Fort Worth Revocable & Irrevocable Trust Attorney

Revocable Trusts vs. Irrevocable Trusts

A well-designed estate plan is one that incorporates wills and trusts. With that in mind, there are significant differences between irrevocable and revocable trusts. By enlisting the services of a skilled estate planning attorney, you can determine whether trusts are a good option for you.

The Law Office of Carey Thompson, PC provides advice and guidance on the benefits of revocable and irrevocable trusts. We are well- versed in the applicable trusts and estate laws and routinely establish trust-based estate plans for our clients.

Revocable Living Trusts

A revocable living trust, also known as an inter vivos or living trust, takes ownership of your property during your lifetime. The fact that the trust is revocable means that it may be changed or modified at any time. The trustmaker, or settlor, can modify provisions of the trust, remove property from the trust, or change the beneficiary designations. The terms of the trust can be modified by a document known as a trust amendment. The trust can also be changed entirely or revoked through a trust amendment and restatement.

The trust agreement specifies property that the trust will own and how the trustee will distribute the assets after the settlor’s death. Once the trust document is in place, the settlor must then transfer property into the trust. This process is referred to as “funding the trust.” Titled property such as real estate, bank accounts, stocks, and motor vehicles, must be retitled in the trust’s name. Other assets such as furnishings, jewelry, artwork, heirlooms, can be listed in an attached schedule or transferred through an assignment of personal property.

If you want to transfer your house into the revocable trust, for example, a general or special warranty deed must be prepared, signed and recorded in the county clerk’s office. It is worth noting that the deed must include specific statements regarding the homestead nature of the property. Similarly, the trust agreement should also contain language that preserves the settlor’s homestead protections and any available homestead tax exemptions in the state of Texas.

If the settlor fails to transfer all of his or her assets into the trust, such property could be subject to a probate proceeding. Therefore, it is also necessary to create a pour-over will. This way, assets that were intended to be placed in the trust pass through the will and are “poured” into the trust. Creating a pour-over will is particularly helpful when the settlor acquires assets after the revocable trust has been established.

In short, a revocable trust transfers property to your heirs when you die, but also enables you to continue managing the property while you are alive and well. Unlike a will, however, a revocable living trust is not required to go through a probate proceeding. This can save time and money and also maintain the privacy of the financial arrangements. Additionally, a revocable trust can also help to plan for incapacity. Finally, a revocable living trust can help to avoid estate taxes.

Irrevocable Trusts

An irrevocable trust is one that becomes effective during the trustmaker’s lifetime and cannot be amended, modified or revoked. The settlor no longer has legal ownership of the property, which remains in the trust permanently. Additionally, the document names a trustee who owns the assets for the benefit of the beneficiaries.

Some common forms of irrevocable trusts include:

Bypass Trusts — A type of irrevocable trust that allows a married couple to reduce estate taxes when the second spouse dies. In a bypass trust, the property of the spouse who dies first is transferred into the trust for the benefit of the surviving spouse. Because the surviving spouse does not own the property, it is not included in his or her estate.

  • Life Insurance Trusts — Although life insurance proceeds pass outside of the estate, they are included in the value of the estate assets — which may have estate tax consequences. In an irrevocable life insurance trust, the proceeds are removed from the estate and ownership of the policy is transferred into the trust.
  • Special Needs Trusts – An irrevocable trust is created to provide for individuals with special needs who may be receiving public benefits. Because a large inheritance could disqualify the special needs individual from benefits such as Medicaid, this type of trust is designed to protect his or her interests. Once this type of trust is created, the assets provide for the beneficiary’s day-to-day expenses while preserving his or her eligibility for government benefits.

Because the settlor no longer owns and cannot manage the property, it is not subject to estate taxes. Moreover, irrevocable trusts also avoid probate and protect assets from creditors. Finally, a properly designed irrevocable trust also allows the trustmaker to qualify for public benefits such as Medicaid.

Dallas-Fort Worth Trusts and Estates Attorney

If you believe your estate plan can benefit from creating a revocable or irrevocable trust, the Law Office of Carey Thompson, PC can help. By taking the time to understand your objectives, we can tailor a trust-based estate plan that best suits your needs. We draft the underlying trust documents, assist with funding the trust, prepare the necessary deeds, and provide ongoing counsel to the individuals named as trustee. Above all, we are committed to protecting the interests of settlors, trustees, and beneficiaries. Call our office or complete the contact form on our website to set up a consultation.

The Law Office of Carey Thompson, PC provides comprehensive estate planning services to clients in Azle, Blue Mound, Haslet, Keller, Lake Worth, Newark, Saginaw, and throughout greater Tarrant County