Common Types of Trusts in TX
Establishing a trust can help you protect yourself and those you care about.
A trust is a legal arrangement which allows a third party or trustee to hold an owner's assets so that they may eventually be distributed among beneficiaries. The third party has a fiduciary obligation to manage these assets wisely and to distribute them according to the owner’s, or trustor’s, wishes. Most importantly, the trustee has a duty to always act in the best interest of the beneficiary. Establishing a trust can play an important role in your overall estate planning. The following details some of the common types of trusts available in Texas.
What Type of Trust do You Need to Include in Your Estate Planning?
Trusts are a common tool used by estate planning attorneys in Texas to protect assets for clients. They help you provide for minor beneficiaries, and allow you to dictate how money or property is managed or distributed after your death to adult beneficiaries.
Under the Texas Statutes, requirements for creating a trust include that the trustor is of sound mind, the trustee act in the best interest of the beneficiaries, and that some consideration, which means money or property, is included in the trust. Common types of trusts clients use to protect themselves and their loved ones include:
- Testamentary Trust: This type of trust is created under the terms of your will. It goes into effect upon your passing and becomes irrevocable but can be changed at any time over the course of your life. Often times, a testamentary trust is included in a will for minor beneficiaries for children and grandchildren.
- Revocable trust: This allows you to designate a trustee to distribute your assets. You can make changes over the course of your life.
- Irrevocable trust: Once you create this type of trust, you cannot change it or add additional assets to it. This is often used to avoid estate taxes and as part of disability planning.
- Asset protection trust: This allows you to shield assets from creditors.
- Crummey trust: Named after a well-documented court case, this allows you to distribute assets to beneficiaries-often children-over a course of time.
- Charitable trust: This allows you to designate certain non-profits as your beneficiaries and to dictate how property is distributed or used.
- Special needs trust: This allows you to make special provisions for a disabled child or adult.
- Pet trust: The American Society for the Prevention of Cruelty to Animals (ASPCA), recommends pet owners use a pet trust to ensure their furry friends are provided for.
Contact Our Lake Jackson, Texas Trusts and Estate Planning Attorneys Today
To find out more about trusts and the important role they play in your estate planning, reach out to the Cordoba Law Firm, PLLC. Call or contact our Texas trusts and estate planning attorneys online to request a consultation today.