Estate Planning Guide: Texas

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    ⭐ Estate Planning in Texas: Key Things Every Client Should Know

    Texas has some very favorable property and probate laws, but families still face important decisions when planning their estates. This guide walks through the major issues Texas residents should consider.

    1. No State Estate Tax or Inheritance Tax

    Good news for Texas residents:

    • No Texas estate tax

    • No Texas inheritance tax

    Only the federal estate tax applies—and only to very large estates.

    Even without state taxes, smart planning is still important to:

    • Avoid probate delays

    • Protect minor children

    • Prevent family disputes

    • Plan for incapacity

    2. Texas Probate: Often Easier Than Other States

    Texas is known for having one of the most efficient probate systems in the country.

    Key features:

    • Independent administration allows executors to act with little court supervision.

    • Muniment of title provides a simplified process when there is a valid will and no debts.

    • Probate is still required for assets in the decedent’s name alone.

    Clients may want to use tools to avoid probate for certain assets:

    • Transfer-on-death deeds (TOD deeds) for real estate

    • Payable-on-death and beneficiary designations

    • Joint ownership

    • Revocable living trusts (helpful for privacy or complex estates)

    3. Creating a Valid Texas Will

    A Texas will must be:

    ✔️ In writing
    ✔️ Signed by the person making it
    ✔️ Witnessed by two adults

    Texas also recognizes holographic (handwritten) wills, but they often cause problems and delays.

    A will should cover:

    • Beneficiaries

    • Guardians for minor children

    • Selection of an executor

    • Distribution of personal items, property, and special gifts

    4. Statutory Durable Power of Attorney (Financial POA)

    Texas has a statutory form for financial powers of attorney.

    This document allows someone to:

    • Manage finances

    • Handle legal matters

    • Pay bills

    • Sell or manage property

    A valid POA helps avoid an expensive court-ordered guardianship.

    Clients should review POAs regularly—banks often reject outdated or improperly drafted ones.

    5. Medical Power of Attorney

    A Medical POA designates someone to make healthcare decisions if you cannot.
    This is crucial for avoiding family conflict and ensuring the right person is in charge.

    6. Texas Directive to Physicians (Living Will)

    This document spells out your preferences for:

    • Life support

    • Life-sustaining treatments

    • End-of-life care

    • Pain management

    • Organ donation (can be included or addressed separately)

    This ensures medical providers follow your wishes even when you cannot speak.

    7. The Texas Declaration of Guardian

    Texas offers a unique planning tool:
    You can name who you want—and who you do NOT want—the court to appoint as your guardian if needed.

    This is extremely helpful for clients with:

    • Family conflict

    • Estrangement

    • Second marriages

    • High-net-worth estates

    8. Trusts in Texas

    Trusts are common in Texas estate planning and can be used for:

    • Avoiding probate

    • Providing for minor children

    • Protecting a spouse or blended family

    • Managing assets for someone with special needs

    • Asset protection (for certain irrevocable trusts)

    • Medicaid and long-term care planning

    • Controlling the timing and conditions of distributions

    Texas’s strong homestead and community property rules also influence trust planning.

    9. Texas Community Property Rules

    Texas is a community property state, meaning:

    • Most property acquired during marriage is shared by both spouses.

    • Separate property includes assets owned before marriage and certain inherited or gifted assets.

    • Community property rules affect how property passes at death.

    Clients should consider:

    • Prenuptial/postnuptial agreements

    • Protecting separate property

    • Proper titling and beneficiary designations

    10. Homestead Rights

    Texas homestead laws are powerful and protect:

    • A surviving spouse’s right to continue living in the home

    • Certain property from creditors

    • A portion of equity during medical or financial emergencies

    Planning should address:

    • Whether a spouse or minor child will need continued housing

    • How the home is titled

    • Whether a trust should hold the property

    11. Beneficiary Designations

    Many Texas assets pass outside probate, including:

    • Life insurance

    • Retirement accounts (IRA, 401(k))

    • Bank accounts with POD/TOD

    • Brokerage accounts with TOD

    • Annuities

    These designations must be reviewed after major life events like:

    • Marriage

    • Divorce

    • Children

    • Moving to Texas

    12. Planning for Long-Term Care & Medicaid

    Texas Medicaid rules include:

    • 5-year lookback period for transfers

    • Limits on income and assets

    • Homestead exemptions up to a certain value

    Long-term care planning can involve:

    • Irrevocable trusts

    • Caregiver agreements

    • Spend-down planning

    • Conversion of countable assets into exempt assets

    Early planning preserves more wealth.

    13. Digital Assets

    Texas allows individuals to authorize fiduciaries to access:

    • Email

    • Online banking

    • Social media

    • Cryptocurrency

    • Digital photos

    • Cloud accounts

    This must be addressed in:

    • Wills

    • Trusts

    • Powers of attorney

    ✔️ Most Texas Clients Should Have:

    • Last Will & Testament

    • Statutory Durable Power of Attorney

    • Medical Power of Attorney

    • Directive to Physicians (Living Will)

    • Declaration of Guardian

    • Updated beneficiary designations

    • Trusts as needed (minor children, blended families, special needs, Medicaid, privacy)