Trust Lawyers in Waco, Texas

When it comes to securing your assets and planning for the future, trusts are an essential tool in estate planning. Trusts offer numerous advantages, from minimizing taxes to protecting assets from creditors. 

In Texas, creating a trust involves understanding specific legal guidelines and how they can best serve your interests. When you work with our team at Pakis, Giotes, Burleson & Deaconson, P.C., we’ll walk you through the basics of trusts, their types, and how they can be utilized for both personal and business purposes.

What Is a Trust?

A trust is a legal arrangement where one party, known as the trustee, holds and manages assets for the benefit of another party, called the beneficiary. Trusts are created by a legal document known as a trust agreement or declaration. The person who creates the trust is called the grantor or settlor.

In Texas, a trust can be used to manage various types of property, including real estate, financial accounts, and business interests.

When establishing a trust, the grantor outlines specific instructions regarding how the assets should be distributed, who will receive them, and under what circumstances. Trusts can be either revocable or irrevocable, depending on the grantor’s intentions.

Types of Trusts in Texas

Several types of trusts can be created under Texas law. The most common ones include:

• Revocable trusts: This is the most flexible type of trust. As the name suggests, the grantor can alter or revoke the trust at any time during their lifetime. The grantor retains control over the assets, and once they pass away, the trust becomes irrevocable. This type of trust is typically used for estate planning to avoid probate and streamline the transfer of assets upon death.

• Irrevocable trusts: Unlike a revocable trust, an irrevocable trust can’t be changed or revoked after it’s been created, except under very specific circumstances. Once the trust is established, the grantor loses control over the assets, and they are no longer part of their estate. Irrevocable trusts can be useful for reducing estate taxes, protecting assets from creditors, or providing for special needs beneficiaries.

• Living trusts: This type of trust is created during the grantor’s lifetime and is often used to avoid probate. The grantor can serve as the trustee while they’re alive and name a successor trustee to take over after their death. Living trusts can be revocable or irrevocable.

• Testamentary trusts: These trusts are created through a will and only take effect after the grantor passes away. Testamentary trusts can help manage and distribute assets according to the grantor’s wishes, and they can be designed to provide for specific needs, such as for minor children or a loved one with special needs.

Each type of trust serves a different purpose depending on the goals of the grantor. Trusts are highly flexible tools that can be tailored to meet specific needs, whether for individual or business purposes.

Trusts and Business Succession Planning

For business owners, trusts can be a crucial part of succession planning. Succession planning is the process of preparing for the eventual transfer of ownership and management of a business. If you're a business owner, you likely want to protect your business from uncertainty during your lifetime and confirm its smooth transition after your death or incapacity.

Using trust to manage the succession of a business allows you to control how and when your business is passed on to the next generation or to another party. It can also help protect the business from creditors, preserve privacy, and avoid probate.

A business trust can hold ownership interests in a company, such as shares of stock or membership interests in an LLC. This structure can make certain that the business continues to operate smoothly even after the death or incapacity of the original owner.

The trust can specify who will take over the business and under what conditions. Additionally, the trust can outline how business income and assets will be managed and distributed to beneficiaries.

Key Benefits of Trusts in Estate and Business Planning

Trusts offer numerous advantages, making them an optional tool in estate and business planning. Some of the key benefits include:

• Avoiding probate – One of the primary reasons people create trusts is to avoid the probate process. Assets held in a trust bypass probate, which can speed up the transfer of assets to beneficiaries and keep the details private.

• Tax benefits – Certain types of trusts, especially irrevocable ones, can provide tax benefits by reducing the taxable value of your estate. By transferring assets into an irrevocable trust, you remove them from your taxable estate, potentially lowering estate taxes.

• Control over distribution – Trusts allow you to dictate how and when your assets are distributed. For example, you can specify that assets will be distributed to beneficiaries over time, or set conditions for the distribution, such as requiring a beneficiary to reach a certain age.

• Continuity for your business – For business owners, trusts offer a way to set up the smooth continuation of your business after your death or incapacity. With a well-drafted business trust, your company can continue to operate without interruption, and your assets can be passed on according to your wishes.

By establishing a trust, you can create a lasting legacy, protect your assets, and make sure that your wishes are followed after your death, whether in terms of personal assets or business interests.

An Overview of Trusts in Business Ownership

When you own a business, you may face additional challenges when it comes to estate planning. Business ownership often involves complicated legal structures, partnerships, and agreements that need to be carefully addressed. Trusts can simplify this process by holding your business assets in a legal entity separate from your personal estate.

In Texas, a business trust can serve as a way to manage and protect the interests of your business. Whether you're a sole proprietor or a partner in a business, placing your business assets in a trust can provide several advantages:

• Continuity of management – If something happens to you, the trust makes sure that the management of the business continues without interruption. The successor trustee can step in and handle the operations, so your business doesn’t face unnecessary delays or disruptions.

• Tax efficiency – Business trusts can help reduce the estate taxes on your business by removing assets from your personal estate. This can be especially beneficial for family-owned businesses, where multiple generations may be involved in the operation.

• Smooth transfer of ownership – A trust allows you to dictate how ownership will be transferred to the next generation or other stakeholders. The trust can specify who takes over the business and how the transition will occur, making sure that your wishes are followed.

Creating a business trust in Texas requires careful consideration of both business and personal objectives. A well-structured trust can provide peace of mind, knowing that your business will be taken care of, no matter what happens.

How We Can Help You With Trusts

At Pakis, Giotes, Burleson & Deaconson, P.C., we understand the importance of creating a trust that aligns with your personal and business goals. Whether you’re looking to protect your assets, plan for the future, or manage your business interests, we can guide you through the process of setting up a trust under Texas law.

We have years of experience helping individuals and business owners create customized trust plans that fit their unique needs. Our team can assist with drafting trust documents, selecting the right type of trust, and confirming that your wishes are legally binding. We will also help you address any concerns about tax implications and business succession planning.

Trusts are an effective tool for estate and business planning, offering benefits such as asset protection, tax savings, and continuity of management. Whether you’re looking to protect personal assets or set up a smooth transition for your business, a trust can help you achieve your goals.