Welcome to Texas!
Your address is updated, and you’ve officially become a Texas resident. Now is an excellent time to discover all the financial and tax-saving benefits that Texas has to offer. To gain access to the cost-saving benefits in the future, you’ll first need to update the following estate administration and business entity documents.
Four legal documents to update after you move to Texas
Consider updating these four documents to save money and live your best life in your new home state:
- Last will and testament
- Revocable trust
- Financial and medical directives
- Texas legal entity formation for your business or investments
I’ll address the most relevant topics for new Texas residents in this article. As a newcomer, you’ll want to reference these when speaking about potential changes to your estate and business entity with an attorney.
1. Transferring a Will from another state to Texas
If you move from another state to Texas, your last will and testament will stay valid. Yet, there are some benefits in Texas that are not available in other states to consider.
Independent vs. Dependent Administration
Texas can be different from other states because it recognizes Independent Administration. Our last will and testament must explicitly grant your will’s executor authority to create an Independent Administration.
Benefits of an Independent Administration
With an independent administration, your will’s executor can easily navigate the probate process without checking in with a Texas probate judge after reporting assets. Typically, this is a less-expensive and time-consuming process for the execution of your will, your executor, and beneficiaries.
Pros and cons of Dependent Administration
Out-of-state trusts typically do not contain this language. All beneficiaries must agree to an Independent Administration; otherwise, the court will assign a Dependent Administration to the trust. Depending on your situation, a Dependent Administration may be your preference so the court can ensure assets are distributed to the beneficiaries fairly.
2. Change a Revocable Living Trust from another state to Texas
Generally, trusts travel well across state lines. Yet, if you have a revocable trust written in another state, there are two reasons to switch your trust status to Texas.
- Avoid ancillary probate in another state. Ancillary administration applies to all 50 states. A revocable trust allows your estate administration to avoid ancillary probate if you own properties in multiple states. Ancillary probate can happen to residents who still own property in their prior state or even another state. In that case, there may need to be various probates in different shapes, or the probate must transfer to the state where the domicile is located.
- Ensure your trust is a Qualifying Trust eligible for the homestead exemption. Many trusts created in another state must contain the correct language to be a Qualifying Trust under Texas Law. A tax exemption can reduce your estate’s property taxes by thousands of dollars.
If either or both of these situations benefit you, plan to meet with an estate planning attorney to update your existing revocable trust and living trust documents.
3. Update your agent and directives to Texas state forms
Even though specific state laws and forms for Power of Attorney exist, they typically work well across state lines. If you plan to update your will or trust, it’s easy enough to update these documents while you’re at it.
Change Power of Attorney forms to Texas
Third parties such as courts, hospitals, or banking institutions who work with your assigned agent may not be as familiar with out-of-state Powers of Attorney forms when presented to them. Don’t delay your agent’s ability to decide on your behalf, especially if dealing with a third-party unfamiliar with another state’s forms, also known as a foreign state’s power of attorney forms. These forms act as advance directives to inform third parties of your preferences in a crisis.
Name agents and backup agents
Prevent delays within the financial and healthcare systems when you update your will and directives. There can be several individuals to consider naming in your estate planning documents. You can have more than one agent named as financial power of attorney.
Update any out-of-state estate forms today
Our law office assists new Texas residents with changes to wills, revocable trusts, and power of attorney forms.
4. Moving a business to Texas
You must reorganize the existing legal entity to a Texas LLC, Texas Series LLC, S-corp, and C-corporation. But before you do, it’s helpful to compare the costs and benefits between Texas and the state where the business entity currently resides.
Benefits of doing business in Texas
It’s true, there’s many benefits to moving a business to Texas. You don’t have to pay a state franchise tax if your business is based and operates in Texas. Though there are still Federal tax liabilities, state licenses, permits, and employer requirements that are outlined on the Texas Economic Development website.
To better understand the benefits of moving a business to Texas, ask yourself these two clarifying questions:
- Are there adverse out-of-state tax consequences? Consider other costs involved.
- Does the current state protect business owners in litigation? If so, what benefits does the other form have if your business was to face a lawsuit?
Moving a business to Texas may require a new accountant, CPA, or tax advisor familiar with Texas state laws. If you’re uncertain of answers, make a pros and cons list for each state. The financial benefit of less state tax overtime may exceed the reformation of a business entity. Our office would be happy to make referrals for your business needs.
Protect your assets from liability with a Texas LLC
Consider changing to a Texas entity for legal, asset protection, and tax liability benefits. An attorney can help advise you on the pros and cons of out-of-state taxes, legal disputes, and business entity reformation.
Texas Series LLC formation for real estate investments
The Texas Series LLC benefits real estate investors who own multiple properties. With this LLC type, protect all your assets under one LLC; it can also save you from the liabilities of the LLC. The benefits of a Texas-based LLC outweigh the cost of a new formation and maintenance of the records associated with the series. Condense your real estate portfolio into one LLC formation to simplify your portfolio.
Paperwork considerations for a Texas Series LLC
If you’re not up for record-keeping, the maintenance of a Series LLC is not for you. Liability protections will only stay active as long as records are maintained. If the forms aren’t supported, it can reduce Series liability protections to a traditional LLC.
Ask about business entity reformation
We provide business entity services to small business owners in the Dallas, Fort Worth area.
Create a team who supports your goals
Finding a new doctor, daycare, school, church, friends, neighbors, and business network can take a while. Moving to another state is an opportunity to create a new community. Find other businesses, organizations, and professionals to help support you, your family, and your business.
Find a an estate planning attorney with connections in the DFW area
In the best-case scenario, an estate planning attorney will work with your other experts, such as accountants, financial planners, etc. At Holman Law, we’ll assemble a comprehensive team to advise on all aspects of your estate plan and entity reformation.
Our law firm is located in North Dallas. We can also provide referrals to other professionals in the area to assist with your home and business relocation.
Dual state residency in California and Texas
Steven Holman is an attorney certified in Texas and California. If you have property located or a business operating in California and want to move to Texas, an attorney knowledgeable with each state’s legal requirements may be able to assist.