What Is The Purpose Of A Trust? What Are The Different Types of Trusts?
In the United States, trusts are used to avoid a very arduous and challenging probate process. However, the probate process in Texas is not daunting or stressful. In Texas, trust creation to avoid probate is not necessary.
A person may want to create a trust for the benefit of an individual who the trust creator believes is not yet quite able to manage his or her financial affairs. Often, parents form a trust for their children’s education and/or for financial support as a young adult. This type of trust is called an inter-vivos trust.
Parents also can form a contingent testamentary trust for their children within their will. The trust is contingent on their children’s age at the parent’s death and lasts until a designated age of the child. The trust can also have partial end dates where the child receives a portion of the trust, free of trust at designated ages. A common example is a child receiving 1/3rd portions of the trust at ages 25, 30, and 35 when the trust would completely terminate. Each parent has a different perception of their children’s financial responsibility. Some parents want their children’s trust to last longer. Some want their children’s trust to end sooner. A conversation with each client is essential to understand their needs and perspective.
What Factors Need To Be Considered In Updating A Trust?
Trusts are often irrevocable. Once an asset becomes part of a trust, it is often no longer subject to an individual’s personal management. Trusts can be more challenging to manage than most people believe or understand. People who have significant financial means, and those who are preparing trust plans for estate tax avoidance should consult with experienced estate planners who deal with these complex matters.
How Often Should We Review Our Estate Plan And Make Any Updates?
As a general rule, you should review your estate plan every 10 years. A review of your estate plan should occur earlier if significant changes in life conditions occur, such as marriage, children, divorce, and/or significant change in financial status.
For more information on A Trust As A Component Of An Estate Plan, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (210) 987-3333 today.
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