Texas Living Trust Attorney
A living trust can be a valuable component of your estate plan, helping you avoid probate, manage your assets during your lifetime regardless of what challenges life brings, and make gifts after you are gone that will be received and used according to your wishes. Learn more about living trusts below, and contact a living trust attorney from our firm to talk about revocable trusts in your Texas estate plan in Houston or Harris County.
What is a living trust?
There are three main parties to a trust: the person making the trust, known in Texas trust law as the settlor; the trustee, who holds legal title to trust assets for the benefit of the beneficiary; and the beneficiary or beneficiaries, who hold equitable title to the trust property until such time legal title is vested in them. The settlor can also serve as the trustee of the trust, and this is often done at least initially, although the trust can also name successor trustees.
Living trusts can be revocable or irrevocable when they are created. Revocable trusts can be amended or revoked during the settlor’s lifetime. Since these trusts are created during the settlor’s lifetime, they are known as living trusts, as opposed to testamentary trusts which can be created in a will or other testamentary instrument.
Title to property held in trust will pass to the beneficiaries upon the death of the settlor or some other triggering event written into the trust. Since the trust is already established to transfer the property, the Texas probate process is not needed in order for title to vest with the beneficiaries. Going outside probate means beneficiaries will receive the property faster and with less expense to the estate.
Avoiding probate is the main reason many people add living trusts to their estate plans, but there are other advantages as well. For instance, a trust is a private, confidential document, whereas a will becomes a matter of public record once it is entered into probate. If you want to keep the size of your estate and distribution of assets private, a trust can help accomplish this purpose. With a trust you can also put conditions on the beneficiary receiving the gift. For instance, the terms of the trust can require the beneficiary to reach a certain age first or attend college. Finally, placing property in trust can be a means for allowing that property to be managed during any period where the settlor becomes incapacitated, without having to go to court and establish a guardianship.
What are the powers and duties of a trustee?
The precise powers and duties of a trustee should be outlined in the terms of the trust itself, but they can be quite broad. Generally speaking, a trustee has control over trust property and is empowered and required to maintain that property for the benefit of the beneficiaries. This means the trustee may be able to invest trust funds in suitable investments; buy, sell, exchange or partition property; or even dispose of property.
All of these powers must be exercised in the best interests of the beneficiaries. The trustee is a fiduciary to the trust and its beneficiaries, meaning the trustee must avoid conflicts of interests and discharge duties prudently and competently. A trustee is charged with knowing the law and the terms of the trust and can be held liable for violating the terms of the trust or breaching fiduciary duties, such as by making unsound investments or profiting personally at the expense of the trust. An investment advisor or attorney who handles probate and trust administration can assist the trustee with tasks beyond the trustee’s knowledge or skill set.
Rules for a valid trust in Texas
Rules for the creation, validity, modification and termination of trusts can be found in Texas Property Code Chapter 112. Some of the main requirements are:
- The settlor intends to create a trust, and that intention is manifested in the trust
- The settlor has the capacity to create a trust at the time it is created, meaning the settlor is of “sound mind” or is aware that he or she is affecting the legal rights to property owned by the settlor
- The trust is in writing and signed by the settlor or the settlor’s authorized agent
- The trust is formed for a legal purpose and does not violate the laws or public policy of the state of Texas
- The trust is “funded” by real or personal property that is identified in the trust document
- The trust contains beneficiaries who are positively identified or reasonably ascertainable
- The same person cannot be both the sole trustee and the sole beneficiary of the trust
Your Attorneys can Help Create, Manage or Administer Your Trust
Trusts may be simple or complex depending on their terms, but they all must meet certain basic principles to be valid and enforceable under Texas law. An attorney at the Stephens | Domnitz | Meineke PLLC can create a valid and enforceable trust to meet your needs. The firm also assists trustees in the complicated tasks of trust administration, including inventorying assets, providing accountings to beneficiaries, liquidating assets and preparing returns. With experience in Texas business law, estate planning, living trusts, probate and real estate, Houston attorney Leigh Meineke is your source for advice and technical assistance in all aspects of your Texas living trust. Get in touch today by calling 713-463-6000.