The unlimited marital deduction has a citizenship requirement

A U.S. citizen can leave an unlimited amount to a U.S. citizen spouse with no federal estate tax at the first death. That deduction is not available where the surviving spouse is not a U.S. citizen, whatever their immigration status. A lawful permanent resident spouse is still a noncitizen for this purpose.

The concern behind the rule is that a noncitizen survivor could leave the country with the assets before the tax is ever collected. The solution Congress provided is the qualified domestic trust, a QDOT, which preserves the deferral so long as the assets are held in a trust meeting statutory requirements, including a U.S. trustee, with tax collected on distributions of principal and at the survivor’s death.

A QDOT can be created by the will or trust, and in some circumstances established after death, but the planning is far cleaner in advance.

Lifetime gifts between spouses are also capped

Gifts to a U.S. citizen spouse are unlimited. Gifts to a noncitizen spouse are not. For 2026, the first $194,000 of gifts to a noncitizen spouse is excluded, and the amount is indexed annually. That matters more than it sounds, because retitling a house into joint names or moving money into a joint account can be a taxable gift when one spouse is not a citizen.

The trap for the nonresident who owns U.S. property

This one causes real damage. Where the decedent is not a U.S. citizen and not domiciled in the United States, the estate tax exemption for U.S. situated assets is $60,000. Not fifteen million. Sixty thousand, and it is not indexed.

A nonresident parent who bought a modest rental house in Houston or a condominium in Chicago can therefore leave a taxable U.S. estate, and the family may face a filing obligation and a tax bill on property they thought was too small to matter. U.S. situated assets include real estate and, importantly, shares of U.S. corporations.

Whether a treaty softens this depends on the country, which is a question to ask before buying rather than after a death.

Where the two practices meet

Domicile is the pivot, and domicile is a facts and circumstances question about where you intend to remain, not a box on a form. A person can be a nonresident for income tax and domiciled here for estate tax, or the reverse. Pending immigration matters, planned departures, and property held abroad all bear on it.

If you are planning to naturalize, the timing of that step can change the analysis entirely, which is a good reason for the immigration file and the estate file to be read together.

This week: Confirm your spouse’s exact citizenship status, not just immigration status. Check how the house and the main accounts are titled, because retitling can be a taxable gift. If naturalization is in progress, tell both your immigration and estate lawyers.

If your spouse is not a citizen, or your heirs live abroad, the standard documents are probably not built for your family. Call or text 512.761.8479.

Three filings that matter

The FBAR, filed with FinCEN rather than the IRS, is required of a U.S. person with a financial interest in or signature authority over foreign financial accounts whose aggregate value exceeded $10,000 at any point during the year. Ten thousand dollars in the aggregate, not per account. A dormant savings account in the home country plus a small pension plus a joint account on a parent’s affairs can clear it without anyone realizing.

Form 8938, filed with the income tax return, reports specified foreign financial assets above higher thresholds. For a married couple filing jointly and living in the United States, the trigger is more than $100,000 on the last day of the year or more than $150,000 at any time during it. Living abroad raises those thresholds substantially. It overlaps with the FBAR without replacing it, so both may be required for the same account.

Form 3520 is the one that catches families at inheritance. A U.S. person who receives more than $100,000 in gifts or bequests from a nonresident alien individual or a foreign estate during the year must report it. Note what this is and is not. It is a reporting obligation, not a tax. Receiving an inheritance from abroad is generally not taxable income. Failing to report it is nonetheless expensive.

Why this lands on the estate

Two ways. First, a decedent’s own unfiled reports do not disappear at death, and the personal representative may inherit both the exposure and the duty to address it. Second, the heirs create fresh obligations the moment they receive foreign assets, and an heir who takes over a foreign account becomes a filer in their own right.

The executor’s practical problem is worse than the legal one. Foreign banks are often unwilling to speak to a U.S. representative without documents issued in their own country, which loops back to needing local counsel and a local grant.

What to do while everyone is alive

Write it down. The single most valuable document in a cross border estate is a plain list of every foreign account, insurer, property, and business interest, with institution names, account numbers, and a local contact. Executors lose more value to assets they never find than to taxes.

Get current before a death rather than after. Where filings have been missed, there are established procedures for coming into compliance, and they are far more available to a living taxpayer who comes forward than to an estate discovered later.

