Texas Trust Law

Category: Real Estate

How to Gift Real Estate without Creating Problems for Heirs

How to Gift Real Estate without Creating Problems for Heirs

January 14, 2026

With the rising cost of homeownership, many families are considering gifting their homes to their adult children. This generous intent is great. However, estate planning is needed to ensure that the estate or heirs don’t face a large tax bill. A recent article from Realtor.com, “What You Need To Know Before You Gift Your Kids Real Estate,” recommends working with an experienced estate-planning attorney to create and document your wishes to avoid IRS scrutiny or other challenges. You can learn how to gift real estate without creating problems for heirs.

Generational wealth can be passed on. However, there are limits on gifting amounts, even for cash. An annual exclusion is the amount a person may give to any single recipient before incurring a gift tax. A single person may gift up to $19,000 per year to as many people as they want, with no gift tax. Married couples may combine their individual exclusions to give a total of $38,000 per recipient. Some estate planning attorneys advise keeping gifts well below these thresholds to avoid errors. If you go over the exclusion amount, you’ll need to file a gift tax return.

In 2026, the estate lifetime gift and estate tax maximum is $15 million. This is the total amount that can be gifted above the annual exclusion throughout a person’s lifetime, and that can be in their estate before any federal estate tax applies. There are also state estate taxes to consider.

Estate plans use both wills and trusts. The will outlines how property is to be distributed upon death. Trusts are legal entities that allow a third party to manage assets on behalf of beneficiaries. The trust owns the assets, and the trustee manages them. Assets in trusts don’t go through probate, which includes a court review and approval of the will and the executor.

Some people prefer trusts, which do not go through probate, and distributions are made directly to beneficiaries in accordance with the trust’s terms. A revocable or living trust allows the grantor to make as many or as few changes to the trust during their lifetime. An irrevocable trust is more permanent and offers stronger creditor and litigation protection. However, it cannot be changed (with some exceptions).

Loans are also used to provide money to children, rather than a gift. This helps the recipient and the donor avoid gift tax issues. However, it must be properly documented. The agreement must outline payment terms, interest and any necessary deadlines. A loan agreement helps establish that the transaction is a loan rather than a gift, as gifts exceeding the gift tax exclusion make the donor subject to tax.

Estate planning attorneys advise parents to ensure that their adult children are prepared for real estate or other inheritances. Is it realistic for siblings to own a home together? Will they be able to work through the issues of homeownership, including maintenance costs? If one child lives nearby and the other lives on the opposite coast, how will they share the house? A bigger question: do the kids even want the home?

One of the most important tips for parents who want to pass on real estate or money is to work with an experienced estate-planning attorney to document every step of the process. The estate planning attorney will walk you through how to gift real estate without creating problems for your heirs. When completed in a timely manner, an estate plan enables efficient transfer of wealth with as few bumps as possible. If you would like to learn more about gifting strategies in estate planning, please visit our previous posts. 

Reference: Realtor.com (Dec. 15, 2025) “What You Need To Know Before You Gift Your Kids Real Estate”

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A Cross-Border Strategy is Needed for Estate Planning with Assets Overseas

November 11, 2025

Ultra-high-net-worth families often live, invest and give across borders. A plan that works in one country can misfire in another. Different rules on domicile, tax residency, marital property and forced heirship can alter who inherits and how much tax is due. Institutions may also block access to accounts until local requirements are met. A cross-border strategy is needed for estate planning with assets overseas. It brings these moving parts into one coherent framework, so heirs receive what you intend with fewer delays and fewer surprises.

Where Plans Break Across Borders

Countries define domicile and tax residency in different ways. One country may view you as a resident based on days present, another based on ties such as a home or family. Several civil law jurisdictions enforce forced heirship, which reserves a portion of an estate for children or a spouse regardless of what your will says.

Community property and separate property systems divide marital wealth differently. Without alignment, the same asset can face competing claims or double taxation. Bank secrecy and data rules can also slow access, especially when fiduciaries lack translated and apostilled documents.

Building A Multi-Jurisdiction Framework

Begin by documenting where you are treated as tax resident and where you are domiciled. Keep residency certificates, visa records and professional analyses that explain treaty positions.

