Family Law Attorney in Cypress, Texas
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What You Need to Know About Divorce & Child Custody
A divorce or custody battle is a life-altering experience. Feelings of extreme emotional distress and anger are normal reactionary responses, but it is important to remember to remain calm. Decisions made now, at this moment, will affect your life for years to come.
As an experienced Houston family law attorney, I understand and am here to provide viable solutions, compassionate guidance and assertive representation to streamline your legal process. Your legal issue is my top priority, and I will work tirelessly to achieve a resolution that is right for you.
Don't wait to reach out to my firm in Cypress, Texas, to put my knowledge and skills to work for you.
Learn More About Wills & Trusts
A Will is a legal document that allows a person to express how they want their property and other assets to be distributed at death. The probate court usually oversees the actions of the executor to ensure he or she carries out the Testator’s wishes specified in the will. The process of probate, however, can be long, arduous and costly.
A Trust, like a will, is also an estate planning document used to transfer assets to beneficiaries. However, a primary difference between a Trust and a Will is that while a Will takes its first breathe of life at death, a Trust breathes life at creation.
Advantages of Creating a Trust Over a Will
1. Avoid Probate
Probate is the process of administering to the estate of the deceased in accordance with their will, all puns intended. In a nutshell, this process allows the assets of the deceased to change ownership to that of the beneficiary. In order to do so, a petition must be filed in probate court so that the probate court can determine whether the will is valid. If the will is determined to be valid, a Personal Representative is appointed.
There can be several obstacles to the court determining that the will is valid. Sometimes beneficiaries wish to challenge the will because they feel that they should have received more than what was designated. Other times, non-beneficiaries may wish to challenge the will because they were not included in the will but feel that they should be.
Other challenges include an improperly executed will, a challenge to the mental capacity of the testator, or an allegation that the will was made under duress. Meanwhile, while probate is pending, assets cannot be managed in any manner and bills, if any, cannot be paid. This process can be long, arduous and costly.
A Trust bypasses the entire probate process. Assets owned by the Trust are immediately transferred and made accessible to the successor declared by the Trust, and there is no cost expensed by the Trustee receiving the Trust.
2. Creditor Protection
Examples include but are not limited to unpaid credit cards, bankruptcy, business loss, lawsuit, and a divorcing spouse. When assets are distributed to a beneficiary of a will that is suffering through any of the above, a will cannot provide sufficient protection if any to avoid the assets being lost or at a minimum, greatly diminished.
A Trust can insulate the beneficiary assets by maintaining ownership of the asset in the name of the Trust. The beneficiary can access the assets in accordance with the instructions left by the Trust creator. The beneficiary may also serve as Trustee thereby allowing the beneficiary an opportunity to manage their own inheritance. In this manner can the Trust creator ensure that assets left to the beneficiaries will be available for use by the beneficiary in the manner in which the Trust Creator chooses, or in any manner, the Trust beneficiary chooses, depending on the terms of the Trust.
3. Reduction or Elimination of Estate Taxes
Federal estate taxes are expensive and must be paid by the estate if the net value when you pass is greater than the exempt amount set by Congress. These expenses must be paid in cash and generally are due roughly 9 months after you die. If the funds are not readily available, it may be necessary to liquidate assets in order to cover the cost of these taxes.
However, you can reduce or eliminate your estate taxes by using both estate tax exemptions if you are married, removing assets from your estate before you die by the creation of a Trust, and buying life insurance to cover the costs of any potential outstanding estate taxes.
4. Protect Governmental Benefits for Those with Disabilities
Oftentimes, individuals with disabilities qualify for governmental assistance including SSI, Medicaid, and subsidized housing. Leaving assets to an individual that falls in this category can be problematic because acquiring assets through a will in a lump sum may actually disqualify your loved one from receiving this governmental aid, or transferring the inheritance into a Trust of which the state becomes the beneficiary upon the death of the beneficiary.
The creation of a Special Needs Trust can avoid all of these potential issues. A Special Needs Trust is specifically designed for the benefit of those with physical and/or mental disabilities. This particular trust is created with the specific needs and future of the beneficiary in mind. Because the Trustee is completely in control of the Trust, government program administrators ignore these trust assets when considering eligibility.
Additionally, if the disabled person inherits assets or prevails in a successful lawsuit, the proceeds can be deposited into the trust without concern that governmental assistance will be adversely affected.
5. Administer Assets for Minor Beneficiaries without Court Intervention
Leaving a minor money in a will creates an administrative nightmare. Minors possess no legal capacity to receive assets, and a parent cannot step in in this capacity unless or until a court says they can. In this instance, the court will appoint an individual who can receive and manage those funds on behalf of the child until the child reaches legal age.
The appointed individual will also be required to complete an annual reporting each year to reflect how much and in what manner funds were expended on behalf and in support of the minor beneficiary. A guardian ad litem is also appointed to make sure the appointed individual is doing what they are supposed to do with regards to the beneficiary’s funds. Once the child reaches majority at age 18, they are free to do as they wish with the remaining proceeds, regardless of whether they are financially ready to handle these finances or not. Fast cars, extravagant Spring Breaks, and endless parties come to mind.
Creating a Trust to manage the assets of the minor child or young adult not only keeps the assets out of the court, but it can also control the release of assets until the minor or young adult is of an age to better be able to financially manage the resources they have inherited.
These are just a few of the ways in which a Trust is superior to a Will but do not discount the importance of a Will either. Trusts are wonderful and admittedly, superior estate planning tools that save the beneficiary a lot of financial heartaches generally formed by the receipt of assets, but Trusts cost significantly more to create. If an individual has limited resources or has no interest in conveying any of the benefits discussed above, then a Will is the way to go.
Beware of the Probate Process
Although the Will still has to pass through Probate, a process by which the beneficiary will likely pay, it is still a shorter process than when the Testator leaves no Will at all. Remember, if you leave no official document that expresses how you want your assets to be divided, the Court through Probate, will do it for you, and you risk individuals you never intended to receive, from taking all.
The Benefits of Estate Planning
The importance of creating a will and/ or trust cannot be over-stressed, or understated and can be summed up in three words: Peace of Mind. Both a Will and a Trust are estate planning instruments utilized to ensure that your property and other assets go to the people and or organizations you wish to benefit. However, there are distinct advantages to creating a Trust that a Will simply cannot provide.
Based in Cypress, Texas, the Delaville Law Firm, P.C. assists families across the Houston area with their estate planning needs. Reach out today!