Texas Estate Planning Guide

Estate planning is the process of organizing how your assets, property, and personal wishes will be managed and distributed after your death or if you become incapacitated. It ensures your loved ones are taken care of, your wishes are respected, and unnecessary legal or tax burdens are minimized.

Without a proper plan, state laws determine who receives your assets, which may not align with your intentions. And if you become incapacitated and do not have powers of attorney in place, a loved one may be forced to seek guardianship for you to protect your interests.

If you die without a Will (called dying intestate), your state’s intestacy laws decide who inherits your property.

Typically, your spouse and children receive shares, but if you have children by a prior marriage, they will be entitled to inherit at least part of your community property with your current spouse. If you have neither spouse nor children, your assets may go to your parents, siblings, or distant relatives.

The court must also appoint a guardian for minor children and an administrator to handle your estate. This will follow a statutory outline of who can serve in these positions, and they may not necessarily be people you would have chosen.

READ: What Happens To My Property If I Die Without A Will

A Will outlines your wishes after death, including guardianship, asset distribution, and final arrangements. But it must go through probate, a court-supervised process.

A trust can take effect during your lifetime and allows assets to pass to beneficiaries without probate. Trusts can offer privacy, tax benefits, and greater control over when and how beneficiaries receive assets. Some legal steps still need to be taken after your death, even with a trust, to accomplish the desired transfers.

Trusts may or may not be justified depending on your personal circumstances. Read this blog to see the situations in which a trust may not be worth the expense.

You should review your estate plan every 3–5 years, or after major life events such as marriage, divorce, the birth of a child, the death of a beneficiary or executor or trustee, or significant financial changes.

Laws and tax rules also change, so periodic updates help keep your plan compliant and effective.

Select someone trustworthy, organized, and financially responsible. This person will manage your estate, pay debts and taxes, and distribute assets. Many people choose a spouse, adult child, or close friend; others use a professional fiduciary, such as a bank trust department, if their estate is complex.

You should name a guardian in your Will to care for minor children if you and the other parent pass away. It’s wise to discuss your choice with that person beforehand.

You should also set up a trust to manage the children’s inheritance until they’re mature enough to handle it responsibly, which you may think is long past age 18. You would appoint a trustee, who again is a responsible person, to manage the assets in the trust for the children.

A guardian is someone legally responsible for the care, upbringing, and welfare of your minor children if you die, or for yourself if you become incapacitated.

You should name a guardian for minor children in your Will, and the court generally honors your choice unless the person is unfit or unwilling to serve. If you should become incapacitated, it’s best to have a power of attorney drawn up in advance, which appoints a person to act as your agent to continue your financial affairs, and a medical power of attorney to make medical decisions on your behalf.

For minors, you can use either a trust set up under your Will or a Living Trust to hold assets for them, instead of naming them directly as beneficiaries. This ensures assets are managed by a trustee until the child reaches a responsible age.

For individuals with disabilities, consider a special needs trust, which provides support without jeopardizing eligibility for government benefits such as SSI or Medicaid.

READ: The Types Of Trusts For Special Needs Individuals

Unequal distributions may be appropriate if, for example, one child received lifetime gifts or has special needs. You can, in fact, disinheret family members with explicit language in your Will or trust.

The key is to document your reasoning clearly and, if possible, communicate it with your family to prevent resentment or disputes later. You do not have to spell out in the Will, however, your reasons for how you have handled your bequests.

Any major life change should trigger an estate plan review. Divorce or remarriage can dramatically affect your wishes and legal designations. In Texas, a divorce automatically revokes any provisions you may have had in your Will for your ex-spouse. However, you may wish to name different alternate beneficiaries than those you originally named in your Will.

Update your Will, trust, beneficiaries, and powers of attorney to reflect your current relationships and intentions.

Common types include:

• Revocable Living Trust: Flexible; you can change or revoke it at any time.
• Irrevocable Trust: Permanent; offers tax and asset protection benefits.
• Testamentary Trust: Created through your Will after death.
• Special Needs Trusts: Designed for beneficiaries who need to protect their right to receive government benefits, even though they may also receive some benefits from your estate.

Your choice depends on your goals: avoiding probate, reducing taxes for extremely large estates, or protecting beneficiaries.

A trust only controls assets titled in its name. “Funding” a trust means retitling bank accounts, real estate, investments, or business interests into the trust’s ownership.

You may also assign personal property (like jewelry or art) and name the trust as a beneficiary on life insurance or retirement accounts.

A revocable trust can be changed or revoked at any time, offering flexibility but little or no asset protection.

An irrevocable trust generally cannot be changed after creation, but it can help shield assets from creditors or lawsuits. There are negative potential income tax consequences to beneficiaries, however, who receive substantially appreciated assets from an irrevocable trust.

For most of us, neither federal nor state inheritance or state taxes will be an issue. Texas estate tax has the same threshold value of assets as the federal estate tax. Currently, this is around $25 million for a couple or $12.5 million for an individual.

Include in your Will or trust agreement a digital assets list with account details, access instructions, and clear authorization for your executor or trustee to manage them. Many states recognize digital access clauses in estate documents under laws like RUFADAA (Revised Uniform Fiduciary Access to Digital Assets Act).

A general power of attorney, officially called a “statutory durable power of attorney” in Texas, allows someone to make financial or legal decisions on your behalf if you’re unable. Choose a trustworthy and financially capable person. You can make the general power of attorney effective immediately or only upon your incapacity (a “springing” power of attorney).

A Living Will or Directive to Physicians outlines your wishes for medical care if you’re terminally ill or unable to communicate. It covers life support, pain management, and organ donation preferences. This ensures your loved ones and doctors respect your choices.

Use two key documents:

• Medical Power of Attorney: Names someone to make medical decisions.
• General Power of Attorney: Allows someone to manage your finances.

Combined with a Living Will, these documents protect you and reduce stress for loved ones.

At minimum:

1. Last Will and Testament or Revocable Living Trust
2. General Power of Attorney
3. Living Will / Directive to Physicians
4. Medical Power of Attorney
5. HIPAA Authorization
6. Beneficiary Designations (for life insurance, IRAs, etc.)

Each state has specific signing, witnessing, and notarization requirements. To ensure validity, work with a licensed estate planning attorney in your state. Probate becomes much more difficult if a Will is not properly executed.

Some people try to handle their estates with a handwritten Will. Sometimes, such Wills are valid, but there are several qualifying and proof requirements before the probate can be started.