Next, identify succession rules that could override your choices. Some jurisdictions allow you to elect the law of your nationality or habitual residence to govern your estate. Make that election clearly in your will or trust if it is available and ensure that each country where you hold assets will honor it.

Align legal structures with asset locations. Company shares, private funds and real estate often benefit from situs-appropriate holding entities or trusts that are recognized locally.

Confirm whether the jurisdictions you care about recognize common law trusts, civil law foundations, or both. Where recognition is limited, consider alternatives such as shareholder agreements, life insurance wrappers, or local testamentary tools.

Coordinating Fiduciaries and Access

Execution details matter. Appoint executors and trustees who can act in each country or name local co-fiduciaries where required. Prepare notarized and apostilled copies of core documents and translations into the languages your institutions require.

Maintain a secure inventory of accounts, safekeeping locations and key relationships, along with device passcodes and instructions for two factor authentication. These access steps are as necessary as the legal documents, since many institutions will not release information without them.

Philanthropy, Art, And Liquidity

Cross-border philanthropy can trigger registration, reporting, or withholding. Decide whether to use a single foundation, parallel entities, or donor-advised funds in more than one country, for art, yachts, aircraft and collectibles, track situs, export and cultural property restrictions and insurance conditions.

Plan liquidity for taxes that may be due before private business interests or real estate can be sold. Consider credit facilities, life insurance, or staged distributions to avoid forced sales at a discount.

Using Multiple Wills Safely

Many families benefit from separate wills for different countries. Each will should cover only assets in its jurisdiction and should state that it is limited in scope so it does not revoke the other will. Coordinate signing formalities, witnesses and governing law choices. Keep originals and certified copies in a location where fiduciaries can easily access them.

How An Estate Planning Law Firm Can Help

An estate planning law firm with cross-border experience can map domiciles and residencies, make governing law choices where permitted and tailor trusts or entities that local courts and registries recognize. A cross-border strategy is needed for estate planning with assets overseas. If your life spans more than one country, schedule a consultation so a lawyer can align documents, structures and access protocols before a crisis forces hurried decisions. If you would like to learn more about estate planning for assets overseas, please visit our previous posts. 

Reference: Forbes (September 24, 2025) “Cross-Border Estate Planning Guide, Essential Strategies For Ultra High-Net-Worth Families”

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It is Wise to Add Your Trust to Your Homeowner's Policy

It is Wise to Add Your Trust to Your Homeowner’s Policy

September 8, 2025

If you’ve placed your home in a trust as part of your estate planning, which many people wisely do, it is wise to complete another task: add your trust to the homeowner’s policy. This detail can make or break your financial life, says a recent article, “Homeowners insurance warning: Why your trust must be listed on your policy,” from WFAA.

Regardless of who has paid the premiums and how long the insurance policy has been in place, if you don’t list the trust as a policyholder, the insurance company can deny coverage. Many homeowners who have created trusts to pass their property along after their death have encountered problems having their homes repaired or rebuilt after wildfires, floods and tornadoes because the trust wasn’t added to the insurance policy.

In most cases, the trust needs to be listed as an additional insured. However, it is essential to verify with both your estate planning attorney and your insurance company to ensure that your property is adequately protected. If it isn’t and you suffer a loss and file a claim, you may learn you don’t have the required “insurable interest.”

You may end up in court with no guarantee of a successful outcome. Insurance companies are notorious for pushing back on expensive claims when there’s wiggle room, and the owner of the property not being listed as an insured offers plenty of wiggle room to the insurance company.

According to the article, the owner of the property is the only entity with an insurance interest in the property. If the owner is the trust, the trust must be listed on the insurance policy.

Do your due diligence and ensure the homeowner’s insurance policy includes all the necessary individuals and entities. It’s essential to do this now, before a claim is filed and rejected.

If you have placed your home in a trust and haven’t yet updated the deeds or other critical documents, this article should provide the necessary incentive.

Once an experienced estate planning attorney creates a trust, the details must be carefully attended to for the trust to function as intended. If you create a trust and fail to fund it, the trust won’t work. This includes retitling investment accounts, business entities and insurance policies.

