Texas Wills, Living Wills & Living Trusts: An Estate Planning Guide
Several types of documents can be used in a Texas estate plan; wills, living wills, and living trusts are the most common. While wills and living trusts are excellent vehicles for the distribution of property at death, some types of property may not need to be distributed in this way. Survivorship property, life insurance, and retirement funds are distributed directly to the property’s designated beneficiaries. The following discussion is an excellent introduction to these estate planning tools, but for effective Texas estate planning, you should consult an experienced Texas estate planning attorney who can advise you on the right choices for your estate.
The most common document used to distribute property at death is a will, and there are three basic kinds of Texas wills:
Texas Oral Wills: These (also called numcupative wills) are the spoken requests of the dying person (the testator) made during his or her last illness. An oral will can’t transfer real estate or bank accounts, but can transfer cash and items owned by the testator. The rest of the estate will be distributed according to the laws for people who don’t have wills (intestate succession), assuming the testator does not have any other written wills at the time of death.
See Texas Probate Administration for more information on intestate succession in Texas.
There are other limitations on oral wills in Texas. The will must be made at home or when the testator was taken ill away from home and was unable to reach home before dying. If the testator’s estate is larger than $30, there must be at least three witnesses to an oral will for it to be legal. The oral will must also be submitted to probate within 6 months after it is made, unless it was written down within 6 days of the day it was spoken.
Texas Holographic Wills: This is a will that is entirely in the handwriting of the testator. There can’t be any sections that are typed or written by someone else. The will has to say clearly how the testator wants to distribute his or her property after death and must be signed by the testator.
Texas Formal Wills: These are usually typewritten or printed wills that may be drafted by an attorney or based on a will form. They must be signed by at least two witnesses as well as by the testator. A beneficiary under a typewritten will should not serve as a witness to the execution of the will because this may prevent the beneficiary from receiving any property under the will.
Texas Living Wills
This document is also called a Directive to Physicians & Family or Surrogates. It is used to give instructions about the use of life-sustaining treatments in the event of a terminal or irreversible condition. In short, a living will specifies when life-sustaining techniques should and should not be used. Life-sustaining treatments can include artificial nutrition and hydration, antibiotics, medications, life support, kidney dialysis, etc. A living will can also name a person who can make medical decisions when you are incapacitated if you have not already named one in a medical power of attorney.
The Texas statutory form for a Texas living will is found at Chapter 166 of the Texas Health & Safety Code.
Texas Living Trusts
A Trust is created when one person, known as the trustee, holds legal title to property for the benefit of another person - the beneficiary. A living trust is created during the life of the person who creates it. If that person is you, all or most of your property would go into the trust and you would typically be both the trustee and the beneficiary for the duration of your life. The purpose of a living trust is to help you avoid probate, perhaps reduce estate taxes, and help you manage your property.
In some states, living trusts are used primarily to avoid the costs of probate, but in Texas there are provisions for a low-cost probate that make a living trust unnecessary for that purpose. A Texas living trust may be recommended in some situations, however, if the person creating it is expecting to become disabled and to need a trustee, owns real property outside of Texas, wants property information to remain private (will provisions become public), and/or wishes to avoid a will contest (a dispute over the distribution of property in a will).
The drawbacks of a Texas living trust are that it usually costs more to draft than a will and ownership of all assets must be transferred to the trust property. This may not be a difficulty if someone is retired and not moving assets around, but for others it can be a burden to transfer assets into the trust. Living trusts may also have other adverse effects related to insurance, partnerships, and bankruptcy. You will definitely benefit from the expertise of a Texas wills, trusts, and probate lawyer if you are considering a living trust as part of your estate plan.
Texas Survivorship Property
Property can be held jointly by two or more people, with the property going to the survivor(s) at the death of one owner. Spouses can only own community property with a right of survivorship if they use the language found in Section 452 of the Texas Probate Code. Ownership with a right of survivorship is not favored in Texas law. This means that if there is any doubt, a court will rule against survivorship. So it’s essential to make sure the right language is used and that all forms are filled out correctly. It’s important to consult a Texas estate planning lawyer to review your survivorship documents.
Survivorship property can include: real estate, bank accounts, vehicles, stocks, bonds, and securities.
Life Insurance and Retirement Fund
Like survivorship property, these are funds that pass automatically to another person at the time of death. Insurance policies, IRAs, KEOGHs, pension plans, profit sharing plans, and 401(K) plans usually name a beneficiary. At the death of the owner, the beneficiary contacts the insurance company or other entity and goes through the process for claiming benefits.