Do I need a trust? Wichita Falls Estate Planning Attorney answers

No, but it depends on your family’s situation.

 For starters, what is a trust? Maybe you’ve heard of “trust fund kids” or think of Scrooge McDuck diving into his money vault. A trust is simply a relationship between three people: a property owner, a trustee, and a beneficiary.

 Here’s an example: Imagine you’re a grandparent who likes to give money to your grandson for Christmas. Your grandson opens the envelope, politely smiles at the card, and goes straight for the cash. But suppose he is 5 years old. What’s a 5-year-old going to do with 20 bucks? So your grandson hands the money to his mom (your daughter) and continues opening more presents. In many ways, you actually gave $20 to your daughter “in trust” for the benefit of your grandson. This relationship between having the money but not owning the money (your daughter) and owning the money but not having the money (your grandson) is a “trust.”

 Now suppose you want to give all your property (house, car, bank account, green crystal frog, etc.) to your children when you die. You could create a “revocable family trust” and give your property to yourself “in trust” for the benefit of your children. The idea is that when you die, “you” don’t own any property (you just hold it “in trust”) and avoid government involvement (through what’s called “probate”).

 If you’re scratching your head right now, you’re in good company. Like I said, no one “needs” a trust; it simply depends on your situation.

 My general rule of thumb is that a family with less than $500,000 in assets does not need a trust. Why? Because we have much more convenient and more affordable ways to ensure your property goes to your children without setting up a trust. There are four major caveats to this: (1) if you have children younger than 25; (2) if you have a special needs child; (3) if your goal is to leave a financial legacy for your grandchildren; and (4) if you anticipate family drama/fights when you die. If you’re in one of these situations, then we would want to set up a trust. Why? (1) If you die next week, we can’t give your house to your kid (like the 5-year-old with cash); (2) we don’t want to interfere with any government benefits for your child; (3) a trust is a great structure for growing wealth for multiple generations; and (4) we can protect your assets and create a robust plan for distribution. Without a proper plan in place, then the government will get involved. 

 As always, this is not legal advice. Contact our office at (940) 264-3041 or go to www.TexasFamilyWills.com for more information.