McKinney, Texas Trusts Attorney

When most people begin to discuss trusts, they quickly get confused or their eyes begin to glaze over.  Trusts are very useful vehicles for use in preparing wills and performing other estate planning.  So it is important to have at least a basic understanding of what a trust is.  First, it must be understood that trusts are used for many purposes and there are a variety of types and forms of trusts.

To have a trust, there should be a trust document and several people or positions designated.  Depending upon what type of trust is created, the various positions might be held by the same person or different people.
  • Trust Document.  The trust can be created through words included in a will or by a separate document.  Often wills or standalone trust documents create several trusts for different purposes.  In any of these cases, the wording creating the trust contains the terms of the trust, including among many other things what the trust is to be called, who is to serve in the various positions described below, what is to happen if any of these people cannot serve, how long the trust is to last, and how changes to the trust can be made or not be made.
  • Grantor.  The grantor is the person who creates the trust. This would be you. The grantor is also sometimes called the creator, settlor or trustor.  As the grantor, you are normally the person who contributes the property to the trust.  The process of putting property into the name of the trust is called “funding” the trust.  
  • Trustee.  The trustee is the person who will manage the assets in the trust and follow the terms of the trust.  The trustee can hire people to assist him such as an attorney, an accountant or CPA, and a financial advisor or broker.
  • Beneficiaries.  The people who receive the benefit of the trust's assets are called the beneficiaries.
The type of trust most people are familiar with or have heard about is called a living trust or a revocable living trust. The living trust is created while you are alive with the intent of holding title or ownership to your real property and assets.  Since this trust is revocable, during your lifetime you can change it or revoke it.  When you transfer title of assets to the trust (or “fund” the trust) you do not relinquish any control.  You can still buy, sell, borrow or transfer.  But instead of doing so as an individual, you will do so as trustee of your living trust.

Upon your death, the trust becomes irrevocable.  Depending upon the terms of the trust, the assets of the trust can be distributed at that time in the same manner as you would provide if you had prepared a will to distribute your estate.  Or the trust can continue in existence until some later time or event as defined in the trust document.

To many the living trust looks a lot like a will. It includes the details and instructions for how you want your estate to be handled at your death.  However, unlike a will a properly funded trust does not go through probate, and allows others you appoint as alternate trustees if you can no longer serve or co-trustees with you to manage your affairs if you become incapacitated or decide you no longer wish to manage them. Some elderly clients find comfort in allowing their adult children to assist them in managing their affairs through the use of a revocable living trust.

But a revocable living trust is not for everyone.  First, it generally costs a little more to prepare a living trust than it does to prepare a comparable will.  Second, to gain some of the benefits of a living trust, your assets must be transferred to the trust.  If some of your assets are left out of the trust, you may incur the time and expense of having to probate those assets in order to be able to transfer them into the trust after your death.  Placing all of your assets in the living trust can sometimes add complexity to your life because you have to remember the trust – not you – owns your property.  Selling and buying assets that are in – or are supposed to be in - the trust can sometimes add complexity to those transactions.

With good planning with your estate planning attorney and attention to detail, the advantages of a living trust can be obtained while minimizing the disadvantages.  But if you are young and healthy and likely to add or change assets or move around the country, you may want to discuss with your attorney whether this is the best alternative for you at that point in your life.

While the revocable living trust is probably what many people think of when they discuss trusts, there are many other forms of trust.  Irrevocable trusts are sometimes created in planning for larger estates.  Trusts that might come into existence in certain circumstances may be provided for in your will.  Some of the purposes they might be used are to hold assets for minor children or adult children you don’t want to distribute all your property to until sometime later, or for a variety of means of complying with different tax laws that might adversely impact assets you own like retirement plans or certain corporate stock holdings.

After reviewing your planning objectives and your situation (assets, liabilities, family, and special concerns) with your attorney, he should be able to propose alternatives that will best achieve those objectives for you.

Please contact our office for an appointment.  We are located at the intersection of Plano, McKinney, Frisco and Allen, Texas, just 30 minutes from downtown Dallas, and provide legal services to individuals in the North Dallas, McKinney, Frisco, Plano, Richardson, Addison, Lewisville and Carrollton areas of Collin, Denton and Dallas Counties.