Texas takes its constitution very seriously including safeguarding the residential homestead exemption. In fact, the Texas Tax Code implies that as long as you hold your property, you have the right to be there, and that no person or government can take it from you. With that in mind, realize that even when it comes to property taxes, the state is lenient on who qualifies for the homestead exemption.
Q: Will I lose my homestead exemption if I transfer my primary residence into a RLT?
A: No. Texas Tax Code mirrors the IRS language when stating that homestead exemptions are transferable into a “Qualifying Trust”. Each Warranty Deed created by Crain & Wooley is in compliance with the Texas Tax Code and even references the appropriate section to avoid any complications.
Sec. 11.13. RESIDENCE HOMESTEAD
(j) For purposes of this section:
(1) “Residence homestead” means a structure (including a mobile home) or a separately secured and occupied portion of a structure (together with the land, not to exceed 20 acres, and improvements used in the residential occupancy of the structure, if the structure and the land and improvements have identical ownership) that:
(A) is owned by one or more individuals, either directly or through a beneficial interest in a qualifying trust;
(B) is designed or adapted for human residence;
(C) is used as a residence; and
As you can see, utilizing a RLT as an estate planning tool does not impact your ability to avail yourself of Texas’ homestead exemption. In fact, a Revocable Living Trust is one of the most flexible AND comprehensive estate planning options available. Learn more about Revocable Living Trusts by attending one of Crain & Wooley’s educational seminars.