• If your will is validly executed and self-proved, and provides for independent administration, then you may not need a new Texas will. If your will was validly executed and self-proved under the laws of the state where you signed it, or where you were domiciled or had a place of residence, it should be valid and self-proved in Texas. Texas Estates Code §§ 251.053; 256.152[b], [c]. For a will to be validly executed in Texas, the will (other than a holographic will) must be in writing and signed by the testator and by two witnesses. Texas Estates Code § 251.051. To be self-proved, the will must include a self-proving affidavit signed by the testator, two witnesses, and a notary. See Texas Estates Code § 251.101. Your prior state's requirements for signing and self-proving a will may or may not be identical to those of Texas. Determining whether you need a new will therefore requires a review of your former state's requirements for will signing and self-proving. Also, if your out-of-state will provides for independent administration, then your estate may be handled with a minimum of court requirements and interference, which is generally preferred. See Texas Estates Code § 401.002[a]. If your out-of-state will does not provide for independent administration, then your estate may be subject to a burdensome dependent administration. Other aspects of your will not mentioned here may support a decision to make a new Texas will. But if your out-of-state will satisfies these minimum requirements, it should be possible to admit it to probate in Texas.

  • There are at least three benefits to lifetime irrevocable trusts for children. First, assets held in a trust for your child should be protected from your child's creditors as long as the trust is a "spendthrift" trust. See Texas Property Code § 112.035. Second, trust assets should not be subject to division upon divorce, and distributions of trust property should be the separate property of the beneficiary spouse. See Sharma v. Routh, 302 S.W.3d 355 (Tex App--Houston [14th dist.] 2009, no pet.). Third, trust assets should not be included in your child's estate upon his or her death for federal estate tax purposes, as long as your child does not possess certain powers over trust property. See I.R.C. § 2041. These benefits may be available even if your child serves as trustee or his or her own trust. See Texas Property Code § 112.034[c]; IRC § 2041[b](1)(A); Treas. Reg. § 20.2041-1[c](1). If your child's trust terminates prior to their death, all these benefits would be lost at that time.

  • You'll need to do a new will or do a codicil to your existing will. Texas law permits a parent of a minor child to designate a guardian of minor children only in a will or a statutorily-prescribed written declaration. Texas Estates Code § 1104.053. The formalities to sign a written declaration are nearly identical to those for signing a will. Compare Texas Estates Code § 1104.152 with Texas Estates Code § 251.051. A parent who desires to designate a guardian of minor children in the event the parent is incapacitated may do so in a separate written declaration of guardian. Texas Estates Code § 1104.053.

  • There are at least four ways to use your gift tax annual exclusion. First, you could create and fund an educational savings account, also known as a "529 Account." See IRC § 529[c](2)(A)(i). Second, you could create and fund a Texas Uniform Transfers to Minors Act (UTMA) account. See Texas Property Code § 141.010. Third, you could create and fund a "2503[c] trust," which is required to terminate and distribute in full to the beneficiary upon his or her turning age 21. IRC § 2503[c]. Fourth, you could create and fund a "Crummey" trust, which may last for the beneficiary's lifetime (or longer). See Crummey v. Comm'r, 397 F.2d 82 (9th Cir. 1968). To secure the gift tax annual exclusion, you must give the beneficiary a right to withdraw the gifts made to the trust.

  • No. Texas law does not permit electronically signed wills. See Texas Business and Commerce Code § 322.003[b](1) (excepting wills, codicils, and testamentary trusts from the Texas Uniform Electronic Transactions Act). Also, except in the case of a holographic (handwritten) will, a will must be attested by two witnesses who sign in the testator's (your) presence. Texas Estates Code §§ 251.051, 251.052. And, for a will to be self-proved, a notary public must be present. Texas Estates Code § 251.104.

FAQs - Estate Planning

  • A trustee of an irrevocable trust is required to file an income tax return (Form 1041), except where the trust is classified as a grantor trust for income tax purposes. IRC § 6012[a](4); 6012[b](4); see IRC §§ 671 through 678. If the trust is a grantor trust, the trustee may not be required to file a separate income tax return as long as the trustee properly reports trust income to the grantor. See Treas. Reg. § 1.671-4. A trustee of a trust that is fully revocable and amendable is not required to file a federal income tax return.

  • A trust’s books should include all financial information necessary to describe the investments and operations of the trust to the beneficiaries. A trustee should be prepared to provide an accounting to any beneficiary upon request. Texas law provides that an accounting may not be demanded more frequently than every 12 months, and a trustee has 90 days to comply with a request before the beneficiary may file suit. See Texas Trust Code § 113.151. An accounting should communicate to the beneficiaries all information relevant to the beneficiaries' interests in the trust, including a statement of trust assets, receipts, expenditures, and distributions to beneficiaries. See Texas Trust Code § 113.151; 113.152. A Trustee is required to provide trust information to any beneficiary over age 25. Texas Trust Code § 111.0035[c].

