What Is a Trust?

A trust is a fiduciary arrangement that allows a third party, who is called a trustee, to hold the assets of a grantor on behalf of a beneficiary or beneficiaries. To clarify, the grantor is the person(s) who creates the agreement and the beneficiary is the person(s) who receives the benefit of the assets in the trust. Trust agreements can be structured in several different ways, and will specify exactly how and when the assets pass to the beneficiaries. While traditionally used for minimizing estate taxes, a trust also offers other benefits as part of a well-crafted estate plan.

There are many types of trusts. Some are designed for providing benefits to surviving spouses, children, family members, non-family members, charities, and later generations, while others are designed for tax shelters, and providing income streams. Choosing the proper trust for an individual’s specific needs and goals, and then structuring it, can be a complicated process. The assistance of a trust attorney in San Antonio, TX is highly recommended. Allen & Roig, LLP has the estate planning experience to draft trusts to be utilized effectively in a variety of situations. Meet with us to discuss the types of trusts, how they are used effectively, and when they are appropriate for you.

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Revocable Trusts and Irrevocable Trusts

There are many types of trusts and a major distinction between them is whether they are revocable or irrevocable. There are benefits and drawbacks to each. The guidance of Allen & Roig, LLP San Antonio trust lawyers will help you determine whether a revocable trust or irrevocable trust is most appropriate for you.

A revocable trust is also known as a living trust and allows the grantor to retain control of assets during the grantor’s lifetime. It can help assets pass outside of probate, but is flexible and can be dissolved at any time before the death of a grantor should the grantor’s circumstances or intentions change. The grantor can name themselves as a trustee or co-trustee and retain ownership in terms of control during their lifetime, and it is treated like any other asset. If the grantor is also a trustee, provisions must be made to assign a successor trustee to manage the trust in the event of the grantor’s incapacity or death. A revocable trust typically becomes irrevocable upon the death of the grantor. While a revocable trust may help avoid probate, it is usually still subject to estate taxes.

An irrevocable trust typically transfers assets out of the grantor’s estate and potentially helps minimize estate tax and avoids probate, but it can’t be altered by the grantor after it has been executed. Once an irrevocable trust has been executed the grantor loses control over the assets and they can’t change any terms or decide to dissolve the trust.

If your primary goal is to reduce the amount subject to estate taxes, an irrevocable trust is effective. Also, since the assets have been transferred to the trust, the grantor is relieved of the tax liability on the income generated by the trust assets, although any distributions from the trust will typically have income tax consequences. An irrevocable trust may also be protected in the event of a legal judgment against the grantor.

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Call on the Experienced San Antonio Trust Lawyers

There are a number of basic benefits to trust agreements. You owe it to yourself to explore the options and decide if a trust is a good fit for you. Remember trusts enable you to:

  • Control of Your Assets- You control when and to whom distributions are made
  • Protect of your legacy- Can help protect your estate from your heirs’ creditors or from beneficiaries who may not be adept at money management
  • Avoid probate- May allow assets to pass outside of probate possibly reducing the amount lost to court fees and taxes in the process
  • Maintain privacy- Allow assets to pass without public record

If you have questions and are interested in any of these benefits as they relate to establishing a trust as part of your estate planning speak, with the San Antonio trust attorneys of Allen & Roig, LLP today. We are highly experienced in trust service and will guide you through all your legal options and help you protect your personal and financial interests. Call (210) 377-2529 Today!