In prior articles, we have considered that planning in Texas can be done with a last will and testament or a revocable living trust. Which is best for you? A Texas will, when probated, gives an executor authority to transfer all assets in the State of Texas which includes personal property regardless where the financial institution is, and real property in Texas. You hear the limitation. Real property in another part of the country, in another state, cannot be transferred by a Texas executor. The executor would have to go to that state and re-probate the will. One probate in Texas is not bad. Two probates is too many. So when two probates would be necessary, we almost universally recommend a revocable living trust.
Also some people have assets, especially mineral royalty interests, that are difficult to transfer and repetitive transfers of those assets can be very expensive as we go from spouse to spouse to children to grandchildren. To avoid multi-generational transfers, we will create a revocable living trust even if all the mineral interests are in Texas because it will be cheaper for the long run by far.
There are other special reasons why some people want a revocable living trust because it can provide a higher level of privacy as to the nature of the plan because the trust is never filed with the court and the nature of the assets. However, that is not the most common other reason people choose a trust. A more common reason is that there are family dynamics that make a dispute more likely. The disputes are more likely to start when there is an incapacity and guardianship is a higher likelihood.
As I will address in later posts, powers of attorney are a very effective, simple way to avoid guardianship. However, powers of attorney are not very durable. When there is a dispute, the powers of attorney tends to fail and guardianship, the more expensive alternative, is the result. So when, for example, beneficiaries are simply oil and water and likely to be in dispute with whoever is controlling the affairs of an incapacitated person, we need a more robust form of planning than powers of attorney, and that robust planning vehicle is a revocable living trust.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, specific tax, legal or accounting advice. We can only give specific advice upon consulting directly with you and reviewing your exact situation.
