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Types of Trusts in Texas: A Complete Guide for 2025

Creating a trust can be one of the most powerful tools in estate planning. In Texas, trusts offer flexibility, control, and protection—making them an ideal option for many families. But with so many types of trusts available, it can be hard to know which one fits your needs.

This guide explores the most common types of trusts in Texas, how they work, and when you might consider each.

What Is a Trust?

A trust is a legal arrangement where one party (the grantor) gives another party (the trustee) the right to hold and manage assets for the benefit of a third party (the beneficiary).

Trusts can help:

• Avoid probate
• Protect assets
• Minimize estate taxes
• Provide long-term financial support for loved ones

1. Revocable Living Trust

A revocable living trust allows you to maintain control over your assets while alive and smoothly transfer them upon death.

Key Features:

• Can be changed or revoked at any time
• Avoids probate
• Offers privacy (not a public record like a will)
• Does not protect from creditors or lawsuits

Best for: Individuals who want flexibility and to avoid probate.

2. Irrevocable Trust

Unlike a revocable trust, an irrevocable trust cannot be changed once established (with limited exceptions).

Key Features:

• Removes assets from your taxable estate
• Offers asset protection from creditors
• Often used for Medicaid planning

Best for: Those seeking tax savings, asset protection, or Medicaid eligibility.

3. Testamentary Trust

This trust is created by your will and only takes effect upon your death.

Key Features:

• Funded after death via probate
• Can provide for minor children or dependents
• Does not avoid probate

Best for: Parents who want to support children or dependents after their death.

4. Special Needs Trust (SNT)

An SNT ensures that a beneficiary with disabilities receives support without losing government benefits like Medicaid or SSI.

Key Features:

• Protects eligibility for public assistance
• Funds can pay for supplemental expenses (housing, therapy, education)
• Managed by a trustee

Best for: Families with children or dependents with disabilities.

5. Spendthrift Trust

A spendthrift trust protects a beneficiary from squandering their inheritance or having it claimed by creditors.

Key Features:

• Limits how and when distributions are made
• Protects against irresponsible spending
• Can protect from creditors

Best for: Beneficiaries who are financially inexperienced or have debt problems.

6. Charitable Remainder Trust (CRT)

A CRT allows you to donate assets to charity while retaining an income stream during your lifetime.

Key Features:

• Income for a set term or life
• Charitable tax deduction
• Remainder goes to a named charity

Best for: Philanthropic individuals seeking tax benefits.

7. Charitable Lead Trust (CLT)

Opposite of a CRT, a CLT provides income to a charity first, then the remainder goes to your beneficiaries.

Key Features:

• Immediate charitable giving
• Potential gift or estate tax savings

Best for: Those who want to support charities now and heirs later.

8. Bypass Trust (Credit Shelter Trust)

Also known as a family trust, a bypass trust is designed to minimize estate taxes for married couples.

Key Features:

• Uses both spouses’ federal estate tax exemptions
• Allows surviving spouse to benefit from the trust

Best for: High-net-worth couples with taxable estates.

9. QTIP Trust (Qualified Terminable Interest Property)

Used in blended families, a QTIP trust provides income to a surviving spouse while preserving assets for other heirs (like children from a prior marriage).

Key Features:

• Surviving spouse receives income for life
• Remaining assets go to named beneficiaries

Best for: Couples with blended families or complex inheritance plans.

10. Gun Trust (NFA Trust)

Texas residents who own National Firearms Act (NFA) items like silencers or automatic weapons can place them in a gun trust.

Key Features:

• Legally owns restricted firearms
• Avoids transfer delays
• Allows multiple trustees to legally possess items

Best for: Firearm collectors or hunters.

11. Pet Trust

A pet trust allows you to leave money and instructions for the care of your animals after your death.

Key Features:

• Designates a caregiver and trustee
• Specifies care instructions and expenses

Best for: Pet owners who want to ensure ongoing care for their animals.

Choosing the Right Trust for Your Needs

Here’s a quick comparison to help you identify which trust may be right for your goals:

Do Trusts Replace a Will?

Not always. Even if you create a trust, you should still have a pour-over will to ensure any assets not transferred to the trust are included in your estate plan.

How to Set Up a Trust in Texas

Step 1: Identify Your Estate Planning Goals

Do you want to avoid probate? Protect assets? Support a loved one with special needs?

Step 2: Choose the Right Trust

Select a trust type that aligns with your goals. You may need more than one.

Step 3: Work With an Estate Planning Attorney

Texas law can be complex. A professional will help ensure your trust is valid and properly funded.

Step 4: Fund the Trust

Transfer real estate, bank accounts, or investments to the trust. An empty trust offers no protection.

Step 5: Review and Update Regularly

Life changes—your trust should too. Review it every few years or after major events (marriage, divorce, births, etc.).

Conclusion

Understanding the types of trusts in Texas empowers you to make smart estate planning decisions. Whether you want to avoid probate, reduce taxes, protect a loved one, or support a charitable cause, there’s a trust that can help.

For tailored advice and custom trust creation, contact The Lange Firm today.