What is a Living Trust in Texas?

A living trust in Texas is a legal document that places your assets into a trust during your lifetime and allows those assets to be managed for your benefit while you’re alive — and then smoothly transferred to your chosen beneficiaries after your death. Unlike a will, which goes through probate, a living trust can bypass that process entirely, saving your loved ones time, money, and stress.

In this article, the estate planning attorneys at Varghese Summersett explain living trusts in Texas, including the types available, how they work, and how they can help protect your assets and provide for your loved ones.

How Does a Living Trust Work in Texas?

When you create a living trust, you (the grantor) transfer ownership of your property, such as real estate, bank accounts, investments, or even personal items, into the trust. You name a trustee (often yourself, initially) to manage the trust during your lifetime. You also designate a successor trustee who will take over if you become incapacitated or after your death. This allows your assets to be distributed directly to your beneficiaries without needing court involvement.

Example: If you own a house in Fort Worth and want your daughter to inherit it, placing it in a living trust means she can take ownership quickly after your death — without waiting on probate court proceedings.

Types of Living Trusts in Texas

While the term “living trust” often refers to a revocable living trust, Texas law recognizes several forms, each suited to different goals and circumstances. Understanding the distinctions can help you make the right decision for your estate planning needs.

Revocable Living Trust

A revocable living trust allows you to change or revoke the trust at any time. It offers flexibility, but does not shield assets from creditors. This type of trust is commonly used to avoid probate and maintain privacy in the management and distribution of your assets.

Irrevocable Living Trust

An irrevocable living trust cannot be changed or revoked without court approval or beneficiary consent. It offers greater protection from creditors and potential tax advantages. Because the assets are removed from your taxable estate, this type of trust is often used for advanced estate planning strategies.

Testamentary Trust

A testamentary trust is created through your will and becomes active after death. Unlike living trusts, these do go through probate but can still be used to control asset distribution. Testamentary trusts are often used to manage assets for minor children or beneficiaries who may not be ready to handle a large inheritance.

Special Needs Trust

A special needs trust preserves a disabled beneficiary’s eligibility for government benefits while providing supplemental financial support. This type of trust is carefully structured to avoid disqualifying the beneficiary from essential aid programs like Medicaid or Supplemental Security Income (SSI), while still enhancing their quality of life.

Who Needs a Living Trust in Texas?

A living trust isn’t just for the wealthy. In fact, it can be especially beneficial for:

• Parents of young children who want to set specific terms for asset distribution
• Individuals with blended families who need to ensure assets go to biological children
• Elderly individuals who may become incapacitated and want seamless financial management
• Business owners who wish to maintain operational continuity
• High-asset individuals who want to minimize estate taxes and avoid probate
• Military members who face deployment or high-risk environment and need a reliable plan for managing and transferring assets

Why Create a Living Trust?

There are many reasons why people should create a living trust. They include, but are not limited to:

1. Avoid Probate: Probate in Texas can be a costly and time-consuming court process. A living trust allows assets to be distributed immediately after death, skipping court delays and fees.

2. Maintain Privacy: Unlike a will, which becomes public record during probate, a living trust keeps your financial affairs confidential.

3. Plan for Incapacity: If you become mentally or physically unable to manage your finances, your successor trustee can step in without requiring court intervention.

4. Control Asset Distribution: You can outline specific instructions for when and how your beneficiaries receive their inheritance, whether it’s at a certain age or upon reaching a milestone like graduation.

5. Protect Loved Ones: A living trust can include protective language to help shield beneficiaries from creditors, lawsuits, or even themselves if they lack financial discipline.

Common Misconceptions About Living Trusts

Many people delay or avoid estate planning because of persistent myths and misunderstandings. Unfortunately, these misconceptions can lead to unnecessary legal complications, financial burdens, and stress for loved ones. Clearing up the confusion can help more families take timely, proactive steps toward peace of mind.

“Trusts are only for the wealthy.”

This is one of the most common myths. In reality, middle-class families often stand to gain the most from living trusts. They help avoid probate costs, protect young beneficiaries, and provide clear instructions for distributing assets—all of which can preserve family harmony and financial stability.

“I’m too young for a trust.”

Tragedy doesn’t follow a schedule, and neither should your planning. Accidents and medical emergencies can happen at any age. A living trust offers financial and legal protection no matter where you are in life, helping to ensure your wishes are followed and your assets are managed according to your terms.

“I already have a will—why would I need a trust?”

While a will is a key estate planning tool, it must go through probate, which can be time-consuming, public, and costly. A living trust allows your estate to bypass probate entirely and also provides a plan for managing your assets if you become incapacitated — something a will cannot do.