It is wise to add your trust to the homeowner’s policy. If you don’t have an estate plan in place, now is the time to consult with an experienced estate planning attorney and start the process. Once the estate plan is in process, ask your attorney for a checklist to be sure you get all the necessary tasks done. You’ll sleep better knowing your family, your home and your future are protected. If you would like to learn more about estate planning and insurance, please visit our previous posts. 

Reference: WFAA (Aug. 13, 2025) “Homeowners insurance warning: Why your trust must be listed on your policy”

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Options when Inheriting a House

Options when Inheriting a House

August 21, 2025

When someone inherits a home, the emotional connection often competes with practical concerns. You may want to preserve the memory, move in, rent it, or sell it. However, each path comes with financial, legal and tax implications. Understanding your options when inheriting a house can help you make informed decisions that align with both your personal goals and long-term stability.

Assess the Property’s Condition and Financial Obligations

Start by evaluating the home’s physical state. A property that needs extensive repairs or updates may not be worth keeping if you can’t afford the upkeep. Get an inspection if necessary to understand the costs involved.

Next, confirm whether there’s a mortgage or any liens. Just because you inherited the house doesn’t mean it’s fully paid off. If the mortgage is assumable, you may be able to assume it. If not, the balance will need to be paid off, refinanced, or covered through the estate.

You should also factor in property taxes, insurance, maintenance costs and potential homeowners association fees. These factors will impact the long-term affordability of maintaining the house.

Consider Your Use and Intentions

Decide whether you want to live in the home, rent it out, or sell it. Each choice has different tax implications:

  • Selling the home may trigger capital gains tax. However, heirs typically benefit from a step-up in basis, meaning the home’s value resets to fair market value at the date of death. That often reduces or eliminates capital gains.
  • Renting the home can generate income. However, it turns you into a landlord with all the responsibilities that entails. You’ll need to address local rental laws and potential property management needs.
  • Living in the home could be beneficial if it aligns with your lifestyle and financial situation. However, you’ll need to ensure that it is properly titled and insured in your name.

Address Estate and Title Matters

The home must be legally transferred to you before you can make changes. This typically happens through the probate process, unless the home was held in a trust or jointly titled with rights of survivorship.

An estate or probate attorney can help navigate these legal processes, especially if other heirs are involved or if disputes arise. Once the title is in your name, you can take formal ownership actions, such as refinancing or selling.

Don’t Delay Financial Planning for the Property

Remember, you have options when inheriting a house. Inheriting a home may significantly affect your estate and tax planning. You should update your will, consider creating a trust and review your insurance coverage. If you plan to keep the home in the long term, it should be integrated into your personal financial strategy.

Some heirs feel overwhelmed by the burden of inherited property. Selling may feel like a loss. However, it may be the wisest choice depending on your goals and the home’s condition. If you would like to learn more about how to manage inherited property, please visit our previous posts. 

Reference: SmartAsset (February 17, 2025) “What to Do When You Inherit a House”

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Moving to Another State can Impact Your Will

Moving to Another State can Impact Your Will

July 29, 2025

Relocating to a new state often prompts a fresh look at housing, healthcare and taxes. However, many people overlook revisiting their estate plan. A will drafted in one state doesn’t necessarily become void elsewhere. However, differences in state laws can create complications if it isn’t updated. To ensure that your wishes are carried out as intended, it’s important to understand how moving to another state can impact the validity and execution of your will.

Your Will May Still Be Valid—But That’s Not Enough

Most states honor wills created legally in another state. However, just because a will is valid doesn’t mean it’s well-suited to your new residence. Probate laws, witness requirements and rules governing executor eligibility can vary widely. For example, your new state may not accept handwritten wills or may require two witnesses instead of one.

Some states also impose additional requirements on out-of-state executors. If you named someone who lives in your former state, they may be unable to serve without appointing a local co-executor or taking other legal steps. These requirements can delay probate and increase administrative costs for your loved ones.

Community Property and Spousal Rights

If you move from or to a community property state, your spouse’s inheritance rights could change. Community property states treat most assets acquired during marriage as jointly owned, regardless of how they’re titled. This could affect how your estate is divided, especially if your existing will was drafted with different assumptions.

