Houston Estate Planning and Elder Law Attorney Blog
Your Texas homestead offers powerful shields against creditors and probate complications, but only if you understand the rules. Leveraging exemptions, transfer options, and property-tax advantages keeps your primary residence safe for heirs and maximizes wealth retention. Think of the homestead as the cornerstone of your estate plan—protect it well, and everything else becomes easier to manage.
Exemption Basics You Should Know
Texas protects up to ten urban acres or two hundred rural acres from most creditor claims during life and after death. The exemption applies to the surviving spouse and minor children automatically, easing the transition and blocking forced sales. Because the acreage cap applies to contiguous land, adding a vacant lot next door might break the shield; double-check boundaries before you buy. If you move temporarily for work or medical reasons, you can retain the exemption, but only if you intend to return—keep utility bills and driver-license addresses current as proof.
Probate Implications of the Homestead
Homestead property bypasses some administration costs. Executors need not post bond to manage it, and it receives priority if debts exceed assets. Recording a “Homestead Affidavit and Designation” in the county’s deed records confirms status, saving the estate an extra court hearing. Early documentation also reassures title companies so they do not demand unnecessary probate letters before closing a future sale.
Transfer-on-Death Deeds vs. Lady Bird Deeds
A transfer-on-death deed (TOD) records your chosen beneficiary now but keeps full control during life. An enhanced-life-estate or Lady Bird deed offers similar benefits while preserving certain Medicaid-planning advantages. Only the Lady Bird deed lets you revoke the transfer without the beneficiary’s consent, adding flexibility if relationships change. Evaluate both options with legal counsel to align paperwork with future medical-care strategies and potential refinance plans.
Property-Tax Considerations
Over-65 or disabled-person homestead exemptions freeze school taxes and reduce county levies. Ensure the appraisal district records your exemptions so heirs inherit the lower base. Filing late triggers back taxes plus interest, wiping out savings faster than any lawyer’s fee to handle the form. Reapply after major remodels or county-wide reassessments to keep records accurate.
Medicaid Estate-Recovery Concerns
Texas may seek reimbursement for Medicaid long-term-care costs against probate assets but cannot claim non-probate transfers. Using a Lady Bird deed shields the homestead from estate recovery while allowing refinancing or sale during life. Timing and correct drafting are vital; mistakes can trigger a five-year look-back penalty. Pair the deed with a well-funded trust or savings plan to cover nursing-home expenses so you never rely solely on Medicaid.
Insurance and Maintenance Obligations
Exemption does not cover flood or wind-storm damage. Maintain adequate insurance and set aside repair reserves in your estate plan. Executors must keep policies active; lapses erode property value and jeopardize heirs’ equity. Regular roof inspections, updated HVAC systems, and documented repairs preserve the home’s market price and simplify eventual sale or transfer.
Balancing Community-Property Interests
Married couples should confirm deeds list both spouses or execute survivorship agreements. Community-property status delivers a full step-up in basis, slashing capital-gains tax for heirs who sell. Coordinated titling avoids surprise partition actions and simplifies probate accounting. Review deeds after refinancing, because lenders occasionally re-record titles in only one spouse’s name.
Preserving the Exemption if You Move Out
Life events sometimes force you into assisted living or closer to grandchildren in another city. Texas allows an “involuntary absence” if you keep the intent to return, but county-tax offices scrutinize evidence. Maintain voter registration, store personal belongings in the house, and visit regularly to reinforce your claim. Failing to prove intent could forfeit the exemption and invite creditor liens.
Reverse Mortgages and the Homestead
Reverse-mortgage proceeds can supplement retirement income, yet they create a lien payable at death or permanent move-out. Heirs receive only the remaining equity and must refinance or sell quickly to satisfy the lender. Weigh this option carefully against downsizing or renting a portion of the home. If you proceed, inform beneficiaries and note payoff instructions in your estate documents.
Preventing Family Disputes Over the Homestead
Adult children often clash over whether to keep or sell the house. A “family settlement agreement” drafted now can set buy-out terms, maintenance duties, and dispute-resolution steps. Including mediation clauses curbs legal fees and preserves relationships. Clear instructions spare your executor from playing referee when emotions run high.
Protect your homestead and secure your legacy by calling McCulloch & Miller, PLLC at (713) 903-7879—your trusted partner for comprehensive Texas probate planning.