Tell your executor. Naming someone who does not know that foreign assets exist, and who has no contact in that country, guarantees delay.

And be careful with well-meaning shortcuts. Adding a U.S. child to a foreign account for convenience can create a reporting obligation for that child, and sometimes a gift, without solving the succession problem it was meant to solve.

This week: Write the list your executor will need: every foreign account, insurer, property, and business, with institution names, account numbers, and a local contact. Then check whether last year’s FBAR and Form 8938 obligations were met.

If your family has accounts or property abroad, the reporting picture should be checked while it is still fixable. Call or text 512.761.8479.

The rule that governs

Real property is governed by the law of the place where it is located. Not where the owner lived, not where the will was signed, not where the family is. A Travis County will admitted to probate in Texas has no direct operative effect on land in Lagos or Jalisco. The local authorities apply local law, local formalities, and local procedure.

That single principle drives everything else in this article, and it bears saying plainly, because it contradicts what most people assume.

Why local counsel is not optional

Your instinct that you need a lawyer in the other country is correct. That lawyer does four things you cannot do from here.

Some jurisdictions will recognize a foreign grant of probate through a resealing procedure, in which a court in the property’s jurisdiction gives effect to a grant already issued elsewhere. Nigeria, for example, provides for resealing through the probate registry of the relevant State High Court, and the path is clearest for grants issued in Commonwealth countries. A grant from a United States court is not automatically in that category, which is exactly the sort of question that has to be answered by someone admitted there.

Other jurisdictions ignore the foreign will and require a fresh local proceeding, sometimes with a locally executed will, sometimes with statutory heirs who are fixed by law.

Formalities differ. A will valid in Texas may fail abroad for want of witnesses, notarization, registration, or language.

Substance differs more. Many civil law and customary systems apply forced heirship, reserving fixed shares to children or a spouse regardless of what a will says.

Parts of Nigeria apply customary or Islamic succession rules depending on the state and the decedent’s circumstances, and Nigerian land is subject to the Land Use Act, under which interests are held as rights of occupancy and transfers commonly require the Governor’s consent. Mexican coastal and border land is subject to the restricted zone and is often held through a bank trust. None of that can be managed from here.

The multiple wills trap

The usual solution is a situs will: a separate will executed in each country, governing only the assets there, so each can be probated locally without waiting on the other.

Done carelessly, this destroys the plan. Wills routinely open with a clause revoking all prior wills. Sign a Nigerian will with that language after your Texas will and you may have revoked the Texas will. The drafting has to limit each will expressly to the assets in its own jurisdiction, and the two lawyers have to see each other’s drafts. This is the most common and most expensive error in cross border estates.

What to do now

Inventory foreign real estate, accounts, insurance, and business interests by country. Find out how title is actually held, since family land is frequently in a parent’s name or unregistered. Engage counsel in each country and have them coordinate with your U.S. documents rather than working in isolation. And expect the foreign process to be slower than the domestic one, so build the timeline around it.

This week: List every foreign property, account, insurance policy, and business by country. Find out how title is actually held, since family land is often still in a parent’s name or unregistered. Then engage counsel in that country before signing anything here.

If you own property in another country, your plan is not finished until someone in that country has looked at it. Call or text 512.761.8479.

The nomination and what it is worth

Both Texas and Illinois let a parent nominate a guardian for a minor child, usually in the will, and both give that nomination substantial weight. It is not binding in the strict sense, because a court retains authority to act in the child’s best interest and will not appoint someone unsuitable. But in the ordinary case, where the nominee is willing and fit and no one objects, courts follow the parent’s choice.

Without a nomination, the court chooses from whoever comes forward. That is how the decision ends up being made by whichever relative filed first, or by whichever branch of the family had the resources to litigate.

The distinction most parents miss

There are two guardianships, and they do not have to be the same person. Guardianship of the person covers where the child lives and how the child is raised. Guardianship of the estate covers the child’s money.

Splitting them is often the right answer. The sister who is the loving choice to raise your children may be a poor choice to manage a life insurance payout for fifteen years. Naming a different person, or better yet avoiding the estate guardianship entirely, is a legitimate and unremarkable decision.

The money problem nobody plans for

This is the part that surprises people. If a minor inherits outright, whether by will, by intestacy, or by a beneficiary designation naming the child directly, the money generally has to be managed under court supervision, with accountings, bonding, and restrictions, until the child turns eighteen. Then it is handed over in full, on a birthday, to a person who was in high school a few months earlier.

