A Living Trust
Most living trusts you’ve seen advertised heavily in recent years are scams. In fact, there was a new industry of living trust “farms” that just sold people trusts they didn’t need. Be leery of anyone offering you a free lunch. Be leery of any DIY living trust “kit” you can order over the internet.
You don’t have to take my word on this. Read what other experts are saying:
Visit www.ShuttLawFirm.com for more information on whether or not you need a living trust in Texas, Texas revocable trust or irrevocable trust, living trust cost versus Texas probate cost, or any other kind of Texas trust, contact Dallas, Texas lawyer Isaac Shutt at firstname.lastname@example.org.
Shutt Law Firm’s office is conveniently located just north of Dallas, TX, near the intersection of highway 75 and Campbell Road in Richardson, TX.
You can also call Mr. Shutt at (214) 302-8197 for more information on the topic discussed in this article or to discuss a different legal matter. For existing clients, quick phone-calls and brief e-mails are always free at Shutt Law Firm PLLC. Please consider the Shutt Law Firm if you need letters testamentary, to know if you should probate a Last Will, how to probate in Texas, Last Will and Testament, or you need a probate lawyer in Dallas, Richardson, Plano, Allen, McKinney, Garland, Addison, TX, Rockwall, or surrounding North Texas area.