A trust is a statutory arrangement where one person (a trustee) holds legal title to property for another person (the beneficiary). Anyone can act as the trustee of his/ her own living trust, and hold complete authority over the property kept in the trust.
Simply, a “living trust” is a trust that one creates while he/ she is alive, rather than one that is created at one’s death and under the provisions of the will.
Living trusts are mainly created so that the deceased's family can avoid the expense and delay of probate court proceedings. But is a living trust really needed in Texas?
In the state of Texas, Uniform Probate Code is not in use, which in a way simplifies the probate procedure. So it may be a wise decision to prepare a living trust in order to avoid Texas’s complex probate procedure.
However, Texas has a simplified probate process for small estates (under $50,000). So if the estate’s net value is below this amount, the probate procedure will be relatively straightforward and inexpensive.
Yes, a will is always necessary. A will in fact acts as a substitute plan for any property that fails to make its way into the trust. For instance, if someone buys a new property but forgets to add it to the trust, that property won’t pass as per the trust provisions after the death the beneficiary. Here, a will should be used to name someone inherit that property.
However, if there is no will, any property that is not transferred by your living trust or by any other means will straight go to your closest relatives as determined by the Texas state law.
It completely depends on the kind of trust you create. If it is a simple probate-avoidance living trust, it can have no effect on federal estate tax. However, relatively complicated trusts like AB trust can lower the federal estate tax bill for people having valuable assets. However, most people actually need not worry about federal estate taxes as it affects only estates of more than $5 million in value.
In order to prepare a living trust in the state of Texas, you need to: