Trusts

Trusts are often seen as an alternative to wills but they are typically best used in conjunction with a will. Your family law attorney, once he or she knows the specifics of your situation, can advise you on if you need one or both.

Trusts are a legal entity that handles certain aspects of your estate. The grantor or trust creator is the person creating the trust. The trustee is the person or institution that holds the trust. The beneficiaries are the people who the trust benefits. The trust estate is all of the aspects of your estate you shift into the trust.

You are not giving up control over your property when you include it in a trust. You are simply shifting it. If you wish to transfer ownership, your “family law attorney” can help you with that but most trusts influence ownership after the death of the grantor.
There are several different types of trusts.

  • Asset Protection Trust—these are set up to protect assets from creditors.
  • Charitable Trust—a trust established to benefit a charity or the public in general. If you are a member of a church and wish to leave your estate to your church, the by laws and classification of your church may allow this type of trust. These trusts are useful in avoiding gift or estate taxes.
  • Express Trust—a type of trust explicitly created by a grantor. Compare this to implied trust.
  • Implied Trust—these happen when there is no trust formally created but circumstances make it obvious that there was intended trust. For example, if a friend frequently asks you to care for her pet when she is out of town and fails to return from a vacation, the courts may see that the care of her animals was trusted to you. As there is a lot of room for interpretation, it is not recommended to assume the courts will recognize your wishes.
  • Inter Vivos Trust—a trust created while the grantor was alive. The grantor may transfer ownership of property to the trust but the property can be removed at any point during their lifetime.
  • Irrevocable Trust—this is a trust that cannot be changed in any way once it has been created. There are some extreme situations that may allow changes and your family law attorney can advise you about those. Since these cannot be altered, you must think very carefully when creating them.
  • Living Trust—is another name for Inter Vivos Trust. Typically the grantor also functions as a beneficiary of this type of trust but also spells out the beneficiaries of the trust once the grantor has died.
  • Resulting Trust—comes about via an act of law. The ownership of property is transferred to the trust but the benefits of that property are passed to someone who is not the owner. Your family law attorney can explain the specifics of this special type of trust.
  • Special Needs Trust—these are set up for people who receive some type of government benefits so that any beneficiaries may also benefit from the government benefits. If one of your beneficiaries receives some kind of government benefit, be sure to inform your family law attorney. You do not want your estate to jeopardize any benefits they may be receiving.
  • Spendthrift Trust—these are used when the grantor does not want the beneficiary to sell their interests in the trust. Any creditors of the beneficiary do not have access to anything included in this type of trust until the beneficiary receives the full benefit of the assets included in the trust.
  • Tax By-Pass Trust—is a type of trust that limits the amount of Federal Estate Tax that would be payable upon the death of the grantor.
  • Testamentary Trust—this type of trust is included as part of the terms and conditions of a will and it only goes into effect after the death of the person who drafted the will.
  • Trotten Trust—this is established while the grantor is alive by the grantor depositing money into a bank account or an account at a financial institution. The grantor can withdraw that money at any time during their life and the fiscal gift is not considered given until after the grantor has died.

Many of these trusts exist within each other. You can create one trust that serves several functions.

There are several benefits to having a trust but four of the main benefits are:

  1. Avoid probate. Valid trusts circumvent probate. The trustee can immediately step in to manage the trust.
  2. Avoid needing a conservator. Since the trust spells out exactly what needs to be handled with your estate, the courts do not need to appoint a conservator and the trustee can manage the trust to your wishes.
  3. Privacy. Wills are public documents. “Trusts” are generally private. Where anyone can view your will and determine the value of your estate, trusts are generally only viewed by the people who need to know the information. If you are concerned about privacy, make sure you ask your family law attorney to explain to you the extreme situations that may arise that would allow an outside party to view your trust.
  4. Division of property. Trusts categorize assets so that you may keep elements of your estate separate. If you worry that your family and friends will fight over elements of your estate, establishing different trusts can help keep things clear. This can also be useful if you want part of your estate to benefit family and other elements to benefit charity.
  5. Trusts & Family Law Attorneys

    At one time trusts were viewed as something only the wealthy created. Today they are a stable of estate planning. Family law attorneys can help you determine if a trust might be in your best interest.

    Please call us today at 281-362-2865 or complete our contact form and let us assist you with your legal need.

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Garg & Associates, PC | 21 Waterway Avenue, Suite 300 | The Woodlands, Texas 77380 Please call 281-362-2865 | Fax: 866-743-4506
Serving The Woodlands, Spring, Houston, Conroe, Kingwood, Tomball, Cypress, Huntsville, Cleveland, Stafford, Montgomery County, Harris County, West Oaks, Memorial, Sugar
Land, River Oaks, Alief, Stafford, Missouri City, and Southwest Houston Texas.