Wills & Trusts
San Antonio Wills & Trusts Lawyer
None of us want to think about dying, but we also want to be sure that our wishes are known and respected when it’s time to pass on our assets. Wills and trusts are the way to do that.
The Law Office of Paul D. Hardy helps people in San Antonio and extends out to Comal County, Kendall County, Hayes County. Call us at (210) 405-1985 or contact us online to talk to a San Antonio wills and trusts lawyer.
A last will and testament is an excellent and necessary start for sound estate planning. A will ensures that your wishes are in writing, and in a binding legal document. But, contrary to popular perception, it does not avoid the probate process.
In order to avoid probate, you need to appropriately structure your trust. Depending on how you set up your trust, you can also shelter assets from estate taxation and exercise greater specificity in how your assets are to be distributed.
When you put your assets into the trust, it’s the trust that now owns them. That means you, as an individual, no longer have anything that has to be probated.
Types of Trusts
There are a wide range of trusts, many of them drawing their title from the contents and conditions within. Our purposes here are the drafting of a trust that avoids probate. That means a living trust, meaning it is created and funded while you are still alive. Living trusts can then be separated into two broad categories–revocable and irrevocable.
When you set up your trust, you identified the beneficiaries, what they were to receive and under what (if any) conditions. As the term revocable suggests, this type of trust allows you to change that. You can even abolish the trust altogether if that’s your desire.
The advantage of a revocable trust is its flexibility. An unfortunate reality of life is that sometimes we have falling outs with family members we were once close to. That reality might lead you to change the terms of your trust. Or perhaps you’re deeply concerned about your adult child, who left their spouse and took up an extravagant lifestyle. You don’t want to be involved with posthumously funding their mid-life crisis. The revocable living trust offers you the opportunity to make changes.
The flexibility does come with a cost–namely, that the assets you hold in the trust are still considered part of your estate for tax purposes. You will avoid probate, but not taxation. To avoid both, you need to make your trust irrevocable.
Again, the word irrevocable does say it all. Your trust and its terms are now set in legal stone. In exchange for giving up flexibility, your assets are not counted in your gross estate for tax purposes. Furthermore, you can make an annual contribution to the trust that will enjoy exemption from gift taxes. It’s also worth noting that irrevocable trust assets are shielded from possible creditors.
A San Antonio wills and trusts lawyer from this office can advise on how to structure your trust to meet the long-term needs of your beneficiaries. Call us at (210) 405-1985 or contact us online today.
Setting Conditions in Your Trust
Many people have specific purposes in mind when they grant someone an inheritance. Maybe you want to fund the college education of your grandchildren. You naturally don’t want to give them $100,000 and hope they’ll do the right thing. In this case, you would stipulate that the money can only be used for college tuition. Along these same lines, you might make money available to them upon graduation, certification in a trade, or getting married.
You may also choose to have your inheritance distributed gradually for the protection of your beneficiaries. Life can deal us all some hard times, and those can include divorce, being sued, or otherwise pursued by creditors. The assets you hold in trust do not yet belong to your beneficiaries and are therefore protected from an ex-spouse or creditor. The only assets that belong to the beneficiaries are those they have already received.
Another example would be our adult child from the example above that you’re concerned with. You don’t want to fund their lifestyle, but you don’t want to cut them off. You might make their inheritance something that’s released gradually and contingent upon making appropriate changes .
There are limits to the conditions a person can set in the trust. An obvious example is that inheritances cannot be conditioned upon doing something illegal. A mafia leader can’t condition the inheritance on a child taking over the family business. Less extreme examples might be that an inheritance conditioned upon a beneficiary divorcing their spouse would likely be ruled out of bounds.
All of this begs the question–if you’re no longer with us, who releases money to the grandkids when they hit designated milestones? Who decides if the adult child is making progress in cleaning up their life? The answer to that is your trustee.
You identify who your trustee will be. This should, ideally, be someone whose personal integrity you completely trust. They should also have a good grasp of legal and financial affairs. If your trust is going to continue on for years after your passing, the trustee may well be responsible for investing trust assets and helping them grow. The trustee will have a fiduciary responsibility to always act in the best interests of the trust, and you want to be certain the person you have chosen can meet that high standard.
The Law Office of Paul D. Hardy aims to meet the high standards our clients expect, whether it’s in the drafting of a trust or its administration. Call us today at (210) 405-1985 or reach out online to set up a free consultation.
Isn’t Estate Planning for People Who Are Rich?
No! The word “estate” can conjure up images of a sprawling yard and luxurious mansion, as though we’re on the set of Downton Abbey. Reality is different. Your estate is simply the money and property you own at the time of your death. Estate planning consists of the various legal mechanisms that are used to ensure your wishes are known and respected, that you get the best possible tax treatment based on your goals and that prudent steps are taken to protect your assets as much as possible in your final years of life.
Can You Avoid Probate With a Will?
A will alone will not be enough for your heirs to avoid going through probate court, with its attendant fees. The way to keep your assets out of probate court is through the establishment of a living trust.
What Happens Without a Will?
When you die without a will, your estate becomes subject to the intestacy laws in the state of Texas. The state seeks to place your assets in the hands of living spouses, children, siblings and parents and has clear guidelines for different family scenarios. The problem is that the law for an entire state is simply not able to anticipate the particular wishes of a deceased person. That’s why it’s strongly advised to put your last will and testament into writing. That way, everyone knows what your wishes are, and courts will be able to enforce it.
What Are the Benefits of a Trust?
Staying out of probate court is just one of the advantages that a living trust can offer. A trust can be structured so as to minimize your tax exposure ,while still allowing you to gift money into it while you’re alive. If you believe the benefits to your beneficiaries are best deferred to a later date or spread out over time, you can appoint a trustee who can administer that after your passing. A trust offers you flexibility and allows your beneficiaries to avoid dealing with probate court .