A revocable trust is only as good as its funding. Texas law requires trust property to create one, and your probate-avoidance plan should cover the homestead and vehicle. In the Shelby County Courthouse, a ceremonial gavel rests on the judge's bench.

Q: If I create a revocable trust and put my financial assets in it, do I have to file a separate income tax return for the trust? Do I have to include my house and my auto in the trust?

A: Some lawyers recommend that you use your Social Security number for a revocable trust, while other lawyers suggest that you get a separate tax number. Either approach is acceptable.

Both numbers have the same number of digits and will therefore be accepted at banks and other businesses. Also, revocable trusts are written so that all of the trust income is taxable to the grantor of the trust, therefore having the income be taxable directly to the grantor of the trust produces the correct tax result.

Advertisement

Article continues below this........

© Houston Chronicle