When you create an estate plan in Texas, you have multiple legal tools you can use to carry out your legal or financial goals. Many people develop wills as part of their estate plans. However, some individuals and families also use trusts to implement their estate planning objectives. But can a trust replace a will in an estate plan in Texas?
What Is a Trust?
A trust is a legal structure in which a party, known as a trustee, holds and manages assets placed into the trust by its creator, referred to as a settlor, for the benefit of one or more beneficiaries designated by the settlor, as outlined in the trust document written by the settlor. Settlors can create revocable trusts, which allow the settlor to amend or cancel the trust, or irrevocable trusts, which do not permit amendment or revocation. Each type of trust offers different benefits. Some of the reasons why people incorporate trusts into their estate plans include:
- Avoiding passing inheritances through probate
- Managing estate taxes
- Empowering others to supervise assets during incapacity
- Maintaining privacy in family wealth
A trust becomes active once the settlor creates and funds the trust. A settlor may establish a living trust by executing the trust document and funding the trust during their life, or a testamentary trust by establishing and funding the trust in their will.
What Is a Will?
A last will and testament serves several purposes in an estate plan, including:
- Appointing someone to serve as the executor of the decedent’s estate
- Designating beneficiaries and allocating inheritances from the estate
- Nominating an individual to serve as guardian of the decedent’s minor children if both the children’s parents pass away
Key Differences Between Trusts and Wills
Trusts and wills have several critical differences, including:
- Wills must go through the court-supervised probate process, whereas trust administration avoids probate.
- The probate process means administering an estate via a will makes the estate a matter of public record, whereas assets managed by a trust remain a private matter.
- Wills cover assets in a decedent’s estate at the moment of their death, whereas trusts only manage the assets placed in them by the settlor along with any income generated by trust assets.
When Might a Trust Replace a Will in Texas?
A person may use a trust to essentially replace the functions of a will under certain circumstances, such as:
- Placing all one’s assets into the trust, leaving nothing in the estate for a will to distribute
- Not having minor children who may require a guardian if both their parents pass away
- Having a pour-over will that directs any assets remaining in a person’s estate at their death to go to the trust
Why You Still Need a Will
However, you may still need to incorporate a will into your estate plan for several reasons, including:
- Nominating a guardian for your minor children
- Distributing personal items you still own, such as heirlooms, jewelry, or family mementos
- Arranging for the disposition of assets you may have inadvertently left out of the trust that remain part of your estate
- Ensuring you have your chosen executor to handle any necessary estate administration tasks, such as disposing of personal items or filing final income tax and estate tax returns
Contact an Estate Planning Lawyer Today
When you have questions about the strategies you should use for your estate plan, an experienced attorney can give you the advice and support you need. Contact Carroll Law Group, PLLC, today for a confidential consultation with an estate planning lawyer to learn more about the roles that trusts and wills can play in your estate plan in Texas.