November 07, 2017
living-trust.jpgEspecially for older folks, you may be bombarded with sales pitches for setting up or buying living trusts by telemarketers, mail solicitations, “free” seminars, and advertisements.

This has been a favorite area for consumer fraud in recent years, resulting in huge sums of unnecessary expense for unsuspecting consumers. The revocable living trusts are usually touted as the way for you to avoid huge probate expenses, long delays in probate, or other scare tactics. 

Buyer Beware!

  • Make an informed, reasoned decision about whether a living trust is right for you.
  • Seek out an attorney with knowledge of Texas law to draft the documents.
  • Avoid using standard forms, kits, or computer software that is one-size-fits-all.

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Here are some of the pros and cons to creating a revocable living trust.


5 Reasons A Living Trust Might Not Be Necessary

1. Probate Is Not That Expensive If You Have A Good Will and Competent Counsel 

Often the price charged by both non-lawyers and lawyers for creation of, funding, transfers to, and related documents for a revocable living trust will far exceed the cost of probate for a will that was properly drawn up to provide for independent administration. Competent counsel will also explore with heirs whether there is any alternative to a full probate to accomplish the transfer of assets desired.

2. Living Trusts Are Not Needed By Most Individuals For Estate Tax Planning Now 

monopoly-house.jpgUnless you are an individual with an estate worth more than $5.5 million per person you have no need for a living trust to avoid estate taxes. Even if you do have an estate large enough to trigger estate tax considerations, you do not always have to have a living trust to minimize estate tax liability. 

3. You Can Avoid Probate Of Many Assets By Placing Them In Joint Tenancy With
Right Of Survivorship, Beneficiary Or Payable on Death Designations

This is a much simpler way of passing on many assets upon death rather than placing them in a living trust. We urge clients to place as many assets as they can in this form of ownership or beneficiary designation if they want them to pass immediately on their death to someone else. Unless the beneficiaries are minors or have special needs, you really don't need a trust for these assets. Also, the state of Texas has approved a transfer on death deed form to make passage of title to real estate on death much easier.

4. Most Probates Of Properly Drawn Wills Do Not Require A Lengthy Process

The Texas Estates Code continues to be modified to streamline and speed up the probate process. Rarely would lengthy delays be involved in passing on assets through probate. An independent administration under a well-drawn will requires only one hearing and minimal court involvement in the process thereafter. A competent, conscientious executor will move the process along quickly unless there are unusual complications.

5. If Assets Are Not Added To The Trust As They Are Acquired, The Purpose of Having a Living Trust Can Be Defeated

Individuals who do set up a revocable living trust have to be careful to keep up on a routine basis with assuring that all assets they want subject to the trust are transferred to it or title is acquired in the name of the trust. Otherwise, a probate in addition to the trust may be necessary to transfer the title and the expense is multiplied.

2 Reasons You Might Need A Trust 

oil well.jpg

1. If You Own Property In Different States Or Many Counties In Texas

One of the best uses of a revocable living trust is to make it easy to pass title to real estate or oil and gas interests held in Oklahoma, New Mexico, Colorado, or any other state in addition to Texas. Even numerous oil and gas interests in counties all over Texas are easier to transfer on death if they are in a trust. 

Without title to real property in other states being held in the living trust, you might be compelled to probate a will in all the different states in which such assets exist. Not all states have as simplified a probate process as Texas and they in fact may be much more expensive than Texas’s. In this instance, there really may be substantial savings realized by placing these assets in a living trust.

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2. If You Need Special Assistance In Managing Assets

Although this same help can be achieved to a large extent through a Power of Attorney, maybe a co-trustee acting with you under a revocable living trust is the best way to allow you to remain involved but gain the help you need in managing your assets, particularly if ill health is your hindrance rather than incompetence. You can designate a knowledgeable person or firm to aid you in handling the assets of the trust.
Editor's note: This blog was originally published Sept. 24, 2015. It has been updated for freshness and accuracy.

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Article Topics:
Estate Planning Wills & Trusts Probate Legal Tips