When someone passes in Texas, their family often needs to sell or transfer property quickly. A living trust avoids probate, which allows assets to transfer in weeks rather than the months or years required by a will. This speed can prove vital for families managing real estate, businesses, or other properties.
A living trust is a legal arrangement that works like a well-organized filing system for your assets. You remain in charge as the trustee, managing everything during your lifetime while ensuring a smooth transition for your beneficiaries.
Unlike wills, which become public records in court, living trusts keep your affairs private. Setting up a trust typically costs between $2,000 and $5,000, but most Texas families find this investment worthwhile for the speed and privacy it provides.
Whether you want to protect your family home or pass down a business, these steps will help you build a trust that meets your needs.
Assessing Your Estate Planning Needs
Start the process by listing your major assets: your home, bank accounts, investments, and business interests. Texas law allows most property types to be held in a trust, though retirement accounts and other assets need special handling.
Consider your goals. Do you want to avoid probate for your primary residence? Provide for children or grandchildren? Create a business succession plan? Your answers will shape your trust’s structure.
An estate planning attorney can help you understand which assets belong in your trust. Professional guidance ensures proper structure for complex estates with multiple properties or business holdings.
Choosing the Right Type of Living Trust
A living trust is a comprehensive legal document that must be understood fully to set yourself up for success. Some Texas families choose a revocable living trust, which can be changed or canceled anytime. You can add property, remove assets, or change beneficiaries as your needs change.
The other option, an irrevocable trust, permanently locks in your choices. While it offers tax benefits for large estates, most families prefer the flexibility of a revocable trust.
A shared trust often works best for married couples. Single people or those wanting to separate certain assets typically choose individual trusts.
Settling an estate through probate court can bring stress and delays. A probate attorney can explain how different trust options protect your family from these challenges.
Drafting the Living Trust Document
Your trust document is the rulebook for managing and distributing your property. While online forms exist, they often need details required by Texas law.
Your document must identify:
- You, as the trust creator (grantor);
- Your chosen trustee;
- Your beneficiaries;
- Property going into the trust;
- Instructions for managing and distributing assets.
Clear instructions become crucial when dealing with family businesses or mineral rights. Lastly, your trust must comply with the Texas statute of fraud. An estate planning attorney can ensure your trust protects everything you value.
Selecting a Trustee
While you’ll likely serve as your trustee at first, you must name a successor trustee to take over when you can’t manage the trust or after your death.
Your successor trustee should:
- Handle money responsibly;
- Make fair decisions;
- Live close enough to manage property;
- Follow instructions exactly.
Many choose adult children as trustees, but neutral parties like banks or trust companies work better for complex family situations. Pick someone trustworthy who will treat all beneficiaries fairly.
Updating Beneficiary Designations
Some assets, like life insurance and retirement accounts, can pass to beneficiaries directly and might not be part of your trust. Review these designations carefully when creating your trust.
You might name your trust as a backup beneficiary for these accounts. This gives you more control over how the assets are distributed if your primary beneficiary dies before you. It also helps manage assets for young or disabled beneficiaries.
For insurance policies and accounts with large balances, talk with your estate planning attorney about whether your trust should serve as the primary or secondary beneficiary. This decision can affect taxes and how quickly your beneficiaries receive the funds.
Notarizing and Signing the Trust Document
Texas requires proper notarization to make your trust valid. Sign your trust documents in front of a notary public. Keep the original in a safe place and give copies to your successor trustee and attorney.
Certain assets, like real estate, need additional notarized documents to complete their transfer into the trust. Your estate planning attorney can ensure these transfers follow Texas recording requirements and avoid future legal challenges.
If you have an older will, update it to match your trust’s terms. This prevents confusion about assets you might acquire after creating your trust.
Maintaining Your Living Trust
Review your trust every few years or after major life events like marriages, divorces, births, or deaths. You might need to add new assets, remove sold property, or change beneficiaries.
Keep good records of what goes in and out of your trust. When you buy new property or open new accounts, title them in the trust’s name right away. Many trusts fail because people forget this step when dealing with new assets.
If you move to another state, have your estate planning attorney review your trust. While Texas trusts work in other states, some provisions might need updating.
Understanding Tax Implications
A revocable living trust doesn’t provide tax benefits while you’re alive since you still control the assets. You’ll report trust income on your personal tax returns just as you did before creating the trust.
After your death, however, trust planning may help your beneficiaries. Large estates benefit most — in 2024, estates for single adults worth more than $13.61 million face federal estate tax. While Texas has no estate tax, proper trust structure can reduce federal tax impact.
For complex estates or businesses, consulting a tax professional along with your estate planning attorney helps maximize benefits for your heirs.
Common Mistakes to Avoid
Many trusts fail because people create them but never transfer their assets — known as leaving the trust unfunded. Always complete property transfers and account changes right after creating your trust.
Don’t forget to name alternate trustees and beneficiaries. Life brings unexpected changes, and your trust needs backup plans. Also review your trust after major life events or buying significant assets.
Finally, resist the temptation to use generic online trust forms. Each family’s situation is unique, and working with experienced counsel protects what matters most. Local estate planning attorneys understand both Texas requirements and your specific needs.