Life insurance is the usual culprit. A policy naming a minor child as beneficiary creates precisely this outcome.

The fix is to give the money somewhere better to go. A trust for the child’s benefit, created in the will or as a standalone trust, with a trustee you choose, distribution ages you choose, and no court supervision, solves the whole problem at once. Custodial accounts under each state’s transfers to minors act are a lighter option for smaller amounts, though they also end at a fixed age.

Practical points

Name alternates, ask the people first, and choose on geography, age, and household stability rather than seniority. Then make sure your beneficiary designations point at the trust rather than at the child.

This week: Pick a first choice and two alternates, and ask all three. Then check every life insurance policy and retirement account to see whether a minor child is named directly as beneficiary. If so, that needs to point at a trust instead.

If you have young children and no guardian nomination, that is the single most important document you do not have. Call or text 512.761.8479.

The basic structure

Title to the real estate is conveyed to a trustee, typically a bank or title company, under a written trust agreement. The trustee holds legal and equitable title. The person who created the arrangement holds a beneficial interest, which is personal property rather than an interest in land, and retains the exclusive power to direct the trustee, manage the property, and receive the income.

The public record shows the trustee. It does not show the beneficiary.

What it is genuinely good for

Privacy is the headline. Recorded documents name a trust and a trustee, so ownership is not searchable by anyone browsing the recorder’s index. Owners with safety concerns, public profiles, or simply a preference for discretion value this.

Transfer is simple. Because the beneficial interest is personal property, it can be assigned without a new deed, and successor beneficiaries can be named to take at death, which passes the interest without probate of the real estate.

Multiple owners are easier to manage. Co-investors can hold percentage beneficial interests, and one co-owner’s judgment creditor generally reaches the beneficial interest rather than clouding title to the land itself. That makes the structure common for jointly held investment property.

What it does not do

It is not asset protection. A creditor of the beneficiary can reach the beneficial interest. The land trust makes ownership harder to find, which is not the same as making it unreachable, and using it to hide assets from a known creditor invites a fraudulent transfer claim.

It saves no taxes. The beneficiary is treated as the owner for income and estate tax purposes, so it does nothing about the Illinois $4 million exclusion.

It does not replace a plan. A land trust addresses one asset. Succession of the beneficial interest still needs to coordinate with the will or trust that handles everything else, and a mismatch between them creates exactly the contradiction the structure was supposed to avoid.

It also carries ongoing cost, since a corporate trustee charges fees for as long as the trust exists, and some lenders and buyers are unfamiliar enough with the structure to slow a transaction down.

Where it fits, and where a Texas owner should be careful

For Illinois residential and investment property where privacy or multiple owners matter, it remains a sound tool, often paired with a transfer on death instrument or a living trust that governs everything else.

For an owner who has moved to Texas, note that this is an Illinois device for Illinois land. Texas has no equivalent, and Texas property held for privacy is usually titled in an LLC or a trust instead.

If you hold Illinois property in a land trust and your plan was drafted somewhere else, the two should be read against each other. Call or text 512.761.8479.

What a revocable trust actually does

You transfer assets into a trust you control, serve as your own trustee, and keep the power to amend or revoke it. You have not given anything away, you have not saved a dollar of income or estate tax, and your creditors are not blocked.

What changes is titling. Property titled in the trust passes under the trust’s terms at your death without a court proceeding, and a successor trustee steps in without a court appointment if you become incapacitated.

That second benefit is underrated. Avoiding probate is a one time saving at death. Avoiding a guardianship during a long decline can matter more.

Why Texas is the state where a will is often enough

Texas has one of the least burdensome probate systems in the country. An independent executor named in a will can administer the estate with minimal court involvement: file the inventory, publish notice, pay the debts, distribute. Add the muscular non-probate tools Texas provides, including the transfer on death deed, the Lady Bird deed, survivorship agreements, and payable on death designations, and a straightforward Texas estate can be settled cleanly on a will alone.

So in Texas, the question is not whether a trust avoids probate. It is whether you have a reason that a will plus the deed tools cannot handle. Real reasons exist: property in more than one state, a beneficiary who should not receive money outright, a blended family, a business, privacy, or a family history of litigation.

