The Usefulness of a Revocable Trust
A trust can be a useful tool in disbursing your estate during and after death. It is hard to consider one’s mortality but when you do finally accept that death is inevitable, it is prudent to have a dispositional scheme set up that will benefit your family. A Revocable Trust is a less complicated and more expeditious way for your heirs to divide and distribute your estate according to your own specific plan once you have passed.
A Revocable Trust is a legal entity created by an individual that is used to disburse an individual’s estate avoiding significant probate court involvement. The Settler is the individual who sets up the trust and places limitations on what the trust can or cannot do with trust assets. The Trustee is the person in charge of the trust and who has a fiduciary duty to the Settlers and Beneficiaries to distribute the estate in accordance with the limitations set forth by the Settler. The Settler, in some instances, may be the Trustee as well. A Settler may not be the beneficiary of a Trust.
A Settler may also be the Trustee and is given the power to change the trust in many ways. Under Texas Property Code 122.033 a Settler that is also the Trustee reserves such powers as:
- Making a beneficial life interest for himself;
- The power to revoke, modify, or terminate the trust in whole or in part;
- The power to designate the person to whom or on whose behalf the income or principal is to be paid or applied;
- The power to control the administration of the trust in whole or in part;
- The right to exercise a power or option over property in the trust or over interests made payable to the trust under an employee benefit plan, life insurance policy , or otherwise; or
- The power to add property or cause additional employee benefits, life insurance, or other interests to be made payable to the trust at any time.
The important point is that Texas allows an individual to both make a trust and control the Trust.
A Revocable Trust can used to bypass the court system thus producing a quick and effective means for an estate to be disbursed. Instead of probating a will and having the court get involved which is timely, an individual may create a trust with limitations which can bypass the court process altogether.
The creation of a Trust can be a complex process depending on the size of the estate. An experienced estate lawyer should be consulted to ensure the Settler’s limitations set upon the Trust are valid and precise. By utilizing a Trust rather than a Will or Intestate Succession, an individual can avoid undue delay in probating the estate and the Trust itself allows the Settler the ability to specify the exact conditions and limitations that will be involved as the estate is disbursed.