A living trust and a will serve different purposes in Texas estate planning, each with its own benefits and limitations. A living trust allows assets to bypass probate, offering a smoother transition of property to beneficiaries, while a will outlines asset distribution but typically requires probate court approval. Texas law recognizes both options, but factors like cost, complexity, and control over assets during one’s lifetime influence which may be more suitable. Understanding how Texas inheritance law apply to living trusts and wills can help you make informed estate planning decisions.
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What Are Living Trusts and Wills?
A will is a legal document that dictates how your assets should be distributed upon your death. It names an executor to oversee the distribution and allows you to name guardians for any minor children. However, a will must go through probate court after you die, which can be a lengthy and expensive process.
A living trust also designates how to distribute your assets when you pass away. But it does so by transferring asset ownership to the trust while you’re still alive. A trustee then manages the assets on behalf of the eventual beneficiaries. Living trusts avoid probate because their assets are not part of the probate estate. Living trusts can be revocable, meaning you maintain control over the assets and can modify terms. Irrevocable trusts can’t be changed once made but provide tax advantages.
Living Trusts vs. Wills in Texas: Key Differences
Choosing between a will and a living trust in Texas depends on various legal and financial considerations. While both serve to distribute assets after death, their structure, legal process, and impact on beneficiaries differ significantly.
Probate and Court Involvement
Texas does not follow the Uniform Probate Code, meaning its probate process can be more complex than in states that do. However, Texas does offer an independent administration process, which can simplify probate if the will includes specific language allowing it. Despite this, probate can still take months or longer, particularly for larger estates or those involving disputes. A living trust bypasses probate entirely, allowing assets to be distributed more efficiently without court involvement.
Community Property
As a community property state, both spouses generally share equal ownership of assets acquired during marriage. When creating a will, it is important to clearly outline how these assets will be distributed, as complications can arise if one spouse designates their portion to someone other than the surviving spouse. This can lead to legal disputes and potential challenges in probate court. A living trust offers an alternative approach by allowing spouses to transfer community property into the trust together, ensuring continuity of ownership and a smoother inheritance process without court intervention.
Privacy and Asset Protection
A will becomes part of the public record once it enters probate, meaning details about the estate, its assets, and beneficiaries can be accessed by anyone. A living trust remains private, protecting sensitive financial information. Additionally, an irrevocable trust can offer asset protection from creditors, lawsuits or other claims, whereas a will provides no such safeguards.
Incapacity Planning
A will only takes effect after death and does not provide any financial management in cases of incapacity. If a person becomes unable to manage their affairs, a court-appointed guardianship may be necessary. A living trust, on the other hand, allows a successor trustee to manage assets without court intervention, ensuring financial stability if the trust creator becomes incapacitated.
Estate Planning in Texas With Living Trusts and Wills
In Texas, compared to other states, living trusts are particularly useful for avoiding probate and dealing with community property. However, Texans still need a will for things like:
- Naming an executor to handle final affairs
- Naming guardians for minor children
- Leaving instructions for things not included in the trust
Take note: A pour-over will transfers any remaining assets into your living trust after death, consolidating estate distribution and preventing multiple probate proceedings.
Estate planners often advise Texas residents to consider:
- A living trust to avoid probate and handle community property
- A simple will to tie up loose ends and name executors/guardians
- Titling real estate, bank accounts and investment accounts in the name of the trust
- Naming the trust as your beneficiary on retirement accounts
Living Trusts and Wills in Action
An example may help illustrate how living trusts and wills are used in Texas estate planning. Consider two married Texas residents with a $2 million joint estate. Here’s how they could use a living trust and will:
- Create a joint revocable living trust and transfer the title of their home and other assets into it
- Name each other as the trustee while both are still alive
- After one spouse passes away, the surviving spouse assumes sole trustee responsibilities
- After both pass away, name their eldest daughter as the successor trustee
- Craft the trust terms to distribute assets equally to their three children after both parents have died
- Create simple wills naming one spouse as executor, the trust as beneficiary, and guardians for minors
This allows the couple to avoid probate, safely distribute their community property, and plan contingencies through the living trust. The wills handle the remaining basics.
Considerations and Potential Pitfalls in Texas Estate Planning
While living trusts and wills are valuable estate planning tools, there are several factors to consider before choosing one. Setting up a living trust requires an upfront financial investment, with costs typically ranging from $1,500 to $5,000, depending on complexity and legal fees. In addition to the cost, funding a trust requires retitling assets, which can be a time-consuming process. Failing to properly transfer assets into the trust can render it ineffective, causing those assets to go through probate.
Tax planning is another key consideration, as Texas does not have a state estate tax, but federal tax laws still apply. State-specific trusts may be needed to optimize tax benefits, particularly for high-net-worth individuals. Given the complexities involved, professional guidance is often necessary to ensure proper structuring.
Finally, estate plans should be reviewed regularly to reflect life changes such as marriage, divorce, the birth of children, or significant shifts in financial circumstances. A will or living trust that is outdated or incomplete can lead to unintended consequences, including disputes among beneficiaries. Regular updates help ensure that the estate plan remains aligned with current needs and legal requirements.
Bottom Line
In Texas, living trusts can be highly beneficial for avoiding probate and dealing with community property laws. A simple will can cover any assets or concerns not included in the trust. Be sure to review your plan every few years and after major life events. You can also work with professionals to help you find the right estate plan for you.
Tips for Estate Planning
- Financial advisors who specialize in estate planning typically stay up to date on the latest Texas laws and estate tax changes. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- If you have a large estate, plan ahead for possible state and federal estate taxes. Fortunately, there is a $13.99 million lifetime exemption in 2025, meaning only estates that exceed this limit are subject to federal estate tax.
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