If you think estate planning sounds like the sort of thing reserved for the rich and famous, you couldn’t be more wrong. The word “estate” as used here doesn’t mean what you think it means at all. It has everything to do with who inherits your assets after you’re gone.
For most people, discussions that have to do with their demise make them uncomfortable. However, it is an inevitable part of life, and when it comes down to it, you want to make sure that all your affairs are in order.
If you don’t plan who gets what after you’re gone, let’s just say you won’t have any control over what happens, now will you? That’s why it’s important to consult with the best estate planning lawyers in Texas to discuss a plan that will ensure that your loved ones are taken care of. Here’s everything you need to know about Texas estate planning.
Texas Probate Law
If a person dies before putting into place a plan that transfers their property by way of direct payments (insurance policies or retirement funds) to beneficiaries, or through right of survivorship that comes from a joint ownership, or even by way of a Trust, the deceased person’s property and assets will be distributed through probate.
Probate refers to the process where a court acts as an oversight authority in the payment of the deceased’s debts and distribution of their assets. Its role is to facilitate the entire process and protect the rights and interests of all beneficiaries and creditors of the estate. The deceased is usually referred to as the decedent.
Types of Probate
Probating a will in Texas may take any of the following forms:
1. Small Estate Affidavit
If the decedent had no will at the time of their death and owned less than $50,000 in assets, then a small estate affidavit will be drawn up. It needs to meet the required legal threshold before a judge approves it.
3. Muniment of Title
If the decedent had a will at the time of their death but has debt related to real estate holdings, then the court will uphold the will. It will also ensure that no claim is made against the estate and make a ruling that the assets of the decedent will not require administration.
3. Independent Administration
In this probate process, the court confirms the person who has been appointed the estate executor (administrator) as per the will. They require no bond and will be responsible for collecting, valuing, and distributing the decedent’s assets. The court doesn’t play an oversight role in this type of probate.
4. Dependent administration
This happens when the decedent had no will in place at the time of their death, and the court appoints an administrator to collect, value, and distribute the estate. However, the court has to approve every action of the administrator.
What Is a Living Trust?
If you don’t like the idea of probate where someone else makes the decisions about how your estate should be distributed, then you need to consider setting up a living trust. A living trust is a legally binding document that details what happens to your assets after your demise.
It is also sometimes called a revocable living trust and forms an important part of the estate planning process. It provides a foolproof way of ensuring that your final wishes are carried out. It also allows you to use your assets during your lifetime.
With a revocable trust, you can alter its terms at any given time. For instance, you can add and remove beneficiaries and modify the terms related to how you want your assets to be managed.
With an irrevocable trust, however, the process isn’t as straightforward. Except in extenuating circumstances, the terms and beneficiaries of the trust cannot be changed. It essentially removes all rights and control over the assets.
Living Trust vs. Will
One of the most common questions when it comes to estate planning is: What is the difference between a living trust and a will? The answer to this has everything to do with the location of the assets.
A living trust is a legal document through which your assets are transferred into a trust during your lifetime. Once you die, those assets will then be transferred to your nominated beneficiaries by your designated representative, referred to as the “successor trustee”.
A last will is a legal document that details how your assets will be distributed upon your death. The executor of the will is named and charged with the responsibility of overseeing the process and making sure that your will is effected after your death.
Benefits of a Living Trust
If you’re not sure which of the two you should have, top estate planning lawyers in Houston will tell you that the benefits of setting up a living trust Texas outweigh those of a will. Here’s how:
1. It Avoids Probate
Having a last won’t exclude the probate process. Your estate would still have to go through court proceedings in the distribution of assets. With a living trust, however, your successor trustee will distribute your assets and pay-off all your debts without requiring any court intervention. This speeds up the entire process tremendously.
2. It Saves you money
The court probate process costs money. This will likely come from the estate. While setting up a living trust may cost more compared to preparing a last will, it will save your estate a lot of money at the time of your death.
3. It Provides Privacy
With a living trust, your assets will be distributed to beneficiaries privately since the document isn’t available for public scrutiny. With a will, however, the document forms part of your public record, so all transactions resulting from it will be available to the public as well.
Plan for Peace of Mind
The process of creating a living trust and last will is straight forward. Get in touch with a Texas estate planning lawyer to help you get your affairs in order to protect the future of your loved ones after you’re gone.
If you have more legal questions, you can also chat now with a Laws101.com attorney, where you’ll be instantly connected to a lawyer who can give you legal guidance on your specific case or question.