Similarly, elective share laws vary from state to state. In some places, a surviving spouse is entitled to a percentage of the estate even if they are disinherited in the will. These rules can override your stated intentions, particularly if your estate plan hasn’t been updated since the move.

Update Beneficiary Designations and Ancillary Documents

Relocation is also a good time to review related documents, such as powers of attorney, advance directives and healthcare proxies. Some states require specific language or forms for these to be enforceable. A new address or a change in family circumstances may also necessitate revisions to your chosen agents or instructions.

Reviewing beneficiary designations on retirement accounts and life insurance policies is equally important. These assets often pass outside the will, and inconsistencies between documents can lead to unintended results. If you’re not certain your estate plan is robust and consistent, an estate planning attorney can help. If you are planning on moving to another state, work with an estate planning attorney to see how the state’s laws impact your will. If you would like to learn more about estate planning, please visit our previous posts. 

Reference: The American College of Trust and Estate Counsel (Jul 17, 2019) “Should I Sign New Estate Planning Documents When I Move to a New State?”

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Managing Inherited Property can be Complicated

Managing Inherited Property can be Complicated

April 1, 2025

When a loved one passes away, their home is often one of the most significant assets left behind. However, managing an inherited property can be complicated, involving legal procedures, financial obligations and potential family conflicts.

Knowing what steps to take can help heirs navigate the probate process, handle property expenses and decide whether to sell, rent, or keep the home.

Understanding Probate and Property Transfers

1. Determining Ownership and Title

Before making any decisions, confirming who legally owns the property is essential. Ownership depends on:

  • Whether the deceased had a will or trust specifying beneficiaries
  • The state’s inheritance laws if no will exists (intestate succession)
  • Whether the home was jointly owned by a surviving spouse or co-owner

If the property is included in a will, it must go through probate before transferring it to heirs. However, probate may not be necessary if it was placed in a living trust or owned jointly with survivorship rights.

2. Navigating the Probate Process

If the home is subject to probate, the executor of the estate is responsible for:

  • Filing legal documents to initiate probate
  • Paying outstanding debts and property taxes before distributing assets
  • Determining if the house must be sold to settle debts or be transferred to heirs

Probate can take months or even years, depending on the complexity of the estate. If multiple heirs inherit the home, they must agree on how to proceed with the property.

Financial Responsibilities of Inheriting a Home

1. Covering Mortgage and Property Expenses

If the home still has a mortgage, the heir must continue making payments or risk foreclosure. Other financial obligations include:

  • Property taxes and homeowner’s insurance
  • Utility bills and maintenance costs
  • Homeowners’ association (HOA) fees, if applicable

If the deceased had a reverse mortgage, the estate may need to sell the home or pay off the loan before inheriting it.

2. Selling vs. Keeping the Home

Once ownership is settled, heirs must decide whether to:

  • Keep the home – Ideal if a family member plans to live in it or use it as an investment.
  • Sell the property – A common choice to divide assets among heirs and cover expenses.
  • Rent the home – Provides an income stream but requires property management.

A legal dispute may arise if multiple heirs inherit the home but disagree on what to do. Having a clear estate plan can help prevent these conflicts.

Steps to Take When Managing an Inherited Home

  1. Secure the Property – Change locks, check for damages and notify homeowners insurance of the owner’s passing.
  2. Review Debts and Expenses – Determine if the home has outstanding loans, unpaid taxes, or liens.
  3. Get a Home Appraisal – Assess the market value to guide selling, renting, or estate distribution decisions.
  4. Settle Ownership and Probate Issues – Work with an attorney to transfer the title to heirs or sell the property.
  5. Decide on Next Steps – Weigh financial and personal factors before keeping, selling, or renting the home.

Get Legal Guidance for Managing an Inherited Home

Managing an inherited property can be complicated, requiring careful legal and financial planning. Whether you need to navigate probate, resolve title issues, or explore selling options, and experienced estate planning law firm can help ensure a smooth transition. Id you would like to learn more about inherited property, please visit our previous posts. 