“Trusts are complicated.”

While trusts may seem intimidating at first, the process of creating one can be straightforward with the guidance of a knowledgeable estate planning attorney. A well-drafted trust simplifies matters for your family by outlining your intentions clearly and avoiding unnecessary legal entanglements.

What Happens If You Don’t Have a Living Trust?

Without a living trust, your estate may be subject to:

• Texas Probate Court, which can delay the distribution of your assets
• Higher legal and administrative costs
• Public exposure of your estate and beneficiaries
• Inflexibility in dealing with sudden incapacity
• Potential disputes among family members

Assets held solely in your name without proper beneficiary designations will be frozen until the probate process is complete. In Texas, even with a will, this can take months — or longer if contested.

Assets Commonly Placed in a Living Trust

Understanding what can (and can’t) go into a trust helps you make the most of this tool. Assets typically included are:

• Real estate (your home, investment properties, land)
• Bank accounts (checking, savings, CDs)
• Investment accounts (brokerage, mutual funds)
• Business interests (LLC shares, partnerships)
• Personal property (jewelry, art, firearms)
• Life insurance policies (when coordinated with a trust-owned policy or pour-over will)

Note: Retirement accounts (like IRAs or 401(k)s) typically stay outside the trust due to tax considerations but can be coordinated with beneficiary designations.

How to Fund a Living Trust in Texas

Creating a trust is just the beginning. Funding it — transferring ownership of your assets — is essential for it to work. Here are the steps to fund a living trust:

• Retitle assets (e.g., change deed on your home to show trust as owner)
• Update beneficiary designations for life insurance or retirement accounts
• Assign personal property using a trust schedule or assignment
• Open trust bank accounts or retitle existing accounts

Many trusts fail not because of bad drafting — but because they were never properly funded. That’s why the attorneys at Varghese Summersett walk clients through this critical step in detail.

How a Living Trust Fits Into a Broader Estate Plan

A living trust is only one component of a comprehensive estate plan. To truly protect your wishes and family, you should also consider:

• Last Will and Testament (to catch any assets not in the trust)
• Durable Power of Attorney (for managing financial affairs if incapacitated)
• Medical Power of Attorney and Advance Directive (for healthcare decisions)
• HIPAA Authorization (to grant access to medical records)

Varghese Summersett Attorneys Michael A. Levins and Brent McMullen work closely with clients to build personalized plans that bring all of these elements together.

Can a Living Trust Impact Divorce?

If you are going through a divorce, a living trust may or may not be considered community property depending on when and how it was funded. Assets acquired during marriage and transferred into the trust may be subject to division. However, if the trust was created before the marriage and funded with separate property, it may remain separate under Texas Family Code § 3.001. It’s crucial to update your trust after divorce to remove your ex-spouse as a beneficiary or trustee, if applicable.

A living trust does not directly influence child custody arrangements, but it can indirectly impact your children’s welfare. For example, if you name a trustee to manage funds for your children, you can ensure financial stability regardless of who is awarded custody. If you pass away while your child is a minor, the trustee can manage the assets in the trust to provide for the child’s health, education, and general needs.

Interested in a Living Trust? Varghese Summersett Can Help

At Varghese Summersett, attorneys Michael A. Levins and Brent McMullen bring decades of combined experience in estate planning and family law to help Texas families craft strategic, personalized living trusts.

Known for his sharp financial acumen, Michael A. Levins advises clients on building estate plans that are both practical and protective. With a finance degree, law degree, and MBA, he is uniquely equipped to address complex family dynamics, asset protection strategies, and long-term wealth preservation goals.

Brent McMullen brings precision and foresight to every living trust he drafts. With extensive experience in estate planning and trust formation, he helps clients establish clear, customized plans that safeguard their assets and ensure a seamless transfer of assets. His detailed approach ensures that each trust reflects the client’s specific wishes, family dynamics, and long-term financial goals.

They can help:

• Determine whether a revocable or irrevocable trust suits your needs
• Fund the trust with proper titling of assets
• Coordinate with wills, powers of attorney, and guardianship designations
• Update your trust after divorce, remarriage, or major life changes

Start Protecting Your Legacy Today

The attorneys at Varghese Summersett understand the importance of planning for the future. Whether you’re safeguarding your children, avoiding probate, or protecting hard-earned assets, our team will walk you through every step with clarity and care. For your convenience, we have offices in Fort Worth, Dallas and Southlake.

Call 817-203-2220 today to schedule a confidential consultation with Michael A. Levins or Brent McMullen. Let us help you protect your legacy—your way.