Trusts

Some individuals and businesses who profit from the creation and management of trusts have done a remarkable job of convincing many people that trusts are necessary to avoid probate, as if probate were something evil. In Texas, however, avoiding probate is not necessarily a valid reason to establish a revocable living trust. Texas probate laws are fairly simple and straightforward, and the probate process is relatively quick and inexpensive (assuming there is not a contest). Texas has what is known as “independent administration” which allows the executor to manage the estate free of court supervision.

There may be legitimate reasons for creating a revocable living trust. One such reason may be to avoid the necessity of a guardian of your estate should you become incapacitated. Others may want to avoid probate for publicity reasons, to avoid delay in receiving benefits, or to avoid potential will contests.

A revocable living trust is a document or series of documents stating who controls your property while you are alive and what happens to your property when you die. While the concept of a trust is quite simple, the details involving the various types of trusts and the mechanics of their creation and management can be complex. Put simply, a trust is like a suitcase which will hold all of the property you decide to put in it. Upon your death, the “suitcase” containing the trust property passes directly to beneficiaries. However, during your life, there will be limitations on what you can remove from your suitcase. You will not be able to treat it in the same way as other property that is not in your suitcase. This is a downside of creating a trust.

A revocable living trust should not be confused with a testamentary trust. A testamentary trust is created in the will itself. This type of trust is useful when assets of a deceased person need to be managed to care for an elderly spouse or disabled person, to postpone distributions to minor children, or to protect the assets for adult children who you may not believe have the ability to manage them on their own. A testamentary trust may also be useful if you have a taxable estate. This type of trust is commonly called a “bypass” trust–you bypass Uncle Sam in favor of your loved ones. Upon your death, a trustee will be appointed to manage the trust on behalf of the beneficiaries. Because the testamentary trust is part of the will, there will only be one document. Just as with a will, it can be modified or revoked so long as you are of sound mind.

Gus G. Tamborello, P.C. can assist clients with:

• Drafting trust instruments;
• Representing the trustee in carrying out his or her duties and in defending against claims of breach of fiduciary duty of removal actions; and
• Representing the beneficiary of the trust in cases such as breach of fiduciary duty and removal of trustee;