Estate planning is crucial in settling one’s affairs in the event of their incapacitation or death. From directing your wishes on medical treatment to distributing your assets to beneficiaries, estate planning gives you peace of mind and control over what happens to you and to the assets you own.
In Texas, two important estate planning instruments are a living trust and a will. Each has its own purpose. They can be used in conjunction with each other, alone, or with another estate planning instrument.
Let’s take a deeper dive into the particulars of living trusts and wills in Texas and answer the question “Living Trust vs. Will in Texas?”
What is a Will?
A will in Texas, legally referred to as a “last will and testament, is a binding legal instrument that outlines how an individual’s property is distributed upon their death. It enables the testator to designate beneficiaries and allocate assets according to their wishes, ensuring a clear and legally recognized framework for property distribution.
What is a Living Trust?
A revocable living trust, commonly known as a trust, is a legal arrangement in which a third party (known as a trustee) temporarily holds the owner’s assets before distributing them to the beneficiaries prior to the owner’s death. The trustee has a legal duty to manage the assets and ultimately distribute them according to the owner’s wishes. A living trust allows the owner to retain control of the property even after transferring it to the trust.
What is the Difference Between a Living Trust and a Will in Texas?
There are several key differences between a living trust and a will in Texas.
First, with a trust, the grantor transfers the assets into it before their death. In contrast, the grantor transfers assets into a will after their death.
Second, a trust allows the transfer of assets without subjecting them to probate proceedings. A will, on the other hand, must first undergo probate proceedings before transferring the assets.
Knowing which type of estate planning instrument is right for you is a personal choice that is dependent upon the unique circumstances of your case.
What are the Advantages and Disadvantages of a Will?
A big advantage of a will is that it gives you certainty and peace of mind should you be unable to make your own medical decisions. A will contains a medical power of attorney, unlike a trust. Another advantage is that a will can be relatively simple, inexpensive upfront and easy to create.
But a will can do more than just distribute property. A properly prepared will can also designate a guardian for minor children and an executor to handle the settling of your estate. It also allows you to provide specific instructions instead of relying on state intestacy law.
On the other hand, under Texas law a will must be probated within four years of the decedent’s death. Your assets could be tied up for years in probate before your beneficiaries receive their assigned assets. Further, a will is made public record and is searchable by any third party. Finally, a will is easier to contest than a trust. If a will is not properly executed, it may be revoked.
What are the Pros and Cons of a Living Trust?
A Texas living trust allows you to avoid probate court, avoiding the costs and time investment probate requires. Avoiding probate court also reduces estate taxes, leaving more of your assets for your beneficiaries.
Trusts in Texas also allow you to maintain your privacy, since they are not part of the public record. This means that the details of your estate remain private from unassociated third parties.
Another benefit of a living trust is that it protects your assets from creditors and lawsuits. It also includes a power of attorney over your assets, unlike a will. Further, you can change a living revocable trust during your lifetime; however, after your death, you can’t change the terms of the trust.
Your family can access the assets in your trust if you become incapacitated or disabled – they needn’t wait until your death
Having a trust in Texas does have some drawbacks, however.
The biggest distinction, or drawback depending on your objectives, of a trust is that it doesn’t allow you to direct medical treatment. A trust only deals with assets. It also doesn’t allow you to designate a guardian for minor children.
The complexity and upfront cost of creating a trust may be burdensome for some families; in this regard, a will is much easier and less expensive to create. Trusts also require maintenance and upkeep – for instance, if you buy a new car you must update the trust or the asset ownership won’t transfer through the trust. Further, trusts must follow strict laws which may limit your flexibility in assigning assets. Finally, if you make mistakes in creating the trust, there could be far-reaching consequences for your beneficiaries, such as inheriting less due to unexpectedly high taxes.
How Can I Get Started with a Living Will or Trust?
Estate planning can be difficult. Because of the importance of such documents, it’s important that you have all the information you need to make an informed decision. That guidance comes from knowledgeable Estate Planning Attorneys who can consult with you about your best options.
Both living trusts and wills have advantages and disadvantages, based on the particulars of your situation. To get legal advice on which instrument would be best for you, contact the experienced Texas Estate Planning Lawyers at Warren & Migliaccio, L.L.P. for a consultation on Living Trust vs. a Last Will and Testament. We have the knowledge and real-world experience you need to be confident in your estate planning. We understand the law and our clients – at Warren & Migliaccio, L.L.P., we make the law work for you.
Don’t wait – take control over your future and get peace of mind by planning your estate today with zealous representation by the members of our legal team.