§ 1.1 Estate Planning

Texas Estate Planning: The Core Documents

An estate plan is not one document. It is a small set of documents that answer four separate questions, and most of the trouble families run into comes from having answered only one of them.

The four questions are: who receives your property when you die; who manages your money if you cannot; who makes your medical decisions if you cannot; and what treatment you want if you are dying and cannot say so. A will answers only the first. It has no effect at all while you are alive, which surprises people, and it does nothing whatever about the years of incapacity that increasingly precede death.

The will

A Texas will directs the distribution of the property that passes through your probate estate. To be valid it must generally be in writing, signed by a testator at least eighteen years old (or married, or in the armed forces) who is of sound mind, and attested by two credible witnesses over fourteen who sign in the testator's presence. Texas also recognises a holographic will — one written wholly in the testator's own handwriting and signed — which needs no witnesses at all.

Two provisions matter far more than most people realise. The first is the appointment of an independent executor, with a direction that no action be required in the probate court other than proving the will and filing an inventory. This is the clause that unlocks Texas independent administration, described on the probate page, and its absence can multiply the cost and duration of an estate several times over. The second is a self-proving affidavit, signed by the testator and the witnesses before a notary, which allows the will to be admitted without tracking down the witnesses years later.

A will does not control everything you own. Life insurance, retirement accounts, payable-on-death bank accounts, transfer-on-death securities registrations and property held with a right of survivorship all pass by their own beneficiary designations, and those designations beat the will every time. An outdated beneficiary form is one of the most common and most consequential defects in an otherwise careful plan.

Community property changes the arithmetic

Texas is one of nine community property states. In broad terms, property acquired by either spouse during marriage is presumed to belong to the community, while property owned before marriage or received during marriage by gift or inheritance is separate. The presumption is strong, and rebutting it requires clear and convincing evidence — which in practice means records.

The consequence for planning is direct: a married Texan can normally will away only their one-half interest in community property, plus their separate property. Plans drafted on the assumption that one spouse "owns the house" frequently do not work. Couples can and do alter these defaults by agreement — partition or exchange agreements to convert community property to separate, and survivorship agreements to allow community property to pass automatically to the survivor — but those agreements must be in writing and signed by both spouses.

There is a tax dimension too. Community property generally receives a full step-up in income tax basis on the first death, including the surviving spouse's half. That is a substantial and often overlooked advantage, and it is one of several reasons that stripping assets out of the community into separate ownership can cost more than it saves. The IRS estate tax pages set out the federal framework; Texas itself imposes no state estate or inheritance tax.

The durable power of attorney

A statutory durable power of attorney appoints an agent to handle financial and property matters. "Durable" means it survives your incapacity — which is the entire point, since a power that lapses when you lose capacity is worthless precisely when it is needed. Texas publishes a statutory form in the Estates Code, and since 2017 the statute has included provisions designed to make banks accept it, including a mechanism for demanding a written explanation of a refusal.

Choosing the agent is the hard part, and it is not primarily a question of affection. The agent needs to be organised, reachable, comfortable with paperwork and willing to keep records. Naming successors matters as much as naming the first agent. So does deciding whether the power takes effect immediately or only upon a physician's certification of incapacity — the springing version sounds safer and is regularly a source of delay, because someone must first obtain the certification.

Without a valid power of attorney, a family facing incapacity is left with guardianship: a court proceeding, with a court-appointed attorney for the proposed ward, medical evidence, annual reporting and continuing supervision. It is expensive, slow and public, and it is the outcome the durable power exists to avoid.

Medical decisions and end-of-life directions

Two further documents cover health care. The medical power of attorney appoints an agent to make treatment decisions when a physician certifies that you cannot. The directive to physicians and family or surrogates — the document most people call a living will — states what you want if you have a terminal or irreversible condition. They do different jobs and both are worth having.

Two supporting documents are commonly added: a HIPAA authorisation, so that the people you have named can actually obtain medical information, and a declaration of guardian in the event of later incapacity, which tells a court whom you would choose if guardianship ever became necessary anyway. The National Institute on Aging's advance care planning guidance is a useful non-legal companion to the conversation these documents are supposed to record.

Where trusts come in

Trusts sit on top of this foundation rather than replacing it. A revocable living trust can avoid probate and manage incapacity, though the Texas case for one is weaker than in states with heavier probate systems. An irrevocable trust trades control for protection and has serious benefits-eligibility consequences. An IRA inheritance trust addresses retirement accounts specifically. And a special needs trust exists to protect a beneficiary's means-tested benefits.

The choice among them is not a matter of sophistication. It is a matter of which specific risk a family is actually facing — and the honest answer, for a great many Texas households, is that a properly drafted will with an independent executor, a durable power of attorney and the two medical documents does the entire job.