Do I need a Living Trust in Texas?
You may have heard a neighbor or friend tell you that you need a living trust to avoid the dreaded probate process after your death. However, probate in Texas is a relatively simple process today, and a living trust is not necessary for everyone. Here are some of the considerations I discuss with clients when determining whether a living trust is advisable:
Estate Tax Considerations: You should consider a living trust if you have a net worth in excess of five or six million dollars. A living trust can take advantage of certain estate tax strategies that delay the payment of estate taxes until the surviving spouse’s death. Additionally, a living trust can provide children with asset protection benefits and keep trust assets outside of a child’s taxable estate.
Non-Tax Considerations: Even if you don’t have a potential estate tax problem, you may want to consider a living trust if any of the following situations are applicable to you:
Blended Family: If you are in a second marriage or have children born outside your current relationship, a living trust is a great vehicle to permit your spouse to have the benefits of your estate during his or her life, while ensuring that your estate ultimately passes to your children.
Ownership of Real Estate Assets Outside of Texas: If you own real estate interests outside of Texas, a living trust can avoid having to go through the probate process in each state where the real estate interests are located.
Young Children: Consider whether you would want your children to receive your estate outright at their current ages if you died. If this sounds like a bad idea, consider a living trust where your children gain management control over their inheritance at specified ages. Additionally, children under the age of 18 are not permitted to own financial assets, so a living trust can limit or eliminate the need for guardianship.
