When you create an estate plan, you may have various legal strategies you can use to carry out your financial and legal goals. Many people in Texas choose to incorporate wills and trusts into their estate plans. But could you face situations where you should use a trust instead of a will to accomplish your estate planning objectives? Under what circumstances would you create a trust instead of a will, and when should you stick with a will instead of a trust?
Overview of Wills and Trusts in Texas
Deciding whether to incorporate wills or trusts in your estate plan begins with understanding what each tool does. In many cases, a will serves as the cornerstone of a person’s estate plan. In a will, you can appoint someone to serve as the executor of your estate. The executor will gather your estate assets, pay your remaining debts and estate taxes, and distribute the remainder of your estate to your beneficiaries and heirs. Most people use a will to determine who should inherit from their estate and what assets they will inherit. You can name beneficiaries and leave them specific assets or sums of money or distribute specific shares of your remainder estate to your beneficiaries. Assets distributed through a will must go through probate, a court-supervised process that executes a person’s will and distributes their estate.
A living trust is a legal structure in which a person, 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 named by the settlor in the trust document. The trust document can also outline the scope of the trustee’s authority or discretion in managing trust assets and distributing income and principal from those assets to beneficiaries. People frequently use living trusts to manage their property during their lifetime and distribute it to family members after death without the need to go through probate.
When You Might Choose a Trust Over a Will
Circumstances in which you might use a trust instead of a will to manage and distribute your estate include:
- You want to avoid probate: You can pass assets to beneficiaries after your death without going through probate by using a trust to distribute inheritances.
- You own assets in multiple states: You can distribute property you own in multiple states through a trust, allowing you to avoid having to open ancillary probate proceedings in each state.
- You want to keep your estate private: As a court-supervised process, probate makes your estate a matter of public record; conversely, a trust allows you to keep your financial affairs private.
- You want a fallback plan in case of incapacity: With a living trust, you can appoint a trustee to manage your property should you become incapacitated.
- You want to control how and when beneficiaries receive inheritances: A trust allows you to distribute inheritances to beneficiaries over time or place conditions on inheritances (such as requiring a beneficiary to reach a specific age or complete a milestone like finishing college)
Situations Where You Might Stick with a Will
You might choose a will to carry out your estate planning goals if:
- You have more modest assets and simple distribution goals, such as leaving your entire estate to your spouse or children
- You and your family do not mind the time and expense of probate, especially if you have a simpler estate
- You need to nominate a guardian for your children if you and your co-parent both pass away (which you can only do in a will)
Contact an Estate Planning Lawyer Today to Discuss Your Options
When you need help deciding between a will and a trust for your estate plan, contact Carroll Law Group, PLLC, today for an initial consultation with a wills attorney to discuss the advantages and disadvantages of trusts versus wills for your estate planning goals.