Why Illinois changes the calculation

Illinois probate is slower, more supervised, and more expensive, and one rule drives most trust planning in the state. An Illinois small estate affidavit cannot transfer real estate at any value. If a home sits in the decedent’s name alone, Illinois probate is required no matter how modest the estate is.

That single sentence sells more Illinois trusts than any marketing pitch. It also explains the two workable alternatives: a transfer on death instrument for the house, or a funded trust. Which one fits depends on how complicated the rest of the picture is.

Illinois estate tax reinforces the point. With a $4 million exclusion and no portability between spouses, married couples with meaningful assets often need trust structures anyway to avoid wasting the first spouse’s exclusion.

The failure that undoes all of it

An unfunded trust is an expensive binder. A trust controls only what is titled in its name, and the most common failure in this area is a family who paid for a trust and never retitled the house, the bank accounts, or the brokerage account. When that happens the estate goes through probate exactly as if the trust had never been signed, with the added cost of having bought one.

Funding is not a one time task either. Every refinance, account opening, and property purchase is a chance to knock an asset back out of the trust.

Ask whoever recommended a trust two questions: why, and what happens to each asset you own. If the answers are vague, get a second opinion. Call or text 512.761.8479.

This is the most common way families in Texas lose land that was never at risk of being sold.

How the property got vulnerable

When an owner dies without a will and nothing is filed, title passes by intestacy to the heirs as tenants in common, in fractional shares that subdivide with every generation. The result is heir property: real ownership, unclear record title.

Nobody can sell, mortgage, insure, or refinance cleanly. Often no single person feels responsible for the taxes, and frequently no one is receiving the notices, because the appraisal district still has a name from 1978 on the roll.

What to do when a tax suit has already been filed

Do not ignore it, and do not assume a fractional owner has no standing. Any co-tenant may generally pay the taxes and protect the property.

Contact the taxing entity’s counsel about a payment agreement. Delinquent tax attorneys frequently accept installment arrangements before judgment, because collection is the objective and a sale is a last resort. Get any agreement in writing and calendar the payments, because default usually accelerates the whole balance.

File an answer rather than defaulting. A default judgment moves directly toward a sheriff’s sale.

Check whether an exemption or a deferral applies. Texas offers a homestead exemption available to an heir property owner occupying the property, an over 65 and disabled person deferral that can suspend collection while the qualifying owner lives there, and installment options for qualifying owners. A deferral does not erase the tax, but it stops the sale.

Understand the right of redemption after a sale. Under Tex.

Tax Code § 34.21, a residence homestead, land designated for agricultural use, and a mineral interest may be redeemed within two years of the purchaser’s deed being recorded, on payment of the purchase amount plus a 25 percent premium in the first year or 50 percent in the second. Other property carries a 180 day window and a premium capped at 25 percent. It is a real remedy and a poor plan.

Fixing the title so this stops happening

The underlying problem is record title, and it does not fix itself. Depending on the facts, the tools are an affidavit of heirship, a judicial determination of heirship, or an administration, followed by deeds among the heirs, a family settlement agreement, or the purchase of one branch’s interests by another.

Where co-owners cannot agree, partition is the remedy, and Texas has adopted the Uniform Partition of Heirs Property Act at Tex. Prop. Code ch. 23A. It requires the court to determine value, gives the other co-tenants a right to buy out the interest of the co-tenant seeking partition, and prefers dividing the land over selling it. Invoke those protections deliberately.

The planning lesson

Every generation that passes without clearing title makes the next one more expensive. A will, a transfer on death deed, or a modest heirship proceeding today costs a fraction of a partition suit or a tax sale later.

This week: Find out who is actually on the appraisal district roll and whether notices are going to a dead relative’s address. If a suit is filed, answer it rather than default, and ask the taxing entity’s counsel about a written payment agreement.

This is a solvable problem right up until the day it is not, and a tax suit is how families find out which day it is. Call or text 512.761.8479.

Finding what is there

Start with the paper trail rather than with the institutions. The last several years of tax returns show interest, dividends, and retirement distributions, and every one of those points to an account. Mail and email over the following 12 months surfaces statements, premium notices, and required minimum distribution letters. Old checkbooks, a safe deposit box, and an address book fill gaps.

