A Trust is a legal chameleon.
What is a Trust
At its most basic, a trust is an agreement by a fiduciary (the trustee) to hold property for the benefit of another. A trust is not a separate legal entity.
There are three players in a trust – the settlor (who establishes and sometimes funds the trust), the trustee (who administers the trust) and the beneficiary (who benefits from the trust).
A trust should always be established with a specific objective in mind. A trust may be used to avoid probate, minimize estate taxes, control the use and disposition of property now or after the death of the settlor, protect assets, or provide money while preserving eligibility for government programs for special needs children and adults.
The Trust Code
Texas has a statutory scheme, called the Trust Code, that applies to express trusts (usually written) that contain property. Among other things, the Trust Code provides default provisions for matters not explicitly addressed in a trust document.
Confusingly, the Trust Code does not apply to constructive trusts (which is a remedy in a lawsuit and not technically a trust at all), resulting trusts (which apply to some situations involving real property) , business trusts (which are considered partnerships) and deeds of trust (Texas’ version of mortgages).
Most estate planning involves two types of written trusts – testamentary (contained in a will) and living (contained in a separate document). The living trusts are divided into two other categories – revocable and irrevocable.
A trust is a very good tool for estate planning. It may not be the final answer, but it should at least be discussed when you are creating your estate plan.
The attorneys at Hammerle Finley Law Firm are available to discuss your estate planning needs and goals. Schedule a consultation with one of our experienced estate planning attorneys today.
