Estate planning in Texas ensures that your assets are transferred according to your wishes. It’s not enough to have financial assets sitting in a bank with no objective; unless your estate is hedged with the right estate planning instruments, it’s exposed to taxes, theft and creditors. The uncertainty of the future leads many to put their hope in a financial trust.
A larger trust in the future
A trust is a unique arrangement that calls for a grantor to create the trust and then assign both a trustee and a beneficiary. Trusts are essential to estate planning because they are a dynamic hedging tool. Whether you have children with disabilities or a likely divorce coming, the wealth in a trust remains protected. Even the assets you deposit into a trust can earn income while remaining free of taxes. The key catch is that you must transfer the trust one day.
Your right to beneficiaries and financial directives
Transferring an estate means to give it or its assets to one or multiple beneficiaries. This must happen in order to justify the delayed taxing for assets in the trust. Essentially, the security that a trust gives you is legally binding because the assets in a trust are, technically, no longer yours: They’re the trust’s. In basic law, liability is only applied to you or a thing you own.
The difference in revocability
There are two basic types of trusts. Revocable and irrevocable trusts both have grantors, trustees and beneficiaries. What differs is in their flexibility. Irrevocable trusts are designed to be written up once and never altered again. Revocable trusts, on the other hand, can be revised as you deem fit. You can even withdraw the assets of a revocable trust without incurring penalties. There are important benefits and drawbacks of the two types of trusts, so make sure you understand them as you create and update your estate plan.