What is the Difference Between a Will and Revocable Living Trust?
The single greatest point of confusion for our clients is whether they should transfer their assets into a revocable living trust. Revocable living trusts (commonly referred to as RLTs) have surged in popularity in recent years and have quite a bit of buzz surrounding them. Revocable living trusts have a number of advantages and disadvantages, and whether they are right for you depends on your situation and estate planning goals. Below, we break down the differences between wills and trusts, discuss the advantages and disadvantages to each, and answer some common questions we get when deciding between a will and a trust. What is the Difference Between a Will and a Trust? First and foremost, it’s important to understand the difference between a will and a trust. What is a will? A will is a written document containing your instruction for distributing your assets when you are gone. Wills generally include the appointment of an executor, who is given the authority to carry out the distributions contained in the will. Ideally a will in Texas will also allow for an independent administration that minimizes the Court’s role in probating the estate. Importantly, wills are not effective until you pass.
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Who can be an Independent Executor or Administrator in Texas?
In Texas, the Court may appoint an independent executor or an independent administrator only to “qualified” representatives. Wait, that’s pretty subjective! What makes a person qualified? The Texas Estates Code defines who may be an independent executor or administrator. A person is qualified to serve if: They are not incapacitated, temporarily or permanently; They have not been convicted of any felony under federal or state law; (a) They are a resident of Texas, or (b) They are a non-resident of Texas, but have appointed a resident of Texas to accept service of process in all proceedings related to the Estate and have filed that appointment with the Court; If the representative is a corporation, the company must be authorized to act as a fiduciary in Texas; and The court does not find the person nominated as the representative to be “Unsuitable.” What does it mean to be unsuitable in the eyes of the Court? The Texas Estate Code does not define “unsuitable.” A suitable representative generally means that the person nominated is not hostile to the court, the person appears to understand the responsibility they are accepting, and the person does not have a clear conflict of interest.
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Certificate of Trust: What is it, and Do I need it?
A Trust created during your lifetime (a revocable living trust) is an important part of any Estate Plan. Trusts can be used for asset protection, tax benefits, to simplify probate and to plan for the financial security of loved ones in the future. But there’s more than simply having a Trust – you also need to understand the Certificate of Trust. What is a Certificate of Trust? A Certification of Trust is a legal document that can be used to certify both the existence of a Trust, as well as to prove a Trustee’s legal authority to act. It’s shorter than the actual Trust document, and it can offer pertinent information without making every aspect of the Trust public. In order to facilitate a transfer of real property into a trust, financial institutions may require the trustee to furnish a certification of trust. In addition, third parties may request a certification of trust to confirm the trustee has the authority to transfer real property out of the trust. How is a Certificate of Trust Used? A trustee can use a certification of trust to certify to third parties that the trustee has authority to administer the trust while keeping
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