Personalized attention is extremely important when it comes to estate planning, and when you work with our firm, this is exactly what you will receive. We sincerely care about the well-being of our neighbors in and around Austin, and we go the extra mile to make sure that you construct your estate plan in the optimal manner.
Is a Last Will the Right Choice?
Many people equate the process of estate planning to the creation of a last will. Under very simple circumstances, this could be an adequate approach, but when you understand the facts, you may decide to go in a different direction. In a last will, you name an executor or personal representative to administer the estate. Contrary to popular belief, this individual would not be allowed to act independently after your passing.
Under the laws of the state of Texas, the executor would be required to admit the will to probate. The court would ultimately supervise the administration of the estate. There is nothing inherently wrong with probate, but it comes with some drawbacks that negatively impact the rightful heirs.
First, considerable expenses can accumulate, including the executor’s payment, legal fees, court costs, appraisal and liquidation fees, and other incidental expenses. All of this red ink reduces the amount of the inheritances that will be received by the people that are named in the last will.
Secondly, probate can be time-consuming. Even if there are no significant complications, it will typically take nine months to a year to run its course. The inheritors receive nothing while the court is probating the estate.
The third drawback of probate is the loss of privacy. Probate records are available to the general public, so anyone who wants to know how you distributed your resources can obtain these records to find out how you planned your estate. Finally, probate provides a window of opportunity for disgruntled parties that may want to challenge the validity of the last will.
Revocable Living Trusts
When you hear about all of these negatives, you are naturally going to be interested in alternatives. One very commonly used probate avoidance device is the revocable living trust. Many people are concerned about the idea of using a trust, because they don’t want to surrender control of the assets. This is understandable, and in this case, the word “revocable” is quite operative. If you were to establish a revocable living trust, you could revoke it or dissolve it at any time and take back direct personal possession of the property that was conveyed into it.
To add to the control factor, you can act as the trustee and beneficiary while you are alive and well. Since the purpose is to facilitate postmortem asset transfers, you name a successor trustee to administer the trust after your passing, and you name successor beneficiaries. The trustee that you choose would be empowered to distribute assets to the beneficiaries outside of probate, so all of the drawbacks that we have touched upon would be avoided.
Probate avoidance is one advantage that is gained through the creation of a revocable living trust, but there are others. It is possible to include spendthrift protections when you establish a revocable living trust, and this can be a major positive if you have concerns about the money management abilities of the beneficiaries. You can also empower a disability trustee to administer the trust if you ever become unable to handle your own affairs late in your life.
Advanced Estate Planning
There are other types of trusts that can be utilized to address advanced estate planning concerns. One of them is the supplemental needs trust, which is sometimes called a special needs trust. This is a vehicle that can be utilized to set aside assets to improve the quality of life of a person with special needs without impacting eligibility for Medicaid and Supplemental Security Income.
If you have children from a previous marriage that you would like to protect as you enter into a new marriage, you could choose to convey assets into a qualified terminable interest property trust. After your passing, your surviving spouse could benefit from assets in the trust without having access to the principal. When your surviving spouse passes away, your children would inherit the resources in the trust.
High net worth individuals can be exposed to the federal estate tax. There are multiple different trusts that can be used to provide estate tax efficiency, including qualified personal residence trusts, grantor retained annuity trusts, and generation-skipping trusts. The creation of a family limited partnership can also have positive estate tax consequences.
Take Action Today!
Now is the time for action if you are going through life without an estate plan. To schedule a consultation, click this link or call us at 512-478-3800.