Planning for the future well-being of your loved ones is important. Part of that process is creating a comprehensive estate plan. A testamentary trust in Texas can be a great tool for many estate plans but not necessarily all estate plans. It depends in part on your purpose.
At Adams, King, & Smith, our estate planning attorney in Longview will make sure your estate plan encompasses all the right tools for your specific needs and purposes. To find out if a testamentary trust is right for you and what other estate planning tools can be used to complement it, contact us by using the online form or calling us directly at (903) 757-3331 to schedule a FREE CONSULTATION FOR WILLS, PROBATE OF A WILL, OR ESTATE PLANNING TO INCLUDE TRUSTS.
Understanding Testamentary Trusts in Texas
A testamentary trust is created by and contained in the terms of a person's Will. The trust is not actually created until the person that created the Will dies. Upon their death, the trust comes into play and property is typically "poured over" (transferred) to it, under the terms of the Will.
Generally speaking, testamentary trusts are typically created to handle the property given to a beneficiary such as minor children or loved ones with special needs, or to help safeguard and manage the property for anyone else who inherits a large sum of money when the trust funds.
Pros of a Testamentary Trust in Texas
There are advantages to creating a testamentary trust, including:
Costs
Unlike living trusts, which are created while the trustor is still alive, a testamentary trust is very often less costly and simpler to create.
Ease of Funding
It is possible to create the testamentary trust in a Will and have it funded by a life insurance policy that pays when the creator of the Will dies, or property from the estate is "poured over" (transferred) to it, under the terms of the Will. This makes funding the trust a relatively simple matter.
Control
A testamentary trust allows its creator to retain control of their assets while they are alive. Until they die, the creator may change the terms or altogether revoke a testamentary trust.
Asset Protection
A testamentary trust must be administered according to its terms. This means that, as a practical matter, it can last for as long as the creator wishes, and it allows for the protection of assets that are passed from one generation to the next.
Cons of a Testamentary Trust in Texas
The benefit of its simplicity is also a limitation because it is usually a simpler document than a separate stand-alone trust. It may not cover all the contingencies a more elaborate trust would have and give less guidance and control to the Trustee. Additionally, to change its terms, a new Will or codicil to the Will should be done. There are also other disadvantages to testamentary trusts that you should consider. Some of these disadvantages are described below.
Trustee Matters
When the trust is created, a trustee is named. The trustee is responsible for administering the trust according to its terms and on behalf of the beneficiaries. There is a lot of responsibility placed on a trustee, and it can be for an extended period of time. It is important that the person chosen is trustworthy, dependable, and willing to perform the duties required of them. Also, should they fail to properly carry out their responsibilities, it may be difficult to have a trustee removed or replaced.
Probate Process
Unlike some other types of trusts, a testamentary trust must pass through probate. Probate is the process of going through the courts to administer a deceased person's estate. It is often tedious, costs money, and is time-consuming.
Public Knowledge
Testamentary trusts are public, unlike some trusts that are administered privately. If it is important to you that the terms of your estate be kept private, a testamentary trust may not be for you.
Testamentary Trust Revocation in Texas
While alive, the trustor is able to change the terms of the testamentary trust whenever they choose to do so. However, because a testamentary trust is not actually established until its creator dies, once it is established, it is typically irrevocable, and the trust must be administered by the trustee in the way the trust requires.
Contact a Testamentary Trust Attorney in Longview, Gregg County, Texas Today
Will a testamentary trust in Texas work well in your estate plan? They offer many benefits, but you still want to consider any potential disadvantages. Contact us online or at (903) 757-3331 for a FREE CONSULTATION FOR WILLS, PROBATE OF A WILL, OR ESTATE PLANNING TO INCLUDE TRUSTS to get the legal advice you need to create a solid estate plan that benefits you today and protects your family tomorrow.