When deciding between a will or trust in Texas it is important to understand the key differences between the two different estate planning tools.
Wills: Tex. Estates Code, Title 2, Subtitle F, Chapter 251, §§251.001, et. seq.
Trusts: Tex. Prop. Code, Title 9, §§101.001, et. seq.
Texas Will Requirements.
Under Texas law, a last will and testament must be in writing and must be signed by the testator (the person making the will).
Alternatively, a will can be signed by someone else on behalf of the testator if the signature occurs in the testator’s presence and at the testator’s direction.
A valid Texas will also must have at least two credible witnesses, both of whom must sign the will in the testator’s presence. Witnesses to a Texas will must be at least 14 years of age.
Texas wills can only be created by adults (over age 18) who have testamentary intent (i.e., intend to make a will of own volition) and sufficient mental capacity to do so. A testator under the age of 18 can create a valid will only if he or she has either been lawfully married or is a member of the U.S. armed forces.
A testator has sufficient mental capacity to create a valid will if, when the document is executed, he or she is of sound mind and generally understands the nature and extent of his or her property, who stands to benefit from his or her estate, and that the document being executed is in fact a last will and testament that will result in distribution of property.
The testator must also have sufficient memory to comprehend how the various provisions of the will relate to each other and the estate.
A Texas will can be “self-proving” (or “self-proved”) if it includes a notarized, sworn affidavit signed by both witnesses and by the testator. The affidavit can be made at the same time the will is created or at subsequent time while both the testator and witnesses remain living. The affidavit attests that the will was freely executed by the testator in the witnesses’ presence and signed by the witnesses at the testator’s request.
If a compliant affidavit is present, a will can be admitted and authenticated in probate court without the need for witness testimony as to the will’s validity.
Amendment, Revision, and Revocation of Texas Wills.
A Texas will can be amended or revoked through execution of a codicil (an addendum to an existing will), a subsequent will, or a written declaration of the intent to revoke the will.
In each case, the later document is not effective unless it observes all formalities required for creation of a will. In the case of a codicil, the document must clearly identify the existing will being amended and the specific provisions within that will subject to the amendments.
Alternatively, a Texas will can be revoked through physical destruction or cancellation of the document by the testator, or by someone else at the testator’s direction in the testator’s presence.
Texas Holographic and Oral Wills.
Texas law recognizes holographic (or hand-written) wills as long as the document is signed and recognizably written in the testator’s handwriting. A Texas holographic will need not be witnessed or notarized and can be made self-proving through attachment of a notarized affidavit executed by the testator.
Until 2007, Texas recognized oral (or “nuncupative”) wills under limited circumstances if the statements constituting the oral will were heard by at least three credible witnesses. Following a legislative amendment that took effect in 2007, oral wills are no longer recognized in Texas.
Texas Trust Requirements.
To create a valid trust in Texas, a grantor must be an adult of sound mind with capacity to transfer assets into the trust and must actually intend to create a trust.
A trust comes into being when the grantor declares he or she owns property for another person’s benefit or transfers property (including through a will) to a trustee for a beneficiary’s benefit.
Texas trusts must include a grantor, trustee, at least one identifiable beneficiary, and trust property. A Texas trust is not valid until the grantor has identified the assets subject to the trust and transferred the assets into the trust.
A trust’s terms must be set forth in writing with the settlor’s signature, except that a settlor can create a personal property trust by transferring property to a third-party trustee who is not beneficiary and expressing the intent to create a trust. A Texas trust can serve any purpose which is not unlawful, tortious, or contrary to the State’s public policy.
Texas trusts must comply with the Rule against Perpetuities, as adopted in the Texas Code. That means an interest can vest no later than 21 years after the end of the life of someone currently living.
Special Considerations for Texas Estate Planning
Some additional considerations for Estate Planning in Texas include a simplified probate, muniment of title, homestead act, community property survivorship agreement, TOD deed, and merger.
Texas’ Estate Code provides a process for streamlined probate of estates valued under $75,000. If simplified probate is approved upon petition by an estate executor, estate assets can be distributed without going through the full formal probate process.
Muniment of Title:
If a Texas estate includes a valid will and there are no creditor claims against the estate (including Medicaid liens but excluding a mortgage on the decedent’s home), the will can be probated as a muniment of title. The process allows the will to serve as evidence of title to estate assets, allowing for transfer of estate assets directly to named beneficiaries.
The Texas Constitution includes homestead protections completely exempting qualifying homesteads from attachment by creditors. Additionally, a surviving spouse of a decedent homestead owner has a guaranteed right to receive at least a life estate in the homestead.
Community Property Survivorship Agreement:
Texas is a “community property state,” which means that assets acquired by a married couple during a marriage are considered as jointly owned by each spouse, one-half each.
Texas law allows married couples to enter into a written agreement declaring that their community property includes a right of survivorship so that full title to the community assets vests with a surviving spouse upon death of the other, with no need for probate of the community assets.
Texas recognizes TOD (transfer-on-death) designations on real estate deeds. When a TOD designation is present, title to the property automatically vests in the named beneficiary upon the original owner’s death, allowing the real estate to avoid probate.
Under Texas trust law, if legal title to property in a trust and all beneficial interests in the property rest with the same person, the trust fails and is terminated by operation of law.
Creating a will or trust does not have to be difficult or intimidating. However, certain circumstances—like second marriages, stepchildren, aging parents, special needs beneficiaries, guardianships, and business interests (to name a few)—can add a layer of complexity and result in unforeseen long-term consequences.
Whenever any out-of-the-ordinary issues are present, it’s a good idea to consult with an experienced attorney familiar with and licensed under the laws of the relevant jurisdiction.