The Basics of Estate Planning in Texas

Estate planning in Texas is the ideal means to protect your assets and distribute them as you wish. 

Many families forcefully endure a lengthy and laborious legal process without an appropriate plan, which further adds stress during challenging times. 

A carefully tailored estate plan will include wills, trusts, and powers of attorney. 

A knowledgeable trust lawyer can walk you through the complicated process while helping you avoid expensive mistakes.

Let’s explore some basic, foundational estate planning principles specific to Texas that everyone should know.

Differences Between Wills and Trusts in Texas

Wills and trusts are two separate legal options for Texas estate planning. A will lists who should receive the property when someone dies. However, the document is subject to probate, which can be costly and tiresome.

On the other hand, a trust helps avoid probate by transferring property into a separate legal entity during one’s lifetime.

This, in turn, allows for a smoother property transfer directly to beneficiaries after death without any interference by the court.

Whether one chooses a will or a trust depends on certain factors, such as asset size and family structure. Consulting with an attorney ensures the right tool is chosen for the situation.

Will (Last Will) 

The will is central to any estate plan. It provides for the disposition of your property and possessions at death; absent a valid will, the law of intestate succession in Texas will apply to the distribution of your estate, which may differ from what you desire. 

In Texas: 

• The will must be in writing and signing you and two witnesses who receive nothing under the will.  
• While you are of sound mind, it can revoke or alter anytime during your lifetime.  

The key features of a will are as follows:

• Executor appointment: He/she will assist you in distributing your. Assets according to the instructions that you have given in your will. He/she will do things like pay bills and distribute assets.   
• Minor Children Conservatorship: If you have children who are minors, you might want to consider appointing a guardian in case you die. You may also wish to appoint a conservatorship for their estate.  
• Specific Bequests: Gifts of property or money to an individual or charity (for example, leaving your car to a niece).  
• Residuary Clause: This takes care of the remaining part of your estate (after specific gifts) and ensures that no part is left without provision.  

Trusts  

A trust is a document in which a grantor transfers property to a trustee to administer to benefit a beneficiary. Trusts give extra control over property distribution, avoid probate, and minimize estate taxation. 

Revocable Living Trust 

• The trust grants property to you during your lifetime and becomes irrevocable at your death. This can avoid probate. 
• You can change or revoke the trust while you are alive. 
• Assets in the trust transfer at death according to trust terms and bypass probate.  

Irrevocable Trust 

An irrevocable Trust cannot alter or terminate. Assets transfer into an irrevocable trust are usually isolated for tax purposes and asset protection. This trust will protect the assets from creditors and reduce estate taxes.  

Special Needs Trust 

If you have a disabled beneficiary, this trust will take care of him/her without ending their qualification for government benefits such as Medicaid.  

Charitable Trust

The charitable trust permits you to donate part of your estate to a charity instead of securing current tax advantages during your lifetime. 

The Powers of Attorney

Powers of attorney enable somebody you trust to make decisions on your behalf in case something happens and you are not in a position to make any decisions for yourself. Texas recognizes two major types of powers of attorney: medical and financial.

“A medical power of attorney gives authority over healthcare choices, such as treatment preferences or facility care, when you cannot communicate them yourself. 

This ensures that your health wishes by carrying out without any delay,” says Sasha Begum, an estate planning lawyer from Begum Pelaez Prada PLLC.

The financial power of attorney (POA) allows a named person to handle your monetary affairs, such as bill-paying or investment management. 

Both POAs protect you against sudden incapacity and allow you to maintain control where you wish.

Nomination of Guardians and Executors in Your Estate Plan

One of the most critical parts of estate planning involves naming a guardian for minor children. 

If you do not appoint somebody in Texas, the courts will decide who plays that role, and your kids could end up with people you would not prefer.

Equally befitting is the nomination of an executor to handle the distribution of the wealth. 

The nominee will ensure that all legal formalities are complied with and all debts are settled before the property is distributed among the beneficiaries.

Selecting the right person for the role is crucial. Ideally, choose someone reliable enough to handle challenges, both emotionally and financially, even in the most demanding situations.

How Texas Probate Law Impacts Your Assets

Texas probate law sets forth the procedures to be followed upon death, especially in the absence of a trust. 

Without appropriate estate planning, your property could be dragged into a time-consuming probate, delaying the rightful conveyance of ownership to beneficiaries.

Some assets, such as jointly held properties or accounts named by beneficiaries, automatically bypass probate. 

However, most personal property included in a will must go through court oversight to be legally distributed.

Minimizing the role of probate provides privacy and reduces costs. Many Texans use living trusts and other strategies to make sure their loved ones get what they need more efficiently.

A Trust Lawyer Can Help You Avoid Common Mistakes in Texas Estate Planning

Estate planning can be very complex, and unintended consequences often follow mistakes. For example, wills or trusts that are not updated occasionally may not reflect one’s updated desires.

Conversely, neglected beneficiary designations on retirement accounts or life insurance policies may conflict with your overall plan. Poorly structured trusts also lead to unwanted tax burdens or disputes over assets among heirs.

Consider hiring a trust lawyer to avoid expensive mistakes. An attorney can offer counsel based on Texas law to keep your estate plan up-to-date and meet your goals.

Read Also:

• Understanding the Role of a Real Estate Lawyer in Toronto
• Benefits of a Real Estate License for Your Career Growth