Then work the searchable systems. The NAIC operates a life insurance policy locator service that queries participating insurers. Each state runs an unclaimed property database, and searching every state where the decedent lived or worked matters because dormant accounts escheat. Former employers should be asked about group life coverage, pensions, and unclaimed retirement balances, which are frequently forgotten. Credit reports can reveal accounts and lenders the family never knew about.

What passes without probate at all

Before opening an estate, determine what is already outside it. Life insurance with a named beneficiary, retirement accounts, payable on death and transfer on death accounts, jointly held property with survivorship rights, and property covered by a recorded transfer on death deed all pass by designation rather than by will. For those, the process is a claim form and a death certificate, not a court.

The small estate affidavit

Where probate is needed but the estate is modest, both states offer a shortcut, and the two are shaped quite differently.

In Texas, a small estate affidavit under Tex. Est. Code ch.

205 is available where there is no will, the value of the estate assets excluding homestead and exempt property does not exceed $75,000, and the assets exceed the known liabilities other than those secured by exempt property. It can transfer the homestead but not other real property. Texas also offers the affidavit of heirship, which is a title clearing tool rather than a court proceeding, and is commonly used for real property.

In Illinois, the small estate affidavit under 755 ILCS 5/25-1 now reaches personal property up to $150,000, a threshold raised from $100,000 in 2025, and vehicles registered with the Secretary of State no longer count toward the limit. The critical limitation is that an Illinois small estate affidavit cannot transfer real estate at all. If the decedent owned a home in their own name, Illinois probate is required regardless of value.

That single difference drives a great deal of planning. It is the reason Illinois homeowners should look hard at a transfer on death instrument or a trust, because in Illinois the house is what forces the courthouse door open.

This week: Pull the last three years of tax returns and mark every source of interest, dividends, and retirement income. Search the NAIC policy locator and the unclaimed property database of every state where he lived or worked. Call his former employers about group life and pensions.

If you are trying to piece together what a spouse left behind, bring what you have found and let us tell you which parts need a court. Call or text 512.761.8479.

An agent under a power of attorney is a fiduciary

A power of attorney is a grant of authority, not a grant of ownership. The agent is a fiduciary who must act in the principal’s best interest, keep the principal’s property separate from their own, avoid self dealing, and maintain records of every transaction.

Texas spells this out. Tex. Est. Code § 751.104 requires the agent to maintain records of each transaction, and sections 751.251 and 751.252 allow specified interested persons, including a child of the principal, to petition a court to compel the agent to account.

Illinois provides parallel relief under its Power of Attorney Act. Courts in both states can order an accounting, remove an agent, and impose liability for breach. Gifts to the agent are the area of greatest scrutiny. In general, an agent has no authority to make gifts, including gifts to themselves, unless the instrument expressly grants that power, and even an express grant does not license self dealing that harms the principal.

What to do first

Move quickly, because the practical remedy is usually recovering assets that still exist.

Document before confronting. Gather statements, deeds, title records, beneficiary change forms, and anything showing the timeline of the parent’s decline against the timeline of the transactions.

Make a written demand for an accounting. This alone resolves a surprising number of situations, and it creates a record when it does not.

Alert the financial institutions. Banks and brokerages have escalation procedures for suspected exploitation of vulnerable adults, and a documented report can freeze further movement.

Report it. In Texas, suspected exploitation of an elderly or disabled adult is reported to Adult Protective Services, and under Tex. Hum. Res. Code § 48.051 reporting is mandatory for anyone with cause to believe it is occurring. Illinois has a parallel adult protective services system. These are not substitutes for legal action, but they open a parallel investigation.

Then get counsel. Depending on the facts, the tools include a court action to compel accounting, revocation of the power of attorney if the parent retains capacity, guardianship if the parent does not, a temporary restraining order to stop transfers, and suit for breach of fiduciary duty, conversion, or fraud.

If the parent has already died

The claim does not disappear. It belongs to the estate, and the personal representative can pursue it. Where the wrongdoer is also the named executor, an interested person can contest the appointment or seek removal. Transactions made when the parent lacked capacity, or procured by undue influence, can be set aside, including deeds, beneficiary changes, and account retitling.

Limitations periods apply and they are shorter than families assume. In Texas a breach of fiduciary duty claim generally runs four years and a conversion claim two. Delay is the most common reason these claims fail.

