Houston Estate Planning Law Firm
Wills, Trusts, Durable Powers of Attorney, & Health Care Documents
We have worked with many families and can offer advice and guidance when a gift or inheritance is contemplated, including:
- Making gifts of special items, such as heirlooms, art or collections
- Dealing with debts owed to you by a beneficiary
- Treating children in different circumstances fairly
- Providing clarity and guidance to an Executor or Trustee carrying out your plan
- Transferring interests in a business
- Protecting a beneficiary’s inheritance from divorce and other creditors
- Balancing the interests of a second spouse and children from a previous marriage
- Avoiding family conflict after you’re gone
- Maintaining a disabled beneficiary’s eligibility for benefits
- Providing for the care of pets left behind
- Making charitable gifts in a tax efficient way
- Avoiding the cost and delay of probate
- Minimizing estate and income taxes
There is nothing we like more than to hear a client say, “I didn’t know I could do that. This has given me such peace of mind.”
More About Estate Planning Services:
Your estate plan may be based on a traditional Will or a Revocable Living Trust. If you are wondering which estate planning vehicle is right for you, the following information may be helpful to you in making that decision.
What is the difference between a Will and a Revocable Living Trust?
The basic difference between a Will and a revocable living trust is that a Will needs to be probated before it can be effective, while assets in a revocable living trust (and accounts passing to the revocable living trust by beneficiary designation) can be controlled by the successor Trustee and distributed to the deceased person’s beneficiaries without having to go through the probate process.
There is also no need to file a public inventory of the deceased person’s assets with the court if the assets are in the name of the revocable living trust, nor is there a requirement to publish a notice to creditors in a local newspaper.
Because a probate procedure needs to be completed in every state in which a deceased person owned real estate, a revocable trust also helps prevent the time and expense it takes to go through the probate procedure in multiple states.
If there is a concern that a Will may be contested, a revocable living trust is the better vehicle for an estate plan. If a Will is contested, even if the contest is of no merit, no actions may be taken regarding the deceased person’s estate until the contest is resolved. If assets are in a revocable trust, the successor Trustee may continue to have access to the deceased person’s assets and manage the trust, unless the contestant is successful in obtaining a restraining order (which is more difficult than merely filing a Will contest).
Can I keep my property tax exemptions, if my home is transferred to my revocable living trust?
You may keep all the property tax exemptions for which you are eligible; however, you may have to file a new exemption application with the appraisal district. You may also need to provide the appraisal district with a copy of the page of your trust which states that you may live in your residence “rent free.”
Can a revocable living trust be the beneficiary of my retirement accounts?
To obtain the most favorable income tax treatment for a tax deferred retirement account, it is preferable to name an individual or the separate trust created under your revocable trust for the benefit of the individual who is to receive a share of your retirement account. If you name your revocable living trust as beneficiary, then the life expectancy of the oldest beneficiary will be used to determine the required minimum distributions for all your beneficiaries.
Can a revocable living trust be the beneficiary of my life insurance?
Do I need a Will, if I have a revocable living trust?
A power of attorney is a legal document giving another person (the attorney-in-fact) the legal right (powers) to do certain things for you. What those powers are depends on the terms of the document. A power of attorney may be very broad or very limited and specific. All powers of attorney terminate upon the death of the maker, and may terminate when the maker (principal) becomes incapacitated (unable to make or communicate decisions). When the intent is to designate a back-up decision-maker in the event of incapacity, then a durable power of attorney should be used. Durable Powers of Attorney should be frequently updated because banks and other financial institutions may hesitate to honor a power of attorney that is more than a year old.
When does a successor Trustee take over managing my revocable living trust?
In most cases, you will be the initial Trustee of your revocable living trust. The successor Trustees you name in your revocable living trust will take over managing your assets only if you resign, or if you are certified to be incapacitated (you control the definition of incapacity in your revocable living trust), or at your death.
Why is it important to transfer my household furnishings and personal effects to my revocable living trust?
Do I have to give a copy of my revocable living trust to the financial institutions where my accounts are located?
How do I transfer my assets to my revocable living trust?
What happens if I sell assets that have been transferred to my revocable living trust?
Do I need to get a separate tax identification number for my revocable living trust?
As long as the trust is revocable by you, you do not need to apply for a separate tax identification number for your revocable living trust. Accounts in the name of the trust will use your social security number.
Do I need to file a separate tax return for my revocable living trust?
As long as the trust is revocable by you, no separate tax return is required for the trust and all income from your assets would be reported on your own individual income tax return as if the trust did not exist.
Can I do the same kind of tax planning in a revocable living trust that I can do in a Will?
You can do the same kind of estate tax planning in a revocable living trust as you can do in a Will.
Does my revocable living trust protect my assets from my creditors?
What if I want to terminate or amend my revocable living trust?
How important is funding my revocable living trust, if I wish to avoid probate?
Creating the revocable living trust, itself, is just the first step. Having an unfunded revocable living trust is the same as having a Will, except that your plan is still private with an unfunded revocable living trust. Probate will be necessary before your estate can be settled and your beneficiaries receive their inheritance.
Some people who are comfortable with the idea of probate will create a revocable living trust, but then just transfer their out of state real property to their trust so as to avoid having to go through the probate process in multiple states.
Other people who are not ready to transfer their assets to their trust now, create a revocable living trust to keep their options open so that they do not have to totally revise their estate plan if they decide at a future date that a revocable living trust is the best option for them. They know that, if they pass away before transferring assets to their trust, their pourover will takes care of making sure that their plan is put into effect after their pourover will is probated. If probate avoidance is the goal, it is important to periodically review how your assets are titled so that newly acquired assets are either in the name of the revocable living trust or the revocable living trust is the beneficiary of the assets at death.
How do I know what’s right for me, a traditional Will or a revocable living trust?