Wills & Trusts - Trust Planning

One of the primary objectives of estate planning should be to make individuals “invisible,” so to speak, for purposes of public knowledge regarding their accumulated wealth and assets. Unfortunately, this family confidentially will be materially breached upon at death, as the filing of the individual’s Will in the public records will result in the contents of such Will becoming available for review by any person that requests a copy. Therefore, the probate of a Will not only will result in the disclosure of your assets and the value of these assets, but also the provisions governing the ultimate distribution of these assets (i.e. third parties will now know who received the various assets and the underlying value of these assets). To avoid this breach of family confidentiality, we typically recommend that individual’s revise their estate plan documents to use a “Pour-Over” Will that will leave the majority of their assets (i.e., assets other than personal items left directly to the surviving spouse) to a separate Family Trust for the benefit of their spouse, followed by their children and/or other descendants. By separating the Will and your Family Trust into two distinct documents, we avoid disclosing the trust provisions detailing the ultimate distribution of the client’s assets.

In addition, any assets owned by the Family Trust at the time of the individual’s death will no longer be disclosed in probate proceedings and will not become part of the public records. Further, by funding the trust prior to death with assets, the individual can continue to have control over those assets yet at the same time potentially avoid a probate completely. The “pour-over” will is available if any assets have been omitted from the process of re-titling assets into the family living trust, but if we make sure all assets have been re-titled properly into the name of the trust prior to death, then probate becomes unnecessary.

Additionally, trust planning should take full advantage of the generous liability/creditor protection which may be afforded to trust beneficiaries under current Texas law. More specifically, we do not want all of our client’s accumulated wealth to be distributed outright to the surviving spouse or their children upon your death, which would subject those assets to the potential claims of creditors, certain IRS tax claims, bankruptcies and/or future divorcing spouses.

By utilizing a Family Trust that contains provisions that allow the surviving spouse and subsequently, each child, to continue to hold his or her inheritance in trust, the surviving spouse and the individual’s children can continue to enjoy the benefit of the assets of the Trusts without forgoing liability protection. With respect to the ultimate disposition of your assets to children or other alternate beneficiaries, we recommend making each child the sole trustee of his or her separate Trust at a predetermined age (i.e., age 35 or 40), and giving such child the option to continue to hold his or her assets in the child's respective Trust for maximum liability protection. Essentially, this would accomplish the intent of providing each beneficiary access to and control of his/her separate Trust at a predetermined age, while providing each beneficiary increased creditor/liability protection from future creditors, tax liens, bankruptcies and/or divorcing spouses.