Most people have heard of trusts, but many people don’t know what a trust is or whether or not it would be appropriate for their estate or financial planning to include one.
A trust describes a particular type of disposition of money or property. As defined by Black’s Law Dictionary, a trust is “An equitable obligation, either express or Implied, resting upon a person by reason of a confidence reposed in him, to apply or deal with the property for the benefit of some other person, or for the benefit of himself and another or others, according to such confidence.” In other words, a trust is actually an obligation imposed upon someone to care for money or property for another’s benefit.
A trust involves:
- a trustor, who creates a trust of money or property
- a trustee, who manages the money or property, and has certain duties that she must follow
- a beneficiary, for whom the trust is managed.
Are trusts just for people with a lot of assets? No, of course not. Trusts can have advantages for people of any financial means. Trusts are sometimes used to avoid the difficulty of probate (the court proceedings related to disposition of a will). However, Texas probate is fairly simple, so the use of a trust may not be terribly advantageous from a time or simplicity standpoint. However, there may be other reasons you don’t want a court involved in your estate, and if this is the case for you, a trust may be a good alternative.
There are other reasons a trust may be advantageous, but the best way to determine the best estate plan for you is to contact us so we can tailor your plan to your unique situation.