Texas Trust Planning Guide

Quick tax summary for 2026

Why this matters for Texas families

Texas is a community property state with strong homestead protections and no state estate tax — a favorable environment for estate planning. However, these same rules create complexity around trust funding:

• Community property requires joint consent to transfer into a trust.
• Texas's robust homestead exemption has specific rules about when and how property can be transferred into a trust without losing the exemption.
• Medicaid estate recovery is active and increasingly targets non-probate transfers.

Practical planning moves

Probate in Texas:

• Texas has one of the more flexible probate systems in the country. The muniment of title process allows a will to be admitted to probate without full administration if there are no debts.
• Independent administration (without ongoing court supervision) is the norm in Texas, making probate less burdensome than in many states — but still public and still requires publication.
• A funded living trust avoids probate entirely for trust-held assets and is particularly valuable for property in multiple states.

Homestead:

• Texas's homestead exemption is unusually strong — it caps the school district property tax assessed value increase at 10% per year and allows deferrals for seniors.
• The general homestead exemption reduces assessed value by $100,000 for school district taxes ($110,000 starting 2023 with Prop 4). Seniors (65+) receive an additional $10,000 exemption.
• Transferring your homestead into a revocable living trust does NOT affect your homestead exemption in Texas, as long as you remain the trustee and the trust is revocable. Always confirm this with a Texas real estate attorney before recording a new deed.

Community property and trust funding:

• In Texas, community property belongs equally to both spouses. Both spouses must sign to transfer community property into a trust.
• A "Texas Community Property Trust" (TCPT), established under Texas Trust Code § 112.001 et seq., allows married couples to hold community property in trust with full step-up basis benefits at the first spouse's death.
• Separate property (owned before marriage, or received as a gift or inheritance during marriage) can be transferred by the owning spouse alone.

Medicaid estate recovery:

• Texas Health and Human Services (HHS) pursues estate recovery against the probate estate. A funded trust keeps assets outside of probate.
• Texas currently has a narrower scope of Medicaid estate recovery than many states — it generally only pursues probate assets, not non-probate transfers. However, this could change; consult an elder law attorney.
• The 5-year look-back rule for MAPT planning still applies.

Heirs' property:

• Texas heirs' property is concentrated in East Texas, the Rio Grande Valley, and communities historically denied access to formal title processes. Texas adopted the Uniform Partition of Heirs Property Act in 2017.
• Lone Star Legal Aid and Texas RioGrande Legal Aid both have heirs' property programs.

Source notes

• Texas Comptroller of Public Accounts: comptroller.texas.gov
• Texas Health and Human Services (Medicaid): hhs.texas.gov
• Texas Trust Code: Texas Property Code Chapter 112
• Uniform Partition of Heirs Property Act (Texas Property Code § 23A.001 et seq.)
• Lone Star Legal Aid: lonestarlegal.org