A trust is a non-probate asset vehicle, in which you can place your assets. The main purpose of a trust is to avoid probate and protection of the assets from creditors. It also acts as protection for the beneficiaries who are either minors and they are incapacitated, or an adult who is incapacitated and receiving government benefits. It can also be used if you believe that your children will spend the money unwisely.
The most common trusts are the inter vivos trusts, meaning a trust that is done during your lifetime. It can be revocable or irrevocable. Revocable means that you can amend the trust without having to go to court in order to do so. But if it is irrevocable, you are the one paying taxes on the assets, so your beneficiaries do not have that burden. You cannot revoke it unless you have some sort of very limited circumstances, and it usually involves court proceedings to get it amended.
The benefits of an irrevocable trust is that the IRS views that trust essentially as a separate entity. The taxes are paid from the trust instead of from your personal assets. The trust has its own tax ID. Testamentary trusts are, by default, irrevocable since they are only effective upon death.
How Often Do You Suggest People Should Be Reviewing Their Estate Planning Documents And Why Would They Need To Make Changes?
There is no hard and fast rule on when you should review your estate planning documents. Many people suggest that it should be reviewed once a year, but you definitely should do so if you have any change in your life or there has been changes in the law. Some examples of some life changes that might prompt an estate plan review are inheriting money or assets, having a child, getting divorced or married.
Do I Need A Texas Estate Planning Attorney Or Can I just Do This On My Own Or With An Online Estate Planning Service?
You do not need estate planning attorney in every situation. The benefit of an estate planning attorney is the customization of your estate plan based on your assets. There are online estate planning services or Legal Zoom. If you do not have the funds to pay an estate planning attorney and you just need a basic estate plan, will, medical power of attorney, or basic statutory durable power of attorney, you can often find these documents online and execute them on your own. It is much less expensive to do that. The drawback is there is no one to explain what is really in those documents and if they will really meet your individual needs. An estate planning attorney can advise you based on your goals. That is the real benefit of having an estate planning attorney if you have a smaller estate.
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