Our Administration of Trust attorneys in Dallas at Pyke & Associates not only creates trusts for our clients, we assist in the administration of trusts as well. Clients needing help with trust administration fall within a variety of categories:
- They need help funding the trust. “Funding” is the transfer of assets into the trust. Often, another attorney has assisted in creating the trust but not explained or assisted in the process of funding, and clients need to consult with an attorney to determine how to properly move their assets into the trust. For many trusts, fully funding the trust is vital to an estate plan working properly.
- Establishing a trust created by a will. Trusts created by a will are called testamentary trusts, and although the trust document is the will itself, the trust is not formally funded and created until the will is probated. Pyke & Associates provides assistance advising clients how to establish and fund these new trusts, including what tax compliance steps will be necessary.
- Issues with running a trust. A client who is serving as a trustee may have question on how to interpret a trust, the proper way to distribute, problems with beneficiaries, or other issues that have arisen since the trust was created. We are here to provide that legal advice and counsel.
- Trustee non-compliance. Often, we are consulted by beneficiaries of a trust concerned that the trust is not being operated properly, the trustee may be overcompensating themselves, or the trustee is investing the assets poorly. Any beneficiary of a trust, even a future beneficiary, has the right to request an accounting and demand proper compliance by the trustee.
- Contesting a trust. Just as wills can be contested, trusts also can be contested either because the trust maker was being manipulated by others or lacked capacity to enter into a trust agreement. Pyke & Associates advises and assists clients in these trust contests.
Pyke & Associates has vast experience in advising clients on avoiding trust issues and disputes, or rectifying those disputes when they arise. Our broad experience in both creating trusts, funding trusts, defending trusts, and contesting trustees’ actions gives us a broad and unique experience to properly advise clients.
Do You Have an Unfunded Revocable Trust?
A Revocable Living Trust is a useful estate planning tool that solves problems for some people, including the ability to avoid probate when probate might be excessively cumbersome or expensive. The trust avoids probate if all the trust maker’s assets are transferred into the trust prior to death, so that the trust rules determine what happens to the assets instead of the rules of probate. The key to making a Revocable Living Trust work is that it be funded, i.e., the trust maker’s assets are transferred into the trust. With real estate, this requires a deed. Bank account names need to be changed into the trustees and trust. The same is true for most investment accounts and other titled assets, like automobiles, boats, and airplanes.
Unfortunately, many people with a Revocable Living Trust did not receive good legal advice when they created the trust, they did not understand the funding requirement, or they never completed the funding requirement. If you have a Revocable Living Trust, ask yourself this question: Do I have assets titled in my individual name instead in the name of the trust? If you don’t know, simply look at the appraisal district records for any real property, the title on your bank or investment statements, and your vehicle titles. If any of these are listed in your individual name, you do not have a fully-funded trust. Unless this asset was specifically excluded for the trust, you may need to fund that trust.
For many asset classes, it does not require a lawyer to transfer the assets into the trust. That can be accomplished by a visit to the bank, a call to the broker, or a visit to the tax office to change vehicle titles. A lawyer would be required to draft an appropriate deed, transfer mineral interests, or update entity records to reflect the new ownership of an LLC, or a family corporation. If you find you have a partially funded or unfunded trust, please take the steps to fund the trust, or consult an attorney as to why these assets should or should not be in the trust.
How do trusts work in your estate plan?
The basic purpose of a trust is to place authority over assets in a person other than the intended ultimate beneficiary of those assets. The goals to be achieved with trusts in place can range from creditor protection of the beneficiary, providing for an incapacitated beneficiary, preservation of a beneficiary’s government and need-based benefits, to general postponement of and greater control over the beneficiary’s receipt of their inheritance. There are various types of trusts, such as a living trust, effective during your life, or testamentary trust, effective upon your death via the terms of your Last Will and Testament, and revocable or irrevocable trusts. Including a trust in your estate planning is not a one size fits all decision; they should be carefully considered and thoroughly discussed with your estate planning attorney to tailor trust terms to your needs.
Attorneys at Pyke & Associates are well versed in these concepts and experienced in consulting with clients about the right fit for their estate plans. Contact us for a free consultation.
Please leave me my inheritance in a trust
Trusts are commonly used in estate plans to leave assets to minor children, incapacitated beneficiaries, or spendthrifts. To avoid the expense of guardianship for a minor, a trust is a necessary part of the estate plan for that beneficiary. Trusts are used for young adults because although the legal age of majority in Texas is 18, I have yet to meet a parent who agrees with that definition! So, trusts are often extended until 25 or 30.
But what if your beneficiary is healthy, financially stable, and manages their money well? Shouldn’t you just give these beneficiaries their money? As for me, I want any gifts I receive in a trust.
At Pyke & Associates, we usually recommend a trust for the estate beneficiaries, because we can create the trust to protect the assets from many of life’s uncertainties. Most notably, a well-drafted trust can protect assets from creditors, from division in divorce, or seizure by the government to pay for medical expenses otherwise covered by Medicaid. An individual cannot create a trust for themselves that does these things, so we cannot leave the money directly to the beneficiaries and simply allow them to create a trust for themselves, waiting to see if negative situations arise. While it is always desirable to create a trust for those with serious medical issues or spendthrifts, we never know what the future holds. Our crystal balls are no better than yours. Planning is about anticipating what might happen.
At Pyke & Associates, we encourage planning that protects assets from medical emergencies, divorce, lawsuits, or other potential adverse actions for our beneficiaries. Life throws too many curveballs to assume that everything will work out well for your beneficiaries. Estate planning should be for the long term, and in the long term, almost anything can happen. If your will has a standard trust for minor children that terminate when they are 25, we highly recommend that you review and modify your estate plan.