Trust – It should have been a four letter word considering all of the confusion it causes. Living in Texas, there are not as many uses for the revocable trust, however, we continue to warm to the Trust and find it very useful in many situations.
To Trust or not to Trust?
To prevent a lengthy discussion, the focus of this post is on the Revocable Trust. This type of trust is the most common, but much different from its relative, the Irrevocable Trust.
Just a few benefits of the REVOCABLE Living Trust:
- Easy to set up
- Simple to change
- Avoids Probate (Especially helpful in expensive probate states such as California and Florida –Not as much in Texas, but again still useful)
- Great Organizer of affairs and death directives
- Helps with privacy-non probate
- Holds almost any type of asset
- Relies on corporate law versus probate law
- Neither helps or hurts from a Tax standpoint and does not require its own Tax ID
misunderstood aspects of a revocable Trust:
Does very little to prevent creditor exposure. — Since it is revocable, creditors can argue since you can do almost anything you wish with the assets, they are essentially yours and liabilities pass through to the trust.
Upon death of the beneficiary, in most cases a revocable trust becomes very strong and will have greater protections.
Lastly, a revocable trust rarely helps with Federal ESTATE Taxes. These are the taxes levied on estates over $5.4 million by individuals or $10.8 by couples.
Still confused? Drop us a line !
Have a Great Wednesday!
John A. Kvale CFA, CFP
8222 Douglas Ave # 590
Dallas, TX 75225