More than ever, wealth is exposed. Lawsuits can come out of nowhere. Storms are gathering on the economic horizon. Markets change and what was once secure now feels vulnerable. If you’ve built up a lot of wealth, you need a fortress, not just a safe.
Markets change and what was once safe now feels insecure. If you’ve built up a lot of wealth, you need a fortress, not just a safe. Here’s where Dominion comes in.
We are the asset protection architects for ultra-high-net-worth individuals and families. We know the difficult issues you are dealing with and we have the experience, the global reach and the unrelenting commitment to protect your assets.
Today, we’ll focus on a powerful tool in the asset protection arsenal: Specifically, the irrevocable trust, as it relates to residents of Texas.
Understanding Irrevocable Trusts
An irrevocable trust offers you a powerful legal structure to protect your assets and how they are used. Unlike a revocable trust, which you can change or dissolve, an irrevocable trust is, as the name suggests, permanent.
It is this “unchangeable” nature that makes it so valuable for asset protection. Once assets are placed in an irrevocable trust, they are no longer yours to own but rather are under the control of a trustee. That makes them generally insulated from creditors, lawsuits and even divorce proceedings.
An irrevocable trust also provides tax advantages, but those vary on the particulars of the trust, the tax laws when it is created and the laws when the property becomes part of the trust. However, it’s important to seek advice from a tax professional.
The Texas Property Code recognizes irrevocable trusts in Texas. There is also section 112.001, which specifically sets out the ways in which one creates the trust and therefore the legal framework within which they will be established and operated.
We at Dominion understand the unmatched power of irrevocable trusts to protect wealth. Irrevocable trusts are almost always a cornerstone of the asset protection plan when we work with clients to develop asset protection strategies. We think they provide the best and most comprehensive protection available.
Why Choose an Irrevocable Trust in Texas?
An irrevocable trust is the best option for those with significant wealth in Texas. It’s a powerful shield first and foremost. Once you place assets in the trust, they are no longer truly yours. They are the trust’s, and are usually not subject to creditors, lawsuits or even a nasty divorce.
Once assets are placed in the trust, they are no longer truly yours. They belong to the trust itself, meaning they are generally beyond the reach of creditors, lawsuits, and even a difficult divorce. It offers a level of security that other strategies can’t even finish off.
Look at it like this: No matter what you’re facing today or years from now, you’re protecting your wealth. In today’s uncertain legal and economic climate, this is particularly important.
There are times when we lose our jobs, get sued for no good reason, our new business venture does not go our way, and so on. This is hardest of all when even the most stable markets are volatile. An irrevocable trust is a buffer that protects your assets from these outside threats.
Potential Tax Benefits
The main advantage of the irrevocable trust is asset protection, but it can also provide tax benefits. It can be structured to minimize estate taxes and even to help to reduce your overall tax burden. Less estate tax is something that can be especially useful for those who are high net worth as Texas has significant estate tax.
Tax laws are complex and ever-changing, however. As always, we always recommend working with a qualified tax advisor to fully explore the specific tax implications to your situation. With a well-structured irrevocable trust and some expert tax planning, you can have a powerful combination to preserve your wealth.
Leaving money is one thing, but thinking about who is going to take care of your kids after you’re gone is a whole other thing.
Estate Planning and Generational Wealth
Estate planning also uses irrevocable trusts. They enable you to manage who gets your assets after your lifetime so that your legacy endures in a way that you would like it to. You can care for your nearest and dearest, put money toward charity and even set up trusts to which your wealth will remain devoted for generations.
Other estate planning tools simply do not allow for this level of control. An irrevocable trust allows you to create your legacy and take care of future generations, even when you’re not around to handle your assets personally.
Freedom in Your Lifestyle and Peace of Mind
Perhaps most importantly, an irrevocable trust gives you peace of mind. When you know your wealth is protected, no matter what, you can focus on what matters. You’ve earned your assets. They should be safe and secure, and you should have confidence that they are.
It’s invaluable peace of mind. This alleviates anxiety and frees you to be joyous, safe from fear of loss or legal challenge to you or your property. An irrevocable trust is an investment in your future and the future of your family.
Steps to Set Up an Irrevocable Trust in Texas
It is not easy to create an irrevocable trust. You can’t do it overnight. It can be a simple, rewarding exercise, however, with the right guidance. Here’s a step-by-step guide to help you tackle the process of setting up an irrevocable trust in Texas:
Find an Experienced Attorney
Making an irrevocable trust is a big decision that will have long term consequences. It is also extremely important that your legal team has deep expertise in Asset Protection and Trust Law.
Make sure you find attorneys that are familiar with the nuances of Texas law and can show you proven success in drafting successful, ironclad irrevocable trusts. They should be able to walk you through every step of the process so that your trust is structured to meet your particular needs and objectives.
Choose the Right Trustee
As the fiduciary of the trust, the trustee has very significant roles of management and administration of the trust. As a general rule, it’s usually ideal to pick a trustee who is a neutral third party for your optimal asset protection. Once you understand this point, this works to a clear distinction between you and the trust assets and thereby enhancing the protection it provides to you.
When it comes to naming your trustee, choose someone who you trust implicitly, who knows about financial matters and who will honor your wishes. Your trustees, as they are known, will manage the trust assets, make distributions to the beneficiaries, and keep the trust running as it is laid out.
Determine Your Beneficiaries
Consider who you want to benefit from the trust. This could be your spouse, your children, your grandchildren, or other loved ones. You can also name charitable organizations as beneficiaries.
You have to decide how and when distributions will be made. Distributions can be specified by ages, milestones or conditions, so your wealth is used in accordance with what you value and intend.
Draft the Trust Documents
Legal documents that form the trust must be carefully drafted so that they are comprehensive, correct, and legally sound. This is where your legal team’s expertise comes in. Working with you, they will draft a trust agreement that expresses how the trust works, what powers the trustee, and what rights the beneficiaries have.
Language must be precise and detail must be paid careful attention to. The foundation of a successful irrevocable trust is a well-drafted trust agreement.
Fund the Trust
Once you have finalized the trust documents, you’ll transfer assets into the trust. This is called funding the trust. Obviously, real estate, investments, even business interests are just a few of the types of assets one can tuck away in an irrevocable trust.
Your legal and financial advisors can tell you which assets are most suitable for your trust and take you through the transfer process. For the trust to work, you need to properly fund the trust.
Choose Dominion to Create Your Irrevocable Trust in Texas
To protect your wealth you will need a proactive and strategic approach. That strategy can be built on an irrevocable trust. If you’re ready to learn how an irrevocable trust can protect your assets and give you lasting peace of mind, we invite you to contact Dominion for a consultation.
With our team of experts at the ready, you can feel free to ask any questions you may have, talk through any particular needs you wish to accomplish with this irrevocable trust, and we will walk you through the process of setting one up.
Trusted by capital savvy families worldwide as leaders in asset protection and wealth governance, our mission is simple: To help you safeguard your family’s financial future for generations to come.
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