Create a Living Trust in Texas
Create a Living Trust in Texas
A living trust in Texas allows you to use your assets during your lifetime and securely transfer them to your beneficiaries after your death. A revocable living trust (also called an inter vivos trust) offers a variety of benefits as an estate planning tool.
Living Trusts in Texas
A Texas living trust is set up by the settlor, the person who places the assets in trust. The goal is generally to place as many assets into the trust as possible. Some assets, such as retirement accounts and life insurance cannot be transferred. The assets in the trust are managed for your benefit while you are alive. You must name a trustee to do this, however most people name themselves for optimum control. You will also name a successor trustee who takes over after your death. The successor will continue to protect and manage trust assets and then disperse them to your beneficiaries according to your instructions. A revocable trust is flexible because you can alter it or even eliminate it whenever you wish. An irrevocable living trust cannot be altered.
A living trust Texas is beneficial because trust assets do not go through probate. Probate is a court process that reviews, verifies, and enforces a will. This can take many months (and since Texas has not enacted the Uniform Probate Code, the process is complex). There are fees applied by the executor, attorney, and the court. Because of the probate process, assets passed through a will cannot be distributed until probate has concluded. A trust avoids all of this red tape and allows you to pass assets to beneficiaries upon your death if you wish. A trust also can avoid probate in more than one state, as long as the assets owned in those states are included in the trust.
If your estate is worth less than $50,000 excluding homestead and other exemptions, it qualifies for a small estate proceeding that is faster and less expensive than probate. This process is also less costly than a trust, but does not provide the many benefits a trust does.
Do I Need a Living Trust in Texas?
Creating a living trust in Texas is a matter of personal choice, but many people find the benefits worthwhile. Your trust keeps your personal business out of the public eye. Wills must go through probate and become public record. A trust is not probated and does not become public record. Your beneficiaries, assets, and trust terms remain private. Trusts are also more difficult to contest than wills, providing greater security.
A living trust keeps you in control of your assets during life and after death. During your lifetime the assets are technically owned by the trust but you have total control over them and continue to live in your home and do whatever you wish with the assets. After you die, the assets remain in the trust where they are protected until the dates you have chosen for distribution to your beneficiaries. The trust allows for spaced out and thought out distribution, unlike a will which transfers assets as soon as probate concludes.
Your revocable living trust protects you should you become mentally incapacitated. All of your assets are already controlled, owned, and managed by the trust and a conservatorship proceeding is likely unnecessary. While a durable power of attorney can be rejected, a trust cannot be. Your financial life is protected by the trust.
Living Trusts and Estate Taxes in Texas
Although Texas has no estate tax, the federal estate tax applies to estates over $5 million. A living trust will not avoid this tax. A special trust, known as a QTIP trust (also called a marital trust or AB trust) will avoid estate tax by transferring assets from deceased spouse to surviving spouse. Living trusts do not protect assets from Medicaid or from creditors.
How to Create a Living Trust in Texas
If you would like to create a living trust in Texas you will need to sign a written trust document before a notary public. The trust is not effective until you transfer ownership of assets to it. A living trust offers options that may be beneficial to you as you plan for the future.
LegalZoom can help you create a living trust in Texas. To start a living trust with LegalZoom, complete a simple questionnaire. We will review your answers and mail your complete living trust package to you.