How Do I Set Up a Living Trust in Texas?

A living trust is an important tool for managing your estate and making sure that your beneficiaries get everything that you want for them to have. In a living trust, you’re allowed to manage the assets during your lifetime, and they will be distributed after your death, mostly avoiding the probate process along the way. Contact a Houston estate attorney when you’re ready to make your trust because it’s important to take each step carefully.

Steps to Set Up a Living Trust in Texas

Contact a Houston Estate Attorney

The first step in setting up a trust should be contacting an attorney with extensive experience in estate planning. Your trust must be set up legally, and you must carefully go through every step of the process in order to protect your assets. There are a number of legal obligations to doing this, and if a step is missed, it could endanger the estate, get you into legal trouble if you’re still alive at the time the issues are discovered, add complications for your beneficiaries after your death, and tie up the estate for a long time after you’re gone.

Create Your Trust Document

The first step in creating a trust is creating a trust document. This has to follow certain rules, but it will generally name the trustee for the living trust, specify who the beneficiaries are, and then explain how the assets of the trust are to be managed and distributed. It will only be considered valid by the courts if it’s shown that you as the settlor intended to create it and if you’re able to transfer assets into it. It must also comply with statutes about fraud here in our state. It does not have to be notarized in Texas to be legal, but an estate attorney will usually recommend that you have it notarized anyway, just as a best practice.

Transfer Assets

Once the trust has been created, you have to put assets into it. This means transferring the ownership of those assets from you personally to the trust itself. If you have named yourself the trustee, then you still have control over these assets, though the control may be somewhat limited by the terms of the trust. You can transfer real estate, bank accounts, other types of financial accounts, and personal property, among other things. Make sure you work with your lawyer to ensure that each element is properly transferred.

Make Sure You’ve Taken Taxes Into Consideration

As you created a trust, talk with your attorney about the tax implications. Texas does not have a state inheritance or estate tax, which is good news. However, federal taxes do still apply to particularly large estates. While the estate must be quite large ($13.99 million for individuals and $27.98 million for married couples in 2025), if your estate does go over this amount, the estate tax rate imposed by the IRS can be incredibly high: up to 40%. Even worse, unless Congress takes some kind of legislative action at some point before the end of 2025, then the exemptions disappear, and an estate will likely be subject to tax at $7 million or even lower starting in 2026. This makes it extremely important to talk to your lawyer about how to manage your estate. An experienced a state planning attorney will also have trusted accountants and other financial experts to work with to help you protect your estate in every way possible.

Updating or Changing Your Trust

Once you were living trust is in place, it does still need to be regularly maintained. If there are major changes of some kind, including potentially changes to the law, you will want to get a trust amendment form to revise the trust as needed. If you work from the beginning with an experience lawyer, your lawyer can simplify this process for you. You’ll just need to contact your lawyer and the trustee (if the trustee is someone other than yourself) after any major life event.

Changing the terms of the trust is a bit harder, but possible. There are certain situations where you may need a court order to allow the trustee to do something different than what the original trust terms lay out.

FAQ About Living Trusts

What’s the Difference Between Revocable and Irrevocable Living Trusts?

Is a Living Trust the Right Choice for Me?

There are some great reasons to set up a living trust, though there are some downsides. No one can make the decision for you: you must decide on your own. However, if you think a living trust might be for you, an estate planning lawyer could help you understand how the general benefits and downsides would apply to your situation

Benefits to Consider

The primary benefits of a living trust is that it protects the assets that are in it from the process of probate court. Probate court takes time, costs money, and any estate assets that go through probate are vulnerable to creditors and other entities. In addition, anything that goes through probate becomes part of the public record. This means that anyone, theoretically, can discover the details of your estate and your beneficiaries. A trust is not probated, does not become part of the public record, and allows your assets to reach your beneficiaries more quickly and without the costs of probate.

These trusts also provide benefits in that they allow for more flexibility in managing and distributing assets and also provide a way for your assets to be managed in the event that you should become incapacitated before your death. A final benefit to a living trust is that it allows you to set up a system for distributing your assets over time rather than all the assets having to be held back until your death. This can offer some financial security for your beneficiaries during your life as well as gradually reduce the size of your estate to protect it from taxes.

Downsides to Consider

There are some downsides to a living trust. For one thing, it does cost money to set it up. Depending on the terms and how you go about it, you should probably budget somewhere from $2,000 to $5,000 to set up your trust. In addition, the document must meet all the requirements of the state of Texas. If it does not, it can be invalidated. It also requires you to establish a dedicated trust account and often does put some limitations on what you can do with your assets even if you are the named trustee.

Contact a Houston Estate Planning Attorney to Set Up Your Living Trust

Overall, a living trust is often a good choice. To learn more about it and whether it’s right for your situation, contact Hensley & Krueger, PLLC today.

We proudly serve Houston & all throughout Texas.

Hensley & Krueger, PLLC

5615 Kirby Dr Suite 720,
Houston, TX 77005, United States
Phone: (713) 850 9700

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