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Making Plans
Do I really need a revocable trust?
By Kristin L. Brown
People who are contemplating their estate plans often assume they need
nothing more than a will. They are often skeptical when presented with
the idea of using a revocable trust rather than a traditional will as
the centerpiece of their estate plan. Many mistakenly assume trusts are
only appropriate for ultra-wealthy individuals who need complex tax
planning. In reality, they offer a multitude of benefits for nearly
everyone.
Reduction of Texas Probate
If you fully fund your
revocable trust during your life, there is a strong possibility that
there will be no need for probate following your death. Although the
Texas probate process is relatively simple, there is still value in
saving the time, court costs, and attorneys’ fees associated with it,
especially when probate court dockets across the state are as congested
as ever. Even if probate cannot be avoided altogether, muniment of title
proceedings are much more likely to be an option for the persons
handling your estate if the bulk of your assets are in trust at your
death. Probating a will as a muniment of title allows those persons to
forgo the requirements of an independent administration, such as
providing various notices to creditors and beneficiaries and preparing
an inventory, appraisement, and list of claims.
Elimination of Ancillary Probate
While failing to avoid
Texas probate is unlikely to have dramatic consequences, the same cannot
be said in states like California, where probate is notoriously costly
and time-consuming. For individuals who own property in other states,
eliminating the need for ancillary probate is critical. If you place
your out-of-state property in a revocable trust, you will ensure that
there is no need for probate proceedings in a potentially unfavorable
jurisdiction. In our increasingly mobile society, it has become
commonplace for people to move to other states. While you should still
seek a review of your estate plan by local counsel after a move, having
a fully funded revocable trust will, in any event, reduce your risk of
having to subject your estate to a costly probate process.
Privacy
Many people prefer that their friends and family not know the exact
details of their estate plan, especially if they opt to disinherit
certain relatives or provide for them in disproportionate amounts. Once
a will has been filed for probate, it is part of the public record and
available for inspection by virtually anyone with internet access. A
revocable trust, in contrast, is not required to be filed with the
court, so you can protect your privacy by including all of the key
dispositive provisions of the estate plan in a revocable trust instead
of a will. In conjunction with the revocable trust, you would also need
to execute a pour-over will that provides for all of your directly held
assets to pass to your trust post-death.
Ease of Management
A Texas will-signing ceremony requires two witnesses, a notary, and
several steps that inevitably manage to befuddle some unsupervised
testators and even the occasional attorney. Even when done correctly,
sometimes it is simply a hassle to execute a new will or codicil when
all you want to do is make a minor change to your plan. Amending a
revocable trust, however, requires at most a notarized signature. There
is often no need for you to sign a trust amendment in your attorney’s
office.
Continuity of Management
As more people are living longer, the need to plan for incapacity is
more important than ever. A revocable trust, especially when funded, is
an excellent tool in this regard. Should it get to the point where you
become unable to manage your own affairs, a new trustee can step in and
immediately begin managing the trust for your benefit, potentially
avoiding the need for a guardianship proceeding. A durable power of
attorney has traditionally served a similar purpose and is still an
important part of an estate plan, but pursuant to new legislation
effective September 1, 2017, financial institutions may refuse to accept
a durable power of attorney for a multitude of reasons. Conversely,
financial institutions are typically more receptive to dealing with
successor trustees, making a revocable trust a more dependable
guardianship alternative in most cases.TBJ
This article was originally published in the Dallas Bar Association’s Headnotes, December 2016. It has been edited and is reprinted with permission.
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KRISTIN L. BROWN is an associate of Davis Stephenson. She can be reached at kristin@davis stephenson.com. |