This week: Document before you confront. Gather statements, deeds, title records, and beneficiary change forms, and line the transaction dates up against the timeline of your parent’s decline. Then make a written demand for an accounting.

If you suspect a relative is exploiting your parent, the first hour of documentation is worth more than the first month of arguing about it. Call or text 512.761.8479.

Capacity is not one standard

Different documents require different levels of understanding, and a person can have enough capacity for one and not another.

Testamentary capacity, the standard for signing a will, is comparatively forgiving. It asks whether the person understands that they are making a will, the general nature and extent of their property, and who the natural objects of their bounty are.

Contractual capacity is a higher bar, and it is the standard that governs deeds. Tex. Est. Code § 114.054 provides that the capacity required to make or revoke a transfer on death deed is the same as the capacity required to make a contract.

A diagnosis of dementia does not by itself end capacity. Capacity is assessed at the moment of signing and can fluctuate. Early stage disease frequently leaves a real window.

The trap: an agent cannot create these deeds

This is the single most important thing for a family to know, and it surprises nearly everyone.

Tex. Est. Code § 114.054 states plainly that a transfer on death deed may not be created through use of a power of attorney. Illinois is the same: an agent under a durable power of attorney does not have authority to create or revoke a transfer on death instrument on behalf of the owner, even if the power of attorney purports to authorize it.

So the common plan, hold the power of attorney and use it later to move the house, does not work. If the parent can no longer sign personally, that door is closed.

A Lady Bird deed is treated differently, and may be executed by an agent where the power of attorney authorizes it. That distinction is technical, easy to miss, and occasionally decisive.

What to do while there is still time

Act now rather than after the next decline. Get the durable financial power of attorney and the medical documents in place, and pay attention to the authorities that must be granted expressly. Under the Texas statutory durable power of attorney, powers to make gifts, create or change a trust, and change beneficiary designations are not implied.

If the form does not grant them in so many words, the agent does not have them, and those are precisely the powers a family later wishes it had. Consider whether a deed or a trust fits, and have the parent sign personally while they can. Document capacity contemporaneously, with a physician’s contemporaneous note and careful attention to who was in the room, because these instruments get challenged.

If capacity is already gone and no adequate documents exist, guardianship of the estate, with court authority for specific transactions, may be the only route. It is slower and more expensive than everything above, which is the point. Before going there, ask whether a less restrictive alternative fits.

Texas requires courts to consider them, and a supported decision-making agreement under Tex. Est. Code ch. 1357 lets an adult keep legal authority while receiving formal help, which suits early decline far better than a guardianship does.

This week: Collect whatever powers of attorney already exist and read what they actually authorize, particularly gifts and trusts. Ask the treating physician to note capacity contemporaneously. Do not plan on using a power of attorney to sign a deed, because neither state allows it.

If you are watching a parent decline and the paperwork is not done, the calendar is not neutral. Call or text 512.761.8479.

What recovery actually is

Every state runs a Medicaid estate recovery program seeking reimbursement for certain long term care costs after the recipient dies. The scope differs by state, and the difference is the whole ballgame.

Texas recovery generally reaches only the probate estate. Property that passes outside probate, including by transfer on death deed, Lady Bird deed, survivorship agreement, or a properly structured trust, is generally beyond it. That is a large part of why those deeds appear so often in Texas long term care planning.

Illinois defines the recoverable estate the same narrow way. The Illinois agency that administers the program describes an estate as property subject to probate, and states that it does not include assets passing directly to a beneficiary outside probate, listing insurance proceeds, retirement accounts, pension plans, accounts with payable on death or survivorship provisions, mutual funds, and deferred compensation.

So the basic strategy travels between the two states better than families expect. What does not travel is everything else about how the two programs are administered, so each parcel still needs to be analyzed under its own state’s rules.

Both states also recognize exemptions and hardship waivers. Texas does not pursue recovery where a surviving spouse is living, where there is a surviving child under 21 or a child of any age who is blind or disabled, and it declines small claims and cases where the cost of recovery would exceed what could be recovered. There are also deductions available for a child who provided care that allowed the parent to stay home longer, and for costs the family paid to maintain the property.

Timing is the part people get wrong

The instinct when a diagnosis arrives is to transfer the house to the children immediately. That instinct causes most of the damage in this area.

