5 Reasons to Create a Trust in Texas: When a Will Isn’t Enough
In Texas, creating a trust is not a legal requirement for passing property to your loved ones and is not always the best option when creating an estate plan. Texas law allows for several probate shortcuts, such as Transfer on Death Deeds, Lady Bird Deeds, and the Muniment of Title process. These tools can allow for the smooth transfer of assets without needing trust. However, there are certain life situations where a trust is not just helpful—but essential. Suppose any of the following five circumstances apply to you. In that case, it may be time to consider incorporating a trust into your estate plan.
1. You Own Real Estate in Multiple States
Probate is controlled at the state level, which means that if you pass away owning real estate in more than one state, your loved ones could be forced to open a separate probate case in each state where the property is located. This process is known as "ancillary probate," and it can significantly delay the administration of your estate and increase legal fees.
By placing all out-of-state properties into a revocable living trust, you can avoid the need for multiple probate proceedings. A trust allows your trustee to transfer or manage property in any state, streamlining the process and reducing court involvement.
Just note: Though the actual trust agreement may be drafted in Texas, you will likely need to consult with an attorney in each state where your property is located to ensure the property is properly funded to the trust and will be protected.
2. You Are in a Blended Family
Blended families are increasingly common in Texas, with spouses often bringing children from prior relationships into the marriage. While a will can be used to leave assets to a surviving spouse and children, the distribution plan can become complicated—especially when children from previous relationships are involved.
A trust allows you to create a detailed plan that ensures your current spouse is supported during their lifetime while protecting your children's inheritance. For example, you may choose to allow your spouse to live in the family home until their passing, after which the property is distributed to your children. Trusts help reduce family conflict and promote fairness among beneficiaries.
When creating a trust to support a blended family, it is crucial that you seek attorney assistance. Planning for property that belongs to a married couple requires knowledge of Texas marital property rules and estate law.
3. You Have a Large Estate and Minor Children
If you have a significant estate and minor children, a trust is one of the best ways to protect their financial future. Minors cannot legally inherit property outright. Without a trust, the court will appoint a guardian to manage the inheritance until your child turns 18. At that point, they will receive full control of the assets.
A trust allows you to delay distribution until the child is more financially mature, such as age 25 or 30. You can also establish guidelines for how the money should be used—such as for education, health care, or first-time home purchases. This level of oversight and flexibility is not available with a simple will.
It is important to note that a stand-alone revocable trust is not the only option for planning for minor children. Contingency trusts properly built into a will or using custodial accounts may also be an option.
4. You Want to Ensure a Pet Is Cared For
Texas law allows for the creation of pet trusts, which are legal arrangements that provide funds and instructions for the care of your pets after you pass away. Without a trust, there's no guarantee that your pet will be cared for according to your wishes—or even that someone will take them in at all.
A pet trust names a caregiver and sets aside funds for your pet's food, medical needs, and daily care. It gives peace of mind that your beloved animal companion won't be neglected or surrendered to a shelter.
5. You Need to Plan for Incapacity
A trust is not just a tool for distributing assets after death but also crucial in incapacity planning. Suppose you become mentally or physically unable to manage your finances due to illness or injury. In that case, a trust allows your successor trustee to step in and manage your affairs without court involvement.
A trust helps avoid the need for court-appointed guardianship, which can be a stressful and expensive process for your family. A revocable living trust ensures that someone you trust is already in place to manage your assets if you can no longer do so.
Alternatively, a well-drafted power of attorney that aligns with the requirements of the law may also be a feasible option when it comes to designating a trusted person to handle your affairs if you are unable to.
Talk to an Estate Planning Attorney About Whether a Trust is Right for You
While trusts can offer significant benefits, they are not necessary for every Texas resident. A well-drafted will, combined with non-probate transfers like beneficiary designations, may be sufficient for many families. However, if you fall into any of the five categories above, a trust may be a vital part of your estate plan.
Every family is different, and so is every estate plan. Consulting with an experienced Texas estate planning attorney can help you decide whether a will, a trust, or a combination of both is best suited for your personal and financial situation.
At Whitney Thomas Law Firm, we help families throughout Texas understand their estate planning options and create tailored solutions to meet their needs. Schedule a consultation today to discuss your estate planning goals—including whether a trust fits you.
