San Antonio Express-News
May 4, 2004

Homestead Tax Exemption for Living Trust

copyright 2004, Paul Premack

Various property tax exemptions and reductions are given for a residence homestead. Texas law defines a residence homestead as a structure that is owned by individuals (either directly or through a beneficial interest in a qualifying trust) and that is occupied as the owners’ principal residence.

A "qualifying trust" is a trust that provides in writing that the trustor has the right to use and to occupy the home (as his/her principal residence) rent free and without charge except for taxes and other costs and expenses specified in the trust. Additionally, to be a "qualifying trust" the trust must acquire ownership of the property in a deed that: (a) adequately describes the real property and the trust’s interest in it, (b) is recorded in the real property records of the county where the property is located; and (c) is signed by the trustor or trustor’s personal representative.

Satisfying all those requirements means the same property tax exemptions and reductions will be given after the home is placed into a Living Trust that it had while owned free from trust. If your living trust is a qualifying trust, you keep your homestead tax exemptions and reductions.

There are three approaches to transferring other assets to your living trust:

1) For items that do not have documents of ownership (like furniture and clothing) a statement in the trust saying that the trust owns them is adequate.

2) For items with a deed or title (like a house or car) there must be a conveyance to the trustee of the trust, signed by the owner. A deed must be recorded with the county clerk; an auto title must be handled by the local tax assessor’s office.

3) For accounts and investments, the contract with the financial institution (the signature card) must indicate ownership by the trustee of the trust. You do not have to specify a dollar figure, since, as you say, the dollar amount would never stay the same anyway.

A Seminar on Fraud Against the Elderly will be presented by the Elder Law Section of the SA Bar Association on Thursday, May 13, 2004. It is free and is targeted at educating the public. The morning session covers "Prevention of Fraud" and the afternoon session covers "When Prevention Fails." The seminar includes continental breakfast and lunch.

Registration is required (phone Darla Peek at Broadway Bank, 283-6693) and closes at 2 pm on May 10th. Attorneys who seek MCLE credit must pay a fee to attend. Check-in begins at 8:30 am, May 13th at St. Anthony of Padua Catholic Church Family Center, 102 Lorenz St. (north of Basse on Broadway).