Reference: AllLaw (Aug. 03, 2022) “Transferring Real Estate After Death”

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Understanding the Downsides of Inheriting a Timeshare

Understanding the Downsides of Inheriting a Timeshare

March 24, 2025

Timeshares are often marketed as affordable vacation ownership. However, what happens when they become part of an estate? Many heirs are surprised to learn that timeshares do not function like traditional real estate assets—instead of inheriting a valuable investment, they may be left with ongoing maintenance fees, restrictions on resale and unexpected legal obligations. Understanding the downsides of inheriting a timeshare can help beneficiaries decide whether to keep, sell, or disclaim the property.

The Hidden Costs of Inheriting a Timeshare

Unlike traditional real estate, timeshares come with mandatory fees and restrictions, making them a financial liability rather than a valuable inheritance.

1. Ongoing Maintenance Fees

One of the most significant downsides of inheriting a timeshare is the never-ending maintenance fees, which must be paid whether you use the property. These fees:

  • Increase annually, often outpacing inflation
  • Can amount to thousands of dollars per year
  • Must be paid even if the timeshare goes unused

Failure to pay can result in collections, credit damage, or even foreclosure.

2. Difficulty Selling or Transferring Ownership

Many assume they can sell an inherited timeshare. However, resale is notoriously difficult. Timeshares:

  • Depreciate quickly and often have little to no market value
  • Have limited buyer demand, even for desirable locations
  • May include contract clauses that restrict resale or transfer options

Some heirs spend years trying to offload an unwanted timeshare, only to realize they are stuck paying fees indefinitely.

3. Potential Legal Liabilities

If a timeshare is deeded property, heirs become legally responsible for all associated costs. This means:

  • The management company can take legal action to collect unpaid fees
  • Inheritance laws may force multiple heirs to share financial obligations
  • Some contracts bind heirs indefinitely, making it hard to walk away

Even if a timeshare seems appealing initially, the long-term costs and restrictions can outweigh any perceived benefits.

How to Avoid Inheriting a Timeshare

1. Disclaiming the Inheritance

Heirs are not required to accept a timeshare inheritance. If an estate includes an unwanted timeshare, beneficiaries can legally disclaim it by filing a formal refusal with the probate court before taking ownership.

However, disclaiming must be done before using the timeshare or making any payments, as this can be seen as accepting ownership.

2. Negotiating a Deed-Back with the Resort

Some resorts allow heirs to return the timeshare through a “deed-back” program. This involves:

  • Contacting the timeshare company to check eligibility
  • Submitting necessary paperwork to relinquish ownership
  • Paying any final fees required to exit the contract

Not all resorts offer this option; some may charge a fee for releasing ownership.

3. Seeking Legal Assistance to Exit a Timeshare

If a resort refuses to take back the timeshare, an estate planning attorney can help explore other legal options. This may include:

  • Reviewing the contract for loopholes
  • Negotiating with the management company
  • Exploring legal exit strategies that protect the estate from liability

Many families assume they must accept an inherited timeshare. However, it may be possible to legally remove this financial burden with the right approach.

Should You Keep an Inherited Timeshare?

While most heirs choose to avoid inheriting a timeshare, some may find value in keeping one under the right conditions. It may be worth keeping if:

  • The location is desirable and frequently used by family members
  • The maintenance fees are affordable compared to rental costs
  • The contract allows for flexibility in usage and resale

However, long-term costs and restrictions should be carefully evaluated before deciding. Understanding the downsides of inheriting a timeshare can help you avoid a potentially costly and difficult headache. If you would like to learn more about managing inherited property, please visit our previous posts. 

Reference: Yahoo Finance (Aug. 16, 2024) “Inheriting a timeshare can be bad news. Here’s why, and how to avoid it”

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Self-Employed must take a Proactive Approach to Estate Planning

Self-Employed must take a Proactive Approach to Estate Planning

January 16, 2025

Freelancers and the self-employed must take a proactive approach to estate planning.  These types of jobs operate without the safety nets provided by traditional employment. This independence brings freedom. However, it also adds complexity to financial and estate planning. From managing irregular income to protecting business assets, creating an estate plan ensures that your hard work is preserved and distributed according to your wishes.

