How to Use a Trust to Protect Your Wealth and Maintain Privacy

Thinking about what will happen to your assets after your death may not be at the top of your to-do list, but it should be if you don’t already have an estate plan. While a will is a good start when it comes to estate planning, there are other tools you can use to manage your estate in a way that minimizes taxes effectively, protects your assets, and ensures you can leave a legacy behind. At Barina Law Group, PLLC, we help clients in Temple, Texas, and the surrounding area with all their estate planning needs. Part of that includes educating them on trusts’ tax and privacy benefits.

Understanding How Estate Taxes Work in Texas

Estate taxes are usually levied at the state and federal levels. However, Texas doesn’t have estate taxes, so you only need to worry about federal estate taxes when creating your estate plan. Estate taxes are levied after your death and are based on the value of the assets at the time of death. The government uses a relatively simple formula to determine your taxable estate.

The fair market value of all assets subject to estate taxes is added up. Then, any relevant deductions are taken, which may include expenses related to estate administration and any property passing to a beneficiary through a transfer on death deed. The value of any taxable gifts you made over the course of your lifetime is added to arrive at your final taxable estate. It’s essential to keep in mind that the value of your assets is determined by the fair market value, which is often much less than what people paid for the items.

The filing thresholds for federal estate taxes are also high, which means that many estates won’t be subject to estate taxes at all. For example, the filing threshold for the year 2025 is $13,990,000.

Tax Benefits of Using a Trust

Placing your assets in a trust can help you avoid or minimize federal estate taxes, but it depends on the type of trust. While a revocable trust can be great for flexibility and avoiding probate, it doesn’t offer the same tax benefits that an irrevocable trust does because the assets are still under your ownership.

When you place assets in an irrevocable trust, on the other hand, the ownership is immediately transferred from you to the trust. This makes those assets no longer part of your taxable estate, which can save you a significant amount of money in estate taxes if you have a high-value estate. For example, if your estate would be valued over the $13,990,000 threshold for federal estate taxes, but you can place enough assets into an irrevocable trust to bring it under that amount, you could avoid estate taxes altogether, leaving more money behind for your beneficiaries.

Probate Is Part of the Public Record

Probate filings are public records, which means that any part of your estate that has to go through probate is also subject to public records. There are various reasons someone may want to keep their finances as private as possible. For example, those with high-value estates may not want everyone to know the extent of their wealth. In some cases, there may be family drama that can be avoided by passing assets to beneficiaries privately instead of through probate.

Protecting Your Privacy With a Trust

If you have privacy concerns, consider using a trust to protect your assets. Assets placed in a trust don’t have to go through probate, which means they do not become part of the public record.

Instead, they are passed directly on to the listed beneficiaries, and no one other than the beneficiaries and the trustee needs to know what is in the trust or the value of the assets.

Trusts can also be beneficial if there are family conflicts that raise the chances of a will being contested. In general, trusts are much more difficult to challenge, and passing assets to beneficiaries in this way can increase the likelihood that your wishes will actually be carried out even if others disagree with your decisions.

The Importance of Working With a Texas Estate Planning Attorney

Estate planning can be complex. There are state and federal laws to consider, and everyone’s needs and goals are different. The right strategy for your estate plan can change depending on the value and type of your assets and how you want your estate to be distributed after you pass. That’s why it’s critical to work with an experienced estate planning attorney throughout the process. They can help you reduce the estate tax burden, protect your assets while planning for Medicaid, and customize an estate plan to fit your needs.

Our estate planning attorneys have extensive experience helping clients from a wide variety of backgrounds decide what they want to happen to their assets after their death. Whether you plan to leave everything to your family through trusts or want to ensure your estate gets passed along to charity, we can help you create the right estate plan for you.

If you have questions about how estate taxes work or how to keep your financial details out of the public probate record, the attorneys at Barina Law Group, PLLC, can help. Call our office at 254-269-4591 to schedule an appointment to get started.