For Texas residents, a revocable living trust can be a valuable tool in estate planning. It offers a way to avoid the often lengthy and costly probate process, ensures privacy for your assets, and simplifies the distribution of your estate. However, creating a trust is only part of the process as our Katy, TX trust lawyer can attest who has been with our firm since its founding in 2021. To fully benefit from it, you must fund the trust by transferring your assets into it. If you don’t, the trust won’t work as intended, and your estate could still face probate—even in Texas.
What Is A Revocable Living Trust?
A revocable living trust is a legal document that allows you to place assets under the management of a trust during your lifetime. As the grantor, you retain control over these assets and can modify or revoke the trust at any time. When you pass away, the trust becomes irrevocable, and the trustee you appoint takes over to manage and distribute the assets according to your instructions.
For Texans, this can be a particularly beneficial tool. Texas probate laws, while generally more streamlined than in other states, still involve court oversight and can be time-consuming and costly. By funding a trust, you can bypass this process for your loved ones.
Why Texans Should Avoid Probate
Probate in Texas, while simpler than in some states, is still a legal process that can take months or even years to complete, depending on the complexity of your estate. This can delay access to assets that your family may need for immediate expenses, such as mortgage payments or medical bills. Additionally, probate costs, including attorney and court fees, can quickly add up and reduce the value of your estate.
Privacy is another concern. Probate is a public process, meaning that details about your assets and who inherits them become part of the public record. For Texans who value discretion, a funded trust keeps this information private and out of the courts.
The Importance Of Funding Your Trust
The benefits of a revocable living trust are only realized if the trust is properly funded. Funding means transferring ownership of your assets such as real estate, bank accounts, and investment accounts into the trust’s name. If an asset isn’t transferred into the trust, it remains part of your probate estate and will not avoid the probate process, even in Texas.
Without funding, a trust is essentially an empty shell. It’s like buying a safe but never putting anything in it. This oversight can lead to costly consequences for your family.
How To Fund Your Trust In Texas
Funding your trust involves legally transferring ownership of your assets into the trust. Here’s how Texans can ensure their trust is properly funded:
1. Real Estate
For Texans, real estate is often the most significant asset in an estate. To transfer property into your trust, you’ll need to execute a new deed listing the trust as the owner. This deed must be recorded in the county where the property is located.
2. Bank Accounts
Speak with your Texas bank to update the ownership of your accounts to the trust. Some institutions may allow you to retitle existing accounts, while others may require you to open new accounts in the trust’s name.
3. Investment Accounts
Contact your financial advisor or institution to transfer stocks, bonds, and other investments into the trust. This process often requires specific forms and documentation.
4. Personal Property
High-value personal property, such as vehicles, jewelry, and art, can be transferred to the trust through a written assignment of ownership.
5. Beneficiary Designations
While certain assets, like retirement accounts and life insurance policies, cannot be owned by a trust, you can name the trust as a beneficiary to ensure these funds are directed into the trust upon your death.
What Happens If You Don’t Fund Your Trust?
Failing to fund your trust means your assets remain outside the trust and subject to probate. This can lead to:
1. Probate Delays
Unfunded assets must go through the Texas probate process, which can take months or longer, leaving your loved ones without immediate access to necessary funds.
2. Additional Costs
Probate fees in Texas, while more affordable than in some states, can still eat into your estate’s value. Court costs, attorney fees, and executor fees all add up.
3. Public Records
Assets that go through probate in Texas become part of the public record. For Texans who value their privacy, this is a significant downside.
4. Family Disputes
The probate process can sometimes lead to disagreements among family members, especially if the estate plan is unclear or incomplete. These disputes can delay the process further and create unnecessary tension.
Taking Action In Texas
For Texans, the solution is simple: fund your trust as soon as it’s created. Working with an experienced estate planning attorney is crucial to ensure the process is handled correctly. A Texas-based attorney will understand the specific requirements and nuances of transferring assets within the state and can help you avoid costly mistakes.
Additionally, regularly reviewing your trust and estate plan is essential. Life events like purchasing new property, opening new accounts, or inheriting assets may require updates to your trust.
A Trust Without Assets Is Ineffective
A revocable living trust is one of the most effective tools for avoiding probate and protecting your privacy in Texas, but only if it is funded. Leaving assets outside the trust defeats its purpose and subjects your estate to the very process you sought to avoid.
By properly funding your trust, you can ensure your family is spared the delays and costs of probate while preserving your legacy and keeping your affairs private. For Texans looking to protect their loved ones and simplify the transfer of their estate, funding a revocable living trust is an essential step.
If you’re a Texas resident and need assistance creating or funding a trust, consult a qualified estate planning attorney today. Taking action now will provide peace of mind and protect your family’s future. For several years, Stuart Green Law, PLLC has been working on estate plans for families and businesses that protect assets. We are licensed in Texas, Kentucky, Pennsylvania, and South Dakota, so contact us for help today.