Unlike salaried employees, freelancers often lack access to employer-sponsored benefits, such as life insurance, retirement plans, or disability coverage. Their business assets and personal finances are frequently intertwined, making careful planning essential to avoid unnecessary complications for heirs.

A well-crafted estate plan for freelancers addresses:

  • Transfer of business assets or intellectual property.
  • Continuity of income for dependents.
  • Minimization of taxes and legal hurdles.

Freelancers and the self-employed must create a plan that considers their unique financial circumstances and provides long-term security for loved ones.

Freelancers often rely on their business as their primary source of income. Without a plan, the value of that business could be lost upon their death. Key steps include:

  • Appointing a Successor: Identify someone to take over the business or handle its sale.
  • Creating a Buy-Sell Agreement: Outline how ownership interests will be transferred for partnerships or joint ventures.
  • Documenting Procedures: Maintain clear records and instructions to help successors understand ongoing operations or intellectual property management.

Freelancers often experience fluctuations in income, which can complicate traditional estate planning strategies. To account for this:

  • Establish a rainy-day fund to provide a financial buffer for your estate.
  • Work with an estate planning attorney to identify flexible asset protection strategies.
  • Consider annuities or investments that provide steady income streams for beneficiaries.

Unlike traditional employees, freelancers must set up their own retirement savings plans. Options include:

  • SEP IRAs or Solo 401(k)s: Tax-advantaged accounts tailored for self-employed individuals.
  • Roth IRAs: Flexible savings accounts that grow tax-free, offering greater liquidity for heirs.

Ensuring that retirement savings are properly designated to beneficiaries avoids complications later.

The self-employed often own valuable digital assets like intellectual property, domain names, or online portfolios. These assets must be included in your estate plan to ensure seamless transfer. Create an inventory of:

  • Login credentials for key accounts.
  • Ownership documentation for websites or digital products.
  • Instructions for transferring or licensing intellectual property.

Many self-employed generate income from intellectual property, such as writing, artwork, or designs. An estate plan should specify how copyrights, patents, or trademarks are managed after death. This may include:

  • Assigning ownership to heirs or beneficiaries.
  • Creating trusts to manage royalty payments.
  • Licensing or selling rights to preserve income streams.

The first step to creating an estate plan is drafting a will that distributes assets, business interests and personal property according to your wishes. Without one, state laws determine asset distribution, which can result in unintended consequences. However, there’s much more to an estate plan than just making a will.

Establish Powers of Attorney

Freelancers should designate a trusted person to handle financial and healthcare decisions, if they become incapacitated. Powers of attorney ensure continuity in managing personal and business affairs during emergencies.

Consider a Living Trust

A living trust can help freelancers avoid probate and ensure that assets are distributed efficiently. Trusts are beneficial for managing complex assets, like intellectual property or business income.

Secure Life Insurance

Life insurance provides a safety net for freelancers with dependents by replacing lost income and covering future expenses. Policies should be aligned with your estate plan to ensure that benefits are directed appropriately.

Reach Out to an Estate Planning Attorney

Freelancers should consult estate planning attorneys and financial/tax advisors to create a plan that addresses their unique circumstances. Regular reviews ensure that the plan evolves alongside income, assets, or family structure changes.

Freelancers and the self-employed must take a proactive approach to estate planning. You can ensure your hard-earned legacy benefits your loved ones by addressing business continuity, income fluctuations and digital assets. An estate plan tailored to your needs secures your financial future and provides peace of mind, knowing that your assets and values will be protected. If you would like to learn more about planning for the self-employed, please visit our previous posts.

 

Reference: American College of Trust and Estate Counsel (ACTEC) (Oct. 19, 2023) “Estate Planning for Freelancers and the Gig Economy”

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A Trust Only Works if it is Properly Funded

A Trust Only Works if it is Properly Funded

January 9, 2025

A revocable trust is a powerful estate planning tool that helps individuals manage their assets during their lifetime and distribute them efficiently after their death. However, a trust only works if it is properly funded. The American College of Trust and Estate Counsel explains that many individuals make the mistake of setting up a trust but fail to transfer assets into it. This leaves their estates vulnerable to probate, taxes and disputes. To fully benefit from your trust, you must ensure that it is appropriately funded with all intended assets.

