The following is provided for informational purposes only and is not, nor should it be construed as legal advice.
Once we reach the age of 50-55, the self-proclaimed revocable living trust advisors seem to come out of the woodwork, descending upon us like locusts and telling us that we need a revocable living trust if we love our families. (We are even made to feel that if we do not have a Revocable Living Trust we might be the type of person who would kick the dog.)
Contrary to this conclusion, it is this firm’s experience that many people love their spouses, cherish their children and never kick dogs without having a revocable living trust. When I am approached to draft this type of trust, my first question is, ”What purpose is it to serve?” There are many good reasons, but there are typically just as many reasons that favor a different approach. The big question is, “What are you attempting to accomplish?”
Many people tell me that they want a Revocable Living Trust as opposed to a Will simply because a friend, neighbor, parent or a really nice person who called on the phone told them that they needed it. There can be many reasons for having a trust; “in fact,” most of the Wills that this firm prepares has a testamentary trust, but trusts (either Living or Testamentary) need to solve a particular problem.
Having a testamentary trust in your Will that serves a particular purpose is far different than making a revocable living trust the primary instrument in your estate planning.
Some of the false or misleading reasons given for having revocable living trusts that this firm hears include:
- MY CHILDREN WILL PAY INHERITANCE TAXES UNLESS THEY INHERIT IN A TRUST – This assertion is very misleading because most Texas estates do not pay inheritance taxes in the first place. Under current laws, your estate pays no estate tax on the first $11,580,000.00 ($23,160,000.00) for a married couple, whether you have a trust or not.
- A TRUST WILL SAVE PROBATE COSTS – This statement may or may not be true, depending on the following:
TRUE – If all of the assets that are owned by an individual are included in the trust. This means every bank account, every piece of real property, every automobile, every brokerage account and every other thing that was owned by that individual are captured by the trust and titled in the name of the trust.
PART TRUE AND PART FALSE – If every asset of every kind is held by the trust, then you will avoid probate, but that is not usually what happens. In addition to a revocable living trust, you should have a “pour-over Will.” This type of Will is intended to capture everything you own at the time of death and pour it over into the trust for planned distribution.
FALSE – If your trust does not capture assets, it will actually cost more in both time and money than a well-drafted Will. You will bear the meticulous burden of keeping the assets in the trust for years, and your family will still need to go through probate for the pour over Will.
- PROBATE WILL TAKE YEARS – Ordinarily this is NOT TRUE. Texas has very reasonable laws regarding probate. A probate proceeding with a Will can take as few as three weeks, but on an average, based on this firm’s experience, not more than 90 days from the time that your probate attorney is contacted until you have “Letters Testamentary,” giving the executor power to act, and all reporting to the Court has been completed.
- PROBATE IS VERY EXPENSIVE AND WILL TAKE A PERCENTAGE OF THE ESTATE is a FALSE statement. Most attorneys charge an hourly fee, and a few will quote you a onetime flat fee. Percentage fees in probate are normally not done.
- MY BENIFICARY IS A SPENTHRIFT AND WILL WASTE THE INHERTANCE IF NOT PLACED IN TRUST. This is a very common problem that can just as easily be handled in a testamentary trust as it can in a revocable living trust. The difference being that you do not need to go through the arduous task of keeping all of your property titled in the revocable living trust during your lifetime.
This firm is not making a declaration against revocable living trusts. “In fact,” they are very often the best way to settle an estate. What this article is intended to do is to say, that “it is not the only tool in the box.” It may be the proper tool and it may not be—depending on your particular circumstances. For instance, if you own real property in more than one state, a revocable living trust, at least as regards that particular asset, might be the best and least expensive solution.
The determination of which tools are best to use in particular circumstances are best done with the guidance of an attorney of your choice who is experienced with wills, trusts and probate. The best results are not always accomplished with someone soliciting your business through telephone calls, mailers, dinner invitations or even well-meaning family or friends.
As always, it is recommended that you talk to an attorney of your choice rather than one who solicited you through a phone call, mailer or dinner invitation.
James Bright has been admitted to practice before the Federal Courts for the Southern District of Texas and Eastern District of Texas as well as all of the Justice Courts, Probate Courts, County Courts at Law, District Courts, Courts of Appeal and Supreme Court for the State of Texas. He maintains an office in Houston and by appointment another at 208 McCown Street in the heart of historic Montgomery. Contact may be made by telephone (936) 449-4455 or (281) 586-8277. For more information about wills or probate in Texas, please see- www.houstontxprobate.com
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JAMES M. BRIGHT
14340 TORREY CHASE BLVD., SUITE 150
HOUSTON, TEXAS 77014
Email: [email protected]