Working through the landscape of estate planning can be challenging, especially when it comes to deciding between inter vivos trusts and testamentary trusts. For residents of Texas, Attorney Stuart Green who works as a Houston, TX revocable living trust lawyer, is a valuable resource for understanding these options and ensuring your assets are protected and distributed according to your wishes. Here’s a look at the important distinctions between these two types of trusts.
Testamentary Trusts Are Activated by Your Will
In contrast to living trusts, testamentary trusts are set up through a will and only come into effect after the grantor’s death. Texas residents should consider the following points:
• Testamentary trusts are specified in your will and become active after your death, requiring the will to go through the probate process before the trust is established and funded.
• These trusts provide control over asset distribution and management post-death, which is beneficial for providing for minor children or setting specific conditions on asset use.
• Unlike inter vivos trusts, testamentary trusts must go through probate, meaning the court oversees the process of validating the will, appointing an executor, and ensuring the trust is funded according to your instructions. They do not avoid probate.
• Once funded, testamentary trusts are typically irrevocable, ensuring your specified wishes are carried out without the possibility of alteration.
Inter Vivos Trusts Are Effective During Your Lifetime
Inter vivos trusts, often referred to as living trusts, become effective during the grantor’s lifetime and provide various advantages, especially for those seeking flexibility and immediate asset management.
• These trusts become active immediately upon creation and funding, allowing you to transfer assets into the trust and manage them according to its terms right away.
• A significant benefit is avoiding the probate process. Since the trust holds the assets, they do not need to go through probate upon the grantor’s death, saving time, reducing costs, and maintaining privacy.
• Inter vivos trusts ensure continuity in asset management if the grantor becomes incapacitated, allowing the trustee to manage the assets without court intervention.
• Many inter vivos trusts are revocable, offering the ability to modify, amend, or dissolve the trust during the grantor’s lifetime, which provides flexibility to adapt to changing circumstances.
• Unlike wills, inter vivos trusts do not become public records, thus keeping the details of your assets and beneficiaries private.
Making The Right Choice For Your Estate
Deciding between an inter vivos trust and a testamentary trust depends on your specific needs and circumstances. Here’s how to determine which might be best for you:
• Timing: If you prefer a trust that takes effect during your lifetime for ongoing management of your assets, an inter vivos trust is suitable. If you are more concerned with post-death asset distribution, a testamentary trust may be the right choice.
• Probate: To avoid the probate process, an inter vivos trust is the preferred option. Testamentary trusts, by their nature, must go through probate.
• Flexibility vs. Control: Consider if you need the flexibility to change the terms of the trust during your lifetime (inter vivos trust) or if you want the rigid control offered by a testamentary trust.
• Privacy: If maintaining privacy is important, an inter vivos trust will keep the details of your estate and beneficiaries out of public records, unlike a will that establishes a testamentary trust.
Both inter vivos trusts and testamentary trusts offer unique benefits and serve different purposes in estate planning. For Texas residents, understanding these differences and consulting with an experienced estate planning attorney like Stuart Green who started his own firm in 2021 in Houston can help you make informed decisions that best meet your needs, ensuring your assets are managed and distributed according to your wishes.
Contact Stuart Green Law, PLLC to get started today; he is licensed in Texas, Kentucky, Pennsylvania, and South Dakota.