Jamie Graham & Associates, PLLC
Schedule A Free Consultation 210-764-3468

Benefits of setting up a trust

Many people have heard of the value of trusts in planning how they want to pass on their estate. Although the revocable living trust is the most well-known, there are several basic types of trusts that attorneys may recommend based on a client's particular circumstances and wishes.

Reducing taxes

When people ask about setting up a trust, many of them primarily want to cut down on the estate tax. As this is currently 35 percent, it makes sense to minimize the number of assets that will be taxable. One way to do this is through an irrevocable life insurance trust, where the insured transfers ownership of the policy to the trust. This way, the proceeds of the policy never enter the estate when the insured dies. While this kind of trust is a good tool for tax reduction, it is not very flexible, as the insured must give up a large measure of control in order for the transfer of ownership to be legitimate.

Another way to save on the estate tax is to create a bypass trust, where you will put the amount of the standard exemption for taxable estate assets (currently this amount is $5 million). This is particularly useful for spouses who want to benefit whichever of them survives, along with children or grandchildren. Another popular tax-saving technique is putting lifetime gifts to children in what is known as a Crummey trust, which is started when the child is a minor and may contain specific provisions for the time and manner in which the child can get access to the funds.

Other benefits

Because of the way Texas probate law is structured, a revocable living trust may not offer the benefit of cutting down on probate expenses and procedures. However, setting up this type of trust can offer other advantages. These include the flexibility of being able to structure the terms and conditions of the trust, to select a trust administrator who can act in your stead if you are incapacitated and to ensure total privacy for your estate.

In addition, if you have property outside of Texas, you may want to place these out-of-state assets in a living trust for the purposes of avoiding probate in a different state. A living trust can also serve as a safeguard against potential challenges, especially if it has been running for a long time.

When you are planning your estate, there are no one-size-fits-all solutions. Whatever your financial situation, you want to choose the best options for you based on your life circumstances and priorities. Consulting a knowledgeable attorney in your state is a smart way to come up with an effective plan.

No Comments

Leave a comment
Comment Information
email us for a response

Get In Touch With Us

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Jamie Graham & Associates, PLLC
310 South St. Mary's Street
Suite 2500
San Antonio, TX 78205

Phone: 210-272-7034
Fax: 210-308-5669
San Antonio Law Office Map