In order to create a comprehensive estate plan, it helps to be familiar with your state’s laws and regulations. Of course, that is easier said than done – especially if you live in the great state of Texas. The Lone Star State presents a number of unique challenges when it comes to estate planning. While only an experienced estate planning attorney can give you specific advice about Texas’s laws, it is helpful to stay in the loop about the following quirky regulations:
Texas is one of the nine states that follow community property law. All assets acquired by a couple during their marriage will be considered “community property,” regardless of which person made the purchase. Houses, cars, and pets are all owned by Texas spouses in a 50/50 breakdown. When one spouse passes away, they can leave their share of assets or property to whomever they would like, but things can get complicated when it comes time to distribute the estate.
For instance, say John purchased a house in Austin a year into his marriage to Rebecca. While John purchased the home himself, both he and Rebecca own 50 percent of the property under Texas’s community property laws. Each spouse must plan out in advance what they would like to do with their portion of the house. Many people are surprised to learn that there is no law in Texas that allows a spouse to automatically inherit the deceased spouse’s portion of their joint assets. Without a will in place dictating their preferences, the court will decide how assets should be distributed.
The perks of a dynasty trust for long-term wealth planning are significant. Dynasty trusts allow Texans to combine protections against divorce and creditors – as well as tax savings – with a long or even unlimited duration. This makes them an invaluable tool for estate planners. A new law allows these trusts to exist for up to 300 years. Effective as of September 1, 2021, the new law allows trusts to be active for centuries to come.
Of course, there are some exceptions to the rule. Charitable trusts are not subject to durational limitations. The new law also includes a provision that precludes trusts from being used to tie up a real property asset for periods of longer than 100 years.
When weighing a dynasty trust for your family, explore the perks of using a corporate trustee. Unlike individuals, corporations don’t die. A corporate trustee can offer professional management skills and understand trust laws in ways a friend or family member simply cannot. When properly drafted, dynasty trusts are like having a family back for your descendants to rely upon for generations.
The State of Texas has written a will on your behalf. Fail to create an individual estate plan, and you will have no say about how your assets will be distributed. Dying in Texas intestate – or without a will – means that the state will apply a standard set of rules to the distribution of your property. The most important factor in determining who gets your assets is marriage. A married intestate decedent will usually have all property transferred to their surviving spouse if all of the children are of the marriage. Kids play a role, too; spouses and children usually split the estate evenly.
State laws complicate the process significantly. In all cases, it is best to have a will or estate plan in place to dictate the distribution of your property instead of relying on intestacy. Even if you are comfortable with how you believe the state will divide up your property, laws can change. Leaving your family’s future in the hands of the government could end up being a costly mistake.
No matter your life goals, it is important to make thorough estate plans. Speaking with an experienced estate planning attorney can help you navigate Texas law while setting up the brightest future possible for your loved ones. Schedule your estate planning appointment now by calling (281) 218-0880 or schedule online here.
Hegwood Law Group