Quick Answer:

The most common situations for when creating a living trust makes sense are:

1. You own real estate outside of Texas.
2. You really want to try to avoid probate on your estate to save time and money.
3. You think you have a high chance of becoming mentally disabled.
4. You think there is likely to be a strong challenge to terms of your will.

A living trust in Texas is advertised all the time as a “must have” estate planning tool, but unfortunately many of these trust products are simply scams. It’s gotten so bad that the Texas Bar put out a pamphlet titled LIVING TRUST SCAMS AND THE SENIOR CONSUMER. According to the Texas Bar every year thousands of people pay anywhere from $500 to $5000+ for trusts that are not only useless, they can actually cost your family even more money after you pass away.

As the pamphlet discusses, these snake oil salesmen use several different fraudulent and misleading statements to try to sell you their services. They are selling classic “FUD” – fear, uncertainty and doubt. Below are just some examples:

A living trust will save on death taxes. FALSE This is misleading for several reasons. First, there is no estate tax in Texas. Second, for any amount of a federal estate tax to be levied, your estate would need to be valued over $11.58 million ($23.16 million for couples) for 2020 (indexed to inflation). The vast majority of us don’t have this kind of wealth, and even if you did you wouldn’t need a living trust to take advantage of the other things that you can do to reduce your estate taxes.

Living trusts let you avoid creditors. FALSE This is flat-out false. While you are still alive creditors can go after the assets in the trust. Likewise, after you pass away the creditors can still go after those assets.

Probate a will requires excessive time and money. FALSE This is another false statement if you have a properly written will in Texas. The probate laws in Texas make probating a correctly worded will relatively easy. I would guess that more than 95% of Texas probate cases with a validly written and properly executed will only require one very simple court hearing. Having said that, the net costs for passing the assets in an estate can definitely be lower if a living trust is used, especially for married couples.

However, there definitely are some situations when creating a living trust does make sense. Below are some of the more prevalent examples.

You own real estate outside of Texas. If you own real estate in another state, then your heirs would need to go through an entirely separate probate proceeding in that state. Having a living trust is one way for your out-of-state real estate to avoid this.

You really want to try to avoid probate on your estate or estates. Some people want to make it as easy as possible for their heirs at the time they pass away, and they want to save their estate money on attorney fees. A living trust is a great tool to help achieve these goals, because any assets that are in a living trust do NOT have to go through the probate process. And this can be even more true for married couples, because there are actually two estates involved.

You think you have a high chance of becoming mentally disabled. If you think there is a high chance of getting dementia or some other debilitating disease, then setting up a living trust would enable someone else to manage your assets if that time were to come. A power of attorney could help to some degree too, but having a trustee over a trust would be much more powerful.

You think there is likely to be a strong challenge to terms of your will. If you think someone is likely to make a major court challenge to your will, then having a living trust might make sense. Trusts can be challenged just like wills, but trusts are generally more difficult to challenge, especially if they have been in place for several years before you pass away.

So the shorter answer to the original question of “Should I get a trust?” is that most likely you do not need one. However, there are legitimate times when they are a good idea. Likewise, if you do get one, make sure you get one created by a competent estate planning attorney rather than a snake oil salesman.