Trusts

The Woodlands, Spring, Houston Trusts Attorneys

 

A trust does not replace a will. In general, a trust deals with specific assets, such as a home, vacation property or life insurance policy. A will administers the distribution of almost everything else in your estate. A trust will help your family avoid probate court proceedings after your death, which will save them money, time and worry. A revocable living trust is a very effective probate-avoidance technique often used for all types of property including bank accounts, real estate, paintings, precious heirlooms and more.

 

There are two basic types of trusts: a testamentary trust and a living trust. Each functions a bit differently to suit a wide variety of needs. With a revocable living trust, you can leave property to loved ones, but if you should change your mind at any time before your death, the terms can be changed. On the other hand, an irrevocable living trust cannot be changed without the beneficiaries permission. The assets basically no longer belong to you. People often use this type of trust because of the tax savings.

 

A Testamentary Trust is established within a will and only goes into effect after the person’s death. It tends to be more for the welfare of the beneficiaries as opposed to being tax-friendly and addresses any estate or assets of the deceased. These are normally used when young children are involved and there can be more than one testamentary trust per will.

 

There are a number of more complex trusts that can apply to specific situations. These include:

 

Irrevocable Life Insurance Trust

 

This document is used to remove your life insurance from your taxable estate. It also works to assist with estate costs, and provide cash to your heirs. You surrender ownership rights once the trust takes effect and you will no longer be able to change beneficiaries or borrow against it. The proceeds can give beneficiaries tax-free income.

 

Generation-Skipping Trusts

 

Also called a Dynasty Trust, the Generation-skipping Trust permits you to transfer a substantial amount of tax-free monies to beneficiaries. This is typically used for grandchildren.

 

Credit Shelter Trusts

 

Also known as a bypass or family trust, you can bequeath an amount up to but not beyond the estate-tax exemption. The rest of your estate can be passed on to your spouse tax-free. Money placed in a bypass trust is free of estate tax, even if it grows.

 

Qualified Personal Residence Trust

 

This trust eliminates the value of your home, including a vacation property, from your estate. It can be very beneficial if your home is expected to appreciate in value.

 

Contact Us Today For A Free Consultation

 

The attorneys at Riddle & Associates PC can explain the various trusts available and assist you in developing a comprehensive estate plan. With over 30 years of experience, we take pride in helping our clients to put all their financial affairs in order so that they and their families can enjoy peace of mind. We would love to talk to you about estate planning and invite you to contact us for more information.

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