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Estate Planning Essentials for Texas Families: Maximizing Your Legacy
Learn how Texas laws and new federal tax rules empower families to build a legacy without crossing tax thresholds.
Why Texas Stands Out for Estate Planning
Texas offers an enviable combination of legal and tax advantages. There’s no state estate or inheritance tax, meaning families avoid burdensome state-level death taxes. Texas’ community property rules simplify asset division for married couples and provide step‑up basis benefits on appreciated property. Plus, strong homestead and retirement account protections further guard family wealth.
Essential Documents for Texas Estate Planning
Last Will and Testament
A Texas Will must be signed in front of two witnesses. It governs your asset distribution and guardianship decisions. Many Texans also rely on trusts to bypass the probate process.
Revocable Living Trusts
Optional but powerful; these can keep your estate private and outside probate, especially beneficial if you own property across state lines.
Financial & Medical Powers of Attorney
Texas statutory forms exist for both. Adding a HIPAA release ensures trusted agents have access to vital medical information.
Advance Directives and Living Wills
Documents like the Directive to Physicians and DNR forms ensure your healthcare wishes will be honored by medical providers and loved ones.
Tax-Efficient Planning Post‑OBBBA
Federal Estate & Gift Tax Exemption
Previously set to drop when the TCJA sunset after December 31, 2025, to roughly $7M per person, the OBBBA permanently raised the threshold to $15 million per individual ($30 million per couple), with future inflation indexing guaranteed (Foster Swift).
Annual Gift Tax Exclusion
In 2025, you may give up to $19,000 per person without reporting. Gifts beyond that count toward your lifetime exclusion (Kiplinger).
Charitable & Business Planning
Incorporate Charitable Remainder Trusts for philanthropic goals and tax reduction. Business owners should consider GRATs, valuation discounts, and Buy‑Sell Agreements to transfer interest efficiently and minimize estate taxes.
Trust Options for Wealth Protection
Irrevocable Life Insurance Trusts (ILITs)
ILITs exclude life insurance proceeds from your estate. Funded via annual gifting, they keep the death benefit outside your taxable estate.
Spousal Lifetime Access Trust
Removes assets from both estates if properly funded. While giving the trustees access to income to help cover expenses during their lifetime.
Asset Protection in Texas
Texas Homestead Protection
Texas shields your primary residence from most creditors, with generous limits even for urban properties.
Retirement Account Protection
State law goes beyond federal ERISA protections, safeguarding IRAs, 401(k)s, and other retirement assets.
Conclusion: Build a Strong Texas Legacy
With Texas’ favorable legal framework and the permanent $15Mfederal exemption, now is a strategic time to plan. Estate plans are about more than taxes; they’re about privacy, control, and intent.
At mFORCE Capital, we coordinate with experienced Texas estate planning attorneys to deliver integrated legal, financial, and tax strategies. Review your plan periodically, especially as values grow, to ensure it adapts as your legacy does.
FAQs: Key Questions About Texas Estate Planning
1. Is there state estate or inheritance tax in Texas?
No; Texas has neither.
2. How do community property laws affect estate planning?
They grant spouses shared ownership of marital assets, simplifying transfers and capital gains planning.
3. Is the federal estate tax exemption going down in 2026?
No. Instead, OBBBA permanently increased it to $15 million per person from 2026onward (Kiplinger, Market Watch, Foster Swift).
4. What is the annual gift tax exclusion now?
It's $19,000 per recipient in 2025 (Kiplinger).
5. What documents should every Texas resident have?
A will or trust, powers of attorney (financial and medical), HIPAA authorization, and advance directive.
6. How protected are retirement accounts in Texas?
Very; state law provides strong protections that exceed federal standards.
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