  • Maybe, if trust is properly drafted to contemplate the beneficiary serving as trustee. See Texas Property Code § 112.008[b]. Some trust agreement expressly prohibit a beneficiary serving as trustee. If the trust agreement is silent on the issue, or if it expressly permits e beneficiary to serve as trustee, consider what effect the beneficiary serving as trustee could have on the tax and creditor protection aspects of the trust. In that regard, to avoid adverse consequences, the trust agreement should limit distributions to the purposes of health, education, maintenance, and support. If that restriction is not in place, trust distributions made by a beneficiary-trustee to other beneficiaries may be treated as taxable gifts, trust assets may be subject to the beneficiary’s creditors, and trust assets may be included in the beneficiary’s gross estate for estate tax purposes upon the beneficiary’s death. See IRC § 2514[b], [c]; Treas. Reg. § 25.2511-1[g](2); Texas Property Code § 112.035[f]; IRC § 2041[a](2). See also Sharma v. Routh, 302 S.W.3d 355 (Tex App--Houston [14th dist.] 2009, no pet.). In addition, an intended beneficiary who disclaimed an interest in the trust may not be permitted to serve as trustee. See Treas. Reg. § 25.2518-2[d](2).

  • Fortunately, neither the Texas Secretary of State nor the Texas Comptroller requires filings for the types of trusts typically used in estate planning. As regards the Secretary of State, a trust (other than a "business trust") is neither a "filing entity" nor a "nonfiling entity" under the Texas Business Organizations Code ("TBOC"). See TBOC §§ 1.002(18) ("domestic entity"), (22) ("filing entity"), and (57) ("nonfiling entity"). The creation and governance of a trust therefore does not require any filings with the Secretary of State. See also TBOC §§ 3.001, 3.002. For Texas franchise tax purposes, a trust (other than a "business trust") should be classified as "passive entity" and not a "taxable entity." Texas Tax Code § 171.0002[a], [b](3). A "business trust" is a trust created by the beneficiaries as a device to carry on a profit-making business which normally would have been carried on through business organizations that are classified as corporations or partnerships under the Internal Revenue Code. Treas. Reg. § 301.7701-4[b]. The Texas Comptroller's website, under Franchise Tax Frequently Asked Questions, provides, "[i]f a partnership or trust qualifies as a passive entity for the period upon which the franchise tax report is based, is not registered and is not required to register with either the SOS or the Comptroller's office, then it will not be required to register or file a franchise tax report with the Comptroller's office." (retrieved January 2, 2023).

  • Yes, within limits. You could (1) apply to a court to modify or reform the trust pursuant to Texas Trust Code § 112.054, (2) merge the trust into a new trust pursuant to Texas Trust Code § 112.057[c] or pursuant to the trust's terms (if the trust contains a merger provision), or (3) decant the trust pursuant to Texas Trust Code §§ 112.071 through 112.087. Generally, under all three methods, you cannot change the dispositive provisions of the trust. See §§ 112.054[a]; 112.057[c]; 112.072; 112.073. Generally, under all three methods, you must notify all beneficiaries prior to taking action. See §§ 112.054[d]; 112.057[c](1); 112.074.

  • For trusts that became irrevocable prior to September 1, 2021, trust property must vest in individuals not later than 21 years after the death of the last to die of persons who were living when the trust was created. See Texas Property Code § 112.036[c](2). For trusts that become irrevocable after September 1, 2021, trust property must vest in individuals not later than 300 years after the date the trust became irrevocable. Texas Property Code § 112.036[c](1).

FAQs - Trust Administration

  • Texas law does not require that a decedent’s will be filed for probate. But if there is any asset titled in the decedent's name, and there's no beneficiary designation or survivorship arrangement, transferring title or gaining access to funds will likely require filing the will for probate.

  • Yes. A will may be filed for probate as a muniment of title only. See Texas Estates Code Chapter 257. Muniment of title is available if the estate has no debts, other than debts secured by a lien on real estate, or if the court finds that there is no necessity for administration of the estate. Texas Estates Code § 257.001. Upon the will's admission to probate as a muniment of title, all persons having possession of estate property are legally protected in transferring the property to the persons entitled to the property under the will. Texas Estates Code § 257.102. Filing the will for probate as a muniment of title avoids the requirement to issue notices to creditors and beneficiaries and to prepare and file an inventory. Care should be taken, however, to ensure that custodians of property will accept a muniment of title in lieu of a full probate administration. Out-of-state (non-Texas) custodians may be especially reluctant to accept a muniment of title.

    In addition, if the only asset needing to be transferred is real property, then it may be possible to use an affidavit of heirship filed in the applicable county records. See Texas Estates Code Chapter 203. The affidavit should describe the existence of the will and the reason it was never probated. Using an affidavit of heirship is appropriate only if the beneficiaries named in the will are the same as the heirs who would inherit the decedent’s estate under the laws of intestate succession.