What It Mean to Fund a Trust

Funding a trust involves transferring ownership of assets from your name into the trust’s name. This step gives the trust legal control over the assets, allowing them to be managed and distributed according to the terms of the trust. Without this transfer, your assets may remain subject to probate, and your trust could become an ineffective document.

Key asset types that can and should be transferred into a trust include:

  • Real estate properties
  • Bank and investment accounts
  • Tangible personal property, such as valuable jewelry, artwork, or collectibles
  • Business interests and intellectual property
  • Life insurance policies (with the trust named as the beneficiary)

By funding your trust, you ensure that these assets are managed seamlessly during your lifetime and distributed efficiently upon your death.

Why Trust Funding is Essential

Failing to fund a trust undermines its primary purpose. If assets remain outside of the trust, they may become subject to probate—the often lengthy and costly legal process of settling an estate. This can delay the distribution of assets to your heirs and increase the likelihood of disputes among family members.

A funded trust also provides benefits that unfunded trusts cannot, including:

  • Privacy: Unlike wills, which become public records through probate, trusts keep the details of your estate private.
  • Control: Funding the trust ensures assets are distributed according to your wishes without interference from courts or state laws.
  • Continuity: In the event of incapacity, the trust enables a successor trustee to manage your assets without court intervention.

How to Fund a Trust

Properly funding a trust requires transferring ownership of assets into the trust and ensuring that documentation is updated to reflect the change. Each asset type requires specific steps:

Real Estate

To transfer real estate, you must execute a deed transferring ownership to the trust. This often involves recording the new deed with the local land records office. Consult an estate lawyer to ensure that the transfer complies with state laws and doesn’t inadvertently trigger taxes or other issues.

Bank and Investment Accounts

Banks and financial institutions typically require documentation to retitle accounts in the name of the trust. This might involve filling out specific forms or providing a copy of the trust agreement. Failing to update account ownership could result in these assets being excluded from the trust’s control.

Tangible Personal Property

A written assignment can transfer tangible personal property to the trust, such as art, heirlooms and jewelry. The assignment lists the items being transferred and formally declares their inclusion in the trust.

Life Insurance and Retirement Accounts

While retirement accounts, like IRAs and 401(k)s, are not typically retitled to a trust for tax reasons, you can name the trust as a beneficiary. For life insurance policies, updating the beneficiary designation to the trust ensures that proceeds are directed according to the trust’s terms.

Business Interests

If you own a business, transferring shares or interests into the trust allows the trustee to manage them as needed. This requires amending operating agreements, stock certificates, or partnership documents to reflect the transfer.

Common Pitfalls to Avoid

Even with good intentions, individuals often make mistakes when funding their trusts. Common errors include:

  • Leaving assets out of the trust: Forgetting to transfer all intended assets undermines the trust’s effectiveness.
  • Failing to update beneficiary designations: Beneficiary forms conflicting with trust terms can create legal disputes.
  • Not reviewing the trust regularly: As assets change over time, it’s essential to revisit and update the trust to include new acquisitions.

An estate lawyer can guide you through the process and help ensure that all assets are correctly transferred and documented. Remember, a trust only works if it is properly funded. It is a living document that requires ongoing attention. Regularly reviewing and updating the trust ensures it remains aligned with your goals and includes all current assets. Properly funding your trust provides security for your loved ones, avoids unnecessary legal complications and ensures that your legacy is preserved. If you would like to learn more about funding a trust, please visit our previous posts. 

References: American College of Trust and Estate Counsel (ACTEC) (Aug. 31, 2023) “Funding Your Revocable Trust and Other Critical Steps” and American College of Trust and Estate Counsel (ACTEC) (Sep 21, 2023) “Tangible Personal Property in Estate Planning”

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Information in our blogs is very general in nature and should not be acted upon without first consulting with an attorney. Please feel free to contact Texas Trust Law to schedule a complimentary consultation.
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