Estate planning in Texas requires understanding how state laws treat property ownership, probate, and family inheritance. A living trust is one of the most effective ways Texans can manage and transfer their assets while avoiding many of the delays and costs tied to probate under the Texas Estates Code.
But what is a living trust in Texas? In a living trust, you transfer ownership of your assets, such as your home, ranch, or business, to a trust you control during your lifetime, ensuring those assets pass smoothly to your beneficiaries when you’re gone. Texas law (Property Code §§111–117) sets clear rules for creating, funding, and revoking a trust. Therefore, it’s important to structure it correctly to ensure it’s legally valid. But how does a living trust work, and are you sure if you really need one?
Well, this guide explains how living trusts work and when establishing one can best preserve your legacy.
How Living Trusts Work in Texas?
In Texas, living trusts are governed by the Texas Trust Code (Property Code §§111–117), which outlines how they’re created, managed, and terminated. A living trust, also called an inter vivos trust, lets you transfer ownership of your assets to a trust during your lifetime while keeping full control as trustee.
Most living trusts in Texas are revocable, allowing the creator to modify or cancel them anytime (§112.051). Once the grantor passes, the successor trustee distributes assets according to the trust’s terms, without court supervision.
Because Texas is a community property state, married couples must clearly define ownership when placing assets in trust. Properly structured, a living trust in Texas helps avoid probate, maintain privacy, and ensure a smooth transition of assets if the owner becomes incapacitated.
Living Trust vs. Will in Texas
Aspect |
Living Trust in Texas |
Will in Texas |
| When It Takes Effect | Becomes effective once created and funded. | Takes effect only after death. |
| Probate Requirement | Generally avoids probate under the Texas Estates Code if fully funded | Must go through probate in a Texas court before assets are distributed. |
| Privacy | Remains private, not filed publicly | Becomes public record once probated. |
| Incapacity Planning | The successor trustee can manage assets if the grantor becomes incapacitated. | Offers no authority during incapacity; a separate power of attorney is required. |
| Guardianship for Minors | Cannot appoint guardians for children or dependents. | Allows you to name guardians for minor children. |
| Asset Management During Lifetime | Allows the grantor to retain control while alive and transfer control upon death. | Provides no management mechanism during the lifetime. |
| Property Coverage | Covers only assets titled in the trust’s name. | Covers all personal and real property owned at death. |
| Public vs. Private Process | Private administration, no court oversight | Court-supervised process through probate |
When You Should Consider a Living Trust?
Creating a living trust isn’t necessary for every Texan, but in the right circumstances, it can provide significant legal and practical advantages. Because Texas already offers streamlined probate options, the decision depends largely on your estate’s size, structure, and privacy needs.
When Your Estate Is Large or Complex
While Texas doesn’t impose a state inheritance or estate tax, large or multi-property estates can still face lengthy probate. A revocable living trust allows you to manage and distribute your assets outside of court, ensuring faster transfers and reduced legal costs. It’s particularly useful if you own:
- Multiple real estate properties, especially in more than one state (avoids ancillary probate).
- Business interests, rental income, or investment portfolios requiring ongoing management.
When You Want to Avoid Probate and Maintain Privacy
Texas probate is more efficient than in many states, but it’s still a public process. Even with shortcuts such as independent administration (Texas Estates Code §§401.001–401.003) or muniment of title (§257.001), your estate information becomes part of the public record. A living trust keeps your financial affairs private and lets beneficiaries receive assets immediately after death, without court supervision.
When Probate Shortcuts Don’t Apply
Texas law provides several simplified probate routes, such as:
- Small Estate Affidavit for estates under $75,000 (Tex. Est. Code §205.001)
- Summary Proceedings for small estates (§354.001)
- Order of No Administration (§451.001)
If your estate exceeds these limits or includes non-exempt assets, probate can become slower and costlier. In such cases, a living trust can help streamline estate transfer while minimizing administrative hurdles.
When You Want to Coordinate Multiple Estate Tools
Many Texans use a pour-over will alongside a living trust. The will ensures any assets not formally transferred to the trust during life are “poured over” into it after death. This provides a safety net and keeps your estate plan unified and efficient.
Ultimately, while living trusts offer numerous benefits, they may not be ideal for every situation. It’s always best to consult an experienced Texas estate planning attorney to understand the pros and cons of a living trust in Texas and determine whether it aligns with your financial goals and family needs.
Avoid probate delays and keep your estate private with a properly structured Texas living trust.
How to Set Up a Living Trust in Texas?
Let’s learn about how to set up a living trust in Texas:
1. Confirm the Legal Foundation
Under the Texas Property Code §112.001, a trust may be created when the settlor declares the trust, transfers property to the trustee, or uses an appointment under a power of appointment. The trust must show the settlor’s intent to create a trust (see §112.002) and must have identifiable trust property (see §112.005).
2. Inventory and Select the Assets
List all assets you intend to place into the trust: real estate, bank accounts, investments, vehicles, valuable personal property. In Texas, the trust cannot function unless property is actually transferred into it. This process (called funding) ensures the trust holds the assets.
3. Choose a Trustee and Successor Trustee
Select a person (or corporate fiduciary) to manage the trust as trustee under Texas law. The named trustee must accept the role; under §112.009, the trustee’s signature or conduct suffices. Also, name a successor trustee who will step in if you become incapacitated or pass away.
4. Draft the Trust Document
Prepare a written trust agreement that includes:
- Your declaration of trust and its effective date.
- Name of settlor, trustee, successor trustee, and beneficiaries.
- Clear instructions for how the trust property is to be managed and distributed.
5. Fund the Trust by Transferring Ownership
To give the trust effect, transfer title or ownership of assets into the trust:
- Real estate: Execute and record a deed conveying the property to the trustee (e.g., “John Smith, Trustee of the Smith Family Trust”).
- Financial accounts: Retitle or update ownership forms, or designate the trust as beneficiary where appropriate.
- Without this step, the trust holds no property and will not function as intended.
6. (Optional) Use a Certificate of Trust for Privacy
In Texas, under §114.086, instead of filing the full trust instrument, the trustee may provide a “Certificate of Trust” summarizing essential information (trust existence, date, trustee identity, revocability). This keeps the details private but enables proof of the trust for third parties (title companies, banks).
7. Keep the Trust Updated
Review the trust document and funding status periodically, and especially after major life events (marriage, divorce, new real estate, business interests, children born, moving states). Update or amend the trust when needed (for a revocable trust) to reflect changes in your assets or intentions.
For Texans exploring broader estate planning tools beyond trusts and wills, our comprehensive guide to estate planning in Texas offers valuable insight into how each component works together to protect your assets and family legacy.
Professional Guidance for Creating Living Trusts in Texas
At Mazurek, Belden & Burke, P.C. (MBB), we go beyond drafting documents; we build lasting strategies that protect your assets, your business, and your loved ones. With deep experience in estate planning in New Braunfels, San Antonio, and surrounding areas, our attorneys tailor every plan to your unique goals, ensuring your legacy is preserved with precision and care. Whether you’re exploring wills, probate solutions, or living trusts in Texas, trust MBB to provide guidance driven by Texas law and personal dedication. Secure your family’s future. Contact us today to begin your estate planning journey.