Living Trust vs. Last Will in Texas

By Jeffry Olson, J.D.

Living Trust vs. Last Will in Texas

By Jeffry Olson, J.D.

In the state of Texas, estate plans include trust-based estate plans and will-based estate plans. Both are regulated by state statute. However, each has significant differences.

Hip middle aged couple looking over documents across table from woman

 

Living Trusts

In a trust-based estate plan, the party, often through an attorney, creates a living trust. Title of all property is then transferred to the living trust. For example, if John and Jane Doe create a living trust named the John and Jane Doe Trust, they will then transfer all property to that trust. This includes any real estate, such as the family home, and all financial accounts, including bank accounts and investment accounts.

However, because it is a living trust, the parties are free to transfer property in and out of the trust. Continuing with our example, John and Jane Doe transfer their home to the living trust. They are able to sell the home and purchase a new home. When they purchase a new home, that home should be titled in the name of the trust.

Upon the death of the individual, also known as the settlor or grantor, the assets in the trust are distributed pursuant to the terms of the trust.

Last Wills

Wills in the state of Texas are often less formal. The State of Texas allows an individual to write out a will by hand. This valid form of a will is known as a holographic will. Texas also recognizes the more formal, testamentary will. Both types of wills allow the individual to determine what happens with her assets upon her death.

Upon the death of the individual, also known as the testator, the assets are distributed pursuant to the terms of the will. However, this process is supervised by a court in a process called probate.

Probate

In a will-based estate plan, upon the death of the testator, the assets are distributed pursuant to the will in a court-supervised process called probate of the estate. Trust-based plans avoid the probate process entirely.

In probate, the creditors come first. Probate includes a process for informing all potential creditors. Not surprisingly, as a court proceeding, the estate needs legal representation to guide the estate through the court process.

After the creditors and lawyers are paid, the remaining assets are distributed pursuant to the terms of the will. Often, very little is left in the estate to be distributed because of creditors and other expenses of probate.

Privacy

Like most court proceedings, probate is a public process. All of the assets of the estate are made public, in part to allow creditors to make their claims. The distribution of the assets as described in the will is also made public.

A trust-based estate plan avoids probate and is entirely private. Instead of a court proceeding, all transfers are handled privately pursuant to the terms of the trust.

Privacy may not be important to everyone. The vast majority of probates go on with little interest from the public. However, if privacy is a concern for an individual creating an estate plan, a trust-based estate plan offers significant advantages.

Living Trust or Last Will in the State of Texas

Both a living trust and a last will allow individuals to control how assets pass to heirs upon their death. However, the procedure after death is very different. Knowing those differences can inform an individual's decision.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.