Wills are probably the most popular testamentary instrument, but they are not the only option. An increasing number of people every year add trusts to their estate plans. Trusts can benefit those with special needs family members, blended families and adult children in difficult marriages.
There are a host of different scenarios that might make a trust a smart inclusion in an estate plan. However, a trust is only as useful as the resources that fund it. How do people typically fund a Texas trust?
With immediate property transfers
Many grantors fund a trust by transferring property to it while they are alive. People may execute a deed so that the trust owns their home. They may also use financial resources to fund the trust. Those assets may have protection from creditor claims and probate issues after someone dies.
With life insurance
Those who do not have many resources on hand but who want to provide for their loved ones after they die may use a trust to distribute life insurance proceeds. That way, it is possible to control what people do with the life insurance, not just who receives the life insurance. People can create a trust and fund it without giving up control over their property while still alive.
With pour-over wills
Some people include special wills in their estate plans. A pour-over will can arrange the transfer of someone’s personal property to a trust after their death, although those assets usually pass through probate court.
There are drawbacks and benefits to each approach, and some people use a combination of all three methods to leave the most profound legacy possible. Ultimately, properly funding a trust can be as important as the decision to add one to an estate plan in the first place.