Testamentary Trust Attorney in Texas for Your Estate Planning Needs

In Texas, a testamentary trust and a living trust are two distinct types of trusts with different creation methods, purposes, and administration processes. A testamentary trust is created through a will and takes effect only after the grantor’s death, requiring probate court approval to establish.

On the other hand, a living trust, also known as an inter vivos trust, is created and funded during the grantor’s lifetime and can be either revocable or irrevocable. A revocable living trust allows the grantor to retain control, modify, or revoke it during their lifetime. In this case, the trust may serve as a substitute for a will to legally avoid probate.

A person with minor children or dependents are potential candidates for a testamentary trust. The trust allows parents to designate how assets, such as a 5300,000 inheritance, are managed and distributed for their children’s benefit after their death. For example, a trust might state that inherited funds be used for education or living expenses until the child eaches age 25, preventing mismanagement by a young beneficiary.

Someone with special needs beneficiaries should also consider a testamentary trust to provide for a disabled child, sibling, or other relative without jeopardizing government benefits like Medicaid or Supplemental Security Income (SSI).

Financial assets are often placed in a testamentary trust because they are straightforward to transfer and manage. These include bank accounts, certificates of deposit (CDs), and investment accounts with stocks, bonds, and mutual funds.

Real estate may be placed in a testamentary trust, such as primary residences, vacation homes, rental properties, or land. For example, your relative may designate a $400,000 vacation home to the trust for the benefit of the children.

The duration of a testamentary trust, created through a will and activated after the grantor’s death upon probate, is governed by the Texas Property Code and the trust’s specific terms. Unlike living trusts, which may begin during the grantor’s lifetime, testamentary trusts start after the person’s death, and can last for varying periods depending on their purpose, the rule against perpetuities, and state law. For example, a testamentary trust for a minor beneficiary often lasts until the person reaches a certain age, such as 25.

Yes, a testamentary trust is a practical, effective tool for managing assets for minor children, ensuring their financial security while preventing mismanagement or premature access to funds. A testamentary trust is particularly appropriate for parents who want to provide for their minor children (under 18 in Texas) after their death.

The trustee of a testamentary trust is named in the grantor’s will. It specifies the individual, entity, or combination of trustees to administer the trust after probate. The grantor may name a trusted family member or friend, such as a sibling or parent, to serve as trustee, often chosen for their understanding of family dynamics and willingness to act without high fees. Or, a professional trustee, such as an estate attorney, may be appointed for their skill in managing complex assets

Yes, a testamentary trust in Texas can provide significant protection for beneficiaries from creditors. Unlike assets inherited outright, which are vulnerable to creditors, a properly designed testamentary trust can shield assets by keeping them under the trustee’s control. However, the extent of protection from creditors depends on the structure of the trust and other factors.

A testamentary trust, created through a will and activated after the grantor’s death upon probate, is subject to specific rules regarding whether it can be changed or revoked after the will is signed. Before the grantor’s passing, a testamentary trust can be changed or revoked by modifying or revoking the will that creates it.

After the grantor passes, the testamentary trust becomes irrevocable upon probate because the grantor can no longer amend the will. However, courts may be able to modify or terminate it under specific conditions with beneficiary consent or changed circumstances

A testamentary trust in Texas has specific tax implications that affect the trust, its beneficiaries, and the estate. These implications may involve income taxes, estate taxes, and, in some cases, property taxes. Unlike a living trust, testamentary trusts are funded through the probate estate, which influences their tax treatment.

Yes, beneficiaries can challenge or dispute a testamentary trust, created through a will and activated after the grantor’s death upon probate. However, there must be issues with its validity, administration, or the trustee’s actions.

Grounds for challenging the trust’s validity include lack of capacity, undue influence, improper education, and fraud. The trust can also be disputed if trustee management involves mismanagement of assets, self-dealing, improper distributions, or failure to inform.