  • There are three options: (i) file an affidavit of heirship in the county deed records, (ii) file a small estate affidavit with a court, or (iii) apply to a court for a determination of heirship.

    Affidavit of Heirship. An affidavit of heirship is a document that describes the decedent's family history, is signed before a notary by a disinterested person (non-family member), and is recorded in the appropriate county deed records. See Texas Estates Code § 203.001. Upon five years after filing, the affidavit serves as prima facie evidence of the facts in the affidavit in any proceeding to declare heirship or suit involving title to property. Texas Estates Code § 203.001[a]. It may be possible to file an affidavit of heirship even if the decedent made a will. See Texas Estates Code § 203.002, item 10.

    Small Estate Affidavit. A small estate affidavit is a similar document, but is filed with a court and is available only if the size of the decedent's estate, excluding homestead and exempt property, does not exceed $75,000. Texas Estates Code § 205.001. The affidavit must be sworn to by two disinterested witnesses, each distributee of the estate, and each guardian of a minor or incapacitated distributee. It must include a list of the decedent's assets, names and addresses of each distributee, and the decedent's relevant family history. Texas Estates Code § 205.002. A small estate affidavit filed with the court may be used to transfer the decedent's homestead, but only in very limited circumstances. Texas Estates Code §§ 205.006 and 205.009. It may be possible to file a small estate affidavit pro se (without an attorney), but such filings experience a high rejection rate. A small estate affidavit cannot be used if the decedent made a will. Texas Estates Code § 205.001.

    Determination of Heirship. A determination of heirship is a proceeding where an application is made to a court to determine the persons who are the decedent's heirs and their respective shares of the decedent's estate. Texas Estates Code § 202.001 et seq. An heirship determination is the most burdensome of these three alternatives, but it is often necessary and is the most likely to result in successful transfer of title in the decedent's assets to his or her heirs.

  • It is possible to probate a copy, but doing so requires testimony regarding regarding the cause of non-production and the will’s contents. See Texas Estates Code § 256.156(b). In some cases, additional testimony regarding the circumstances of signing may be required. See Texas Estates Code §§ 256.152(a), 256.156(c). In contrast, probating an original, attested, self-proved will should not require such witness testimony. See Texas Estates Code § 256.152[b].

  • If an application to admit the decedent's will to probate has been filed in Texas, a beneficiary may be able to obtain a copy through https://research.txcourts.gov or by requesting a copy from the court in which the will was filed. Also, the executor is required to send notices to beneficiaries, which may include a copy of the will, within 60 days after the date of the order admitting the will to probate. See Texas Estates Code §§ 308.002 and 308.003.

  • Federal income tax law requires the executor of a decedent's estate to file the decedent's final income tax return for the tax year ending with the decedent's date of death. IRC § 6012[b](1); Treas. Reg. § 1.6012-3[b](1). Although the decedent's final income tax return will cover only the short period beginning with the first day of his last taxable year and ending with the date of his death, the filing of the return and the payment of tax may be made as though he had lived throughout his last taxable year. Treas. Reg. § 1.443-1. Consequently, the decedent's final income tax return will likely be due on April 15 of the year following the calendar year in which the decedent died. If the decedent was married, a joint return for the decedent's final tax year may be filed by the executor or administrator of the decedent's estate, except in limited circumstances where a surviving spouse can file the return. See IRC § 6013[a](3). In addition to filing the decedent's final income tax return, the executor or administrator must file fiduciary income tax returns (Forms 1041) for every year in which the estate has gross income of $600 or more. IRC § 6012[a](3), (b)(4).

  • Federal estate tax law requires the filing of an estate tax return (Form 706) if the sum of the decedent's gross estate plus lifetime taxable gifts exceeds the basic exclusion amount in effect for the year of the decedent's death. IRC §. 6018[a](1) and (3). To determine whether an estate tax return must be filed therefore requires identifying all taxable gifts made by the decedent during his or her lifetime and determining the fair market value of the decedent's gross estate at death. Even if the decedent's gross estate plus lifetime taxable gifts does not meet the threshold for filing an estate tax return, it may be prudent to file a return for other reasons. First, an estate tax return may be filed solely to elect portability, which allows the decedent's surviving spouse to use the decedent's remaining unused estate tax exclusion amount. IRC § 2010[c](5)(A). Second, an estate tax return may be required to make a qualified terminable interest property ("QTIP") election with respect to property passing in trust to the decedent’s surviving spouse. IRC § 2056[b](7)(B)(v). Third, an estate tax return may be required to make a reverse QTIP election, which utilizes the decedent's GST exemption with respect to marital deduction property. IRC § 2652[a](3). Fourth, it may be prudent to file an estate tax return for an estate whose size may be close to, but not in excess of, the filing threshold, in order to start the running of the statute of limitations on IRS assessment. See IRC § 6501[a].

FAQs - Estate Administration