Estate Planning Strategies for Texas Residents

When you think of Texas, both wide open spaces and big-city Southern opportunity often come to mind. But when it comes to estate planning, the landscape isn’t always so simple. While Texas doesn’t impose its own estate or inheritance tax, the federal estate tax still looms large, especially for high-net-worth families.

That’s why building a thoughtful estate plan is so important. The right strategy can help you reduce tax exposure, preserve wealth for future generations and ensure your legacy supports the people and causes you value most.

ESTATE TAXES IN TEXAS

Texas doesn’t impose its own estate or inheritance tax, which is good news for residents looking to pass more wealth to their heirs. But the federal estate tax still applies to estates exceeding $13.99 million in 2025 (or $27.98 million for married couples). 

But if your estate is even close to these limits, waiting to act could result in higher taxes and fewer planning options.

UNDERSTANDING COMMUNITY PROPERTY IN TEXAS

Texas is a community property state, which means most assets acquired during marriage are considered jointly owned. This can impact how wealth is divided, transferred and taxed at death. Proper planning ensures your estate takes full advantage of step-ups in basis for appreciated property and protects your intentions for both spouses and heirs.

STRATEGIES TO HELP REDUCE ESTATE TAX EXPOSURE

Even without a Texas estate tax, the federal rules can have a meaningful impact on your legacy. The good news is there are steps you can take today to help lower your taxable estate while strengthening the foundation of your overall plan.

GIVING DURING YOUR LIFETIME

A simple yet effective strategy is to make financial gifts during your lifetime. In 2025, you can give up to$19,000 per recipient each year without using any of your lifetime exemption. Larger gifts may also be worthwhile since they help reduce the overall size of your taxable estate by allowing the assets to appreciate outside of your taxable estate.

The true advantage, however, goes beyond taxes. Lifetime gifting allows you to make a meaningful impact right now – whether that’s helping a child with a down payment, funding education or supporting a new business opportunity.

USING IRREVOCABLE TRUSTS TO PRESERVE AND PROTECT

Irrevocable trusts are powerful tools that can do more than help reduce estate taxes. They can give you greater control over how your wealth is managed and distributed, protect assets from creditors and ensure that family property or business interests are passed on according to your wishes.

Some commonly used trust strategies include:

• Irrevocable Life Insurance Trusts: Exclude life insurance proceeds from your taxable estate
• Grantor Retained Annuity Trusts: Transfer appreciating assets at reduced gift tax cost
• Qualified Personal Residence Trust: Gift a home at a reduced gift tax cost

Trusts can be tailored to your unique situation and goals, but selecting the right type requires careful planning.

ESTATE PLANNING FOR MARRIED COUPLES

Married couples have access to a valuable estate planning provision known as portability. This rule allows a surviving spouse to use any unused portion of their partner’s federal estate tax exemption, making it possible to transfer more wealth without incurring federal estate taxes.

PLANNING ACROSS GENERATIONS

If your goal is to provide for not just your children but also your grandchildren and beyond, multigenerational planning strategies can be especially effective. These approaches are designed to preserve wealth, reduce long-term tax exposure and create a lasting financial foundation for your family.

Options include:

• Dynasty trusts: Structured to last across multiple generations, protecting assets from repeated estate taxation while allowing them to grow
• Generation-skipping transfer tax exempt trusts: Pass assets directly to grandchildren or other heirs, bypassing the transfer tax that might otherwise apply at each generational level
• Family limited partnerships: Particularly useful for families with businesses, ranches or real estate, FLPs allow gradual transfers of ownership while maintaining control and potentially reducing estate tax exposure through valuation discounts

For many Texans, especially those with family businesses or significant property, these strategies can help protect wealth and values across generations.

INCORPORATING CHARITABLE GIVING

For Texans who want to align their wealth with their values, charitable giving can play a central role in an estate plan. The right approach not only reduces the taxable value of your estate but also allows you to support the causes you care about most.

Popular options include:

• Donor-Advised Funds: Make a charitable contribution, receive an immediate tax deduction and recommend grants to nonprofits over time
• Charitable Remainder Trusts: Generate income for yourself or your beneficiaries for life or a fixed term, with the remainder going to charity
• Private Foundations: Build a long-term philanthropic legacy with greater control, flexibility and opportunities for family involvement

Whether your focus is on maximizing impact during your lifetime or leaving a legacy of generosity, charitable strategies can help bring purpose and meaning to your estate plan.

WHY FLEXIBILITY MATTERS IN TEXAS ESTATE PLANNING

Even though Texas doesn’t impose its own estate tax, planning is still essential. The overall complexity of estate laws, combined with potential changes in your wealth and family circumstances, means your estate plan should be flexible and adaptable over time.

At Edelman Financial Engines, we collaborate with you – and your legal and tax professionals — to create a comprehensive financial plan that includes estate planning strategies that reflect your goals, adapt as laws and circumstances change and help ensure your legacy endures.

Your wealth represents a lifetime of work and achievement. Protecting it requires foresight, flexibility and the right strategies for your situation, which can help you protect your wealth and support the people and causes you care about. Whether your goals include supporting your family, preserving a business or giving back to your community, estate planning can serve as the foundation of that vision and help ensure it stands the test of time.