Medicaid applies a five year look back to uncompensated transfers, and gifts made inside that window create a penalty period of ineligibility that begins when the applicant would otherwise qualify. A transfer made weeks before an application can therefore produce exactly the outcome the family was trying to avoid: no benefits and no house.

There are also tax consequences. Property inherited at death generally receives a stepped up basis. Property given away during life generally carries the donor’s basis, which can hand the children a capital gains bill that dwarfs whatever was saved.

This is planning that belongs years in advance, not weeks. Where a crisis has already arrived, there are still tools, including spousal protections, certain exempt transfers, and qualified income trusts in Texas, but the options narrow sharply.

What these deeds do not do

A transfer on death deed or Lady Bird deed is not an asset protection force field. The property can still be reached by creditors of the estate for a period after death, the deeds fit awkwardly with minor or spendthrift beneficiaries, and an uncoordinated deed can quietly contradict the will. Where the family situation is complicated or there are several properties, a trust usually does the job better.

This week: Do not transfer anything yet. Write down when care began, how the house is titled, and any gifts or transfers made in the past five years. That timeline determines which options are still open.

If a parent is entering long term care and the house is the concern, the sequence of steps matters more than the choice of form. Call or text 512.761.8479.

What the will can and cannot reach

A Texas will can only dispose of what the testator owns. If the home is community property, half already belongs to the surviving spouse by operation of law, and the will can pass only the decedent’s half. If the home is the decedent’s separate property, the will can pass all of it, subject to the protections below.

Characterization is therefore the first question, and it is decided by the inception of title rule. Property acquired before the marriage, or during it by gift or inheritance, is separate. Property acquired during the marriage otherwise is presumed community, and overcoming that presumption requires clear and convincing tracing evidence.

Even where the house is separate property, community funds spent on mortgage principal or capital improvements can create a reimbursement claim in favor of the community estate.

What he cannot do while alive

Before worrying about the will, know this. Tex. Fam. Code § 5.001 provides that neither spouse may sell, convey, or encumber the homestead without the joinder of the other spouse, and it applies whether the homestead is separate or community property. A husband cannot deed the house to his daughter during his lifetime over his wife’s objection. Whatever the will says, the house is not going anywhere without that signature while he lives.

The homestead right the will cannot defeat

This is the protection that matters most. A surviving spouse has a constitutional and statutory right to occupy the homestead, whether the property was community or the decedent’s separate property, and Tex. Est. Code § 102.005 provides that the homestead may not be partitioned among the decedent’s heirs during the lifetime of the surviving spouse for as long as the surviving spouse elects to use or occupy the property as a homestead.

Read that carefully, because it is both stronger and narrower than people expect. A daughter who inherits the house under the will may hold title and still be unable to take possession, sell free of the interest, or force a partition, for as long as the surviving spouse occupies it. What the surviving spouse holds is a right of occupancy, not ownership, and it comes with obligations, including taxes, insurance, and ordinary maintenance.

Texas also provides exempt property set asides and a family allowance for the surviving spouse’s support, which are separate from the homestead right.

What Texas does not give you

There is no elective share. A Texas spouse cannot renounce the will and claim a statutory fraction of the estate the way an Illinois spouse can. If the house is separate property and the surviving spouse eventually stops occupying it, the devisee’s title becomes possessory.

What to do rather than wait

If the marriage is intact, this is a planning conversation and not a litigation one. Both spouses can agree in writing, through a marital property agreement, a survivorship agreement, a life estate, or a trust that supports the surviving spouse and then passes the property to the children. Those instruments produce a result the couple chose. Silence produces the statute’s result, and the statute is a blunt instrument for a blended family.

If a spouse’s will has changed and you do not know where that leaves you, find out before it becomes a probate dispute. Call or text 512.761.8479.

What Illinois does

Illinois imposes an estate tax with a $4 million exclusion. Three features make it harsher than the number alone suggests.

It is not indexed for inflation. The threshold does not rise with the value of your house or your retirement account, so estates cross it through nothing but the passage of time.

There is no portability. Under federal law, a surviving spouse can carry over the unused portion of a deceased spouse’s exemption. Illinois has no equivalent. If the first spouse to die leaves everything outright to the survivor, that spouse’s $4 million exclusion is simply lost, and the survivor’s estate faces the tax with only one exclusion instead of two.

The rates climb quickly. An estate a few million dollars over the line can generate a six figure liability.

Who gets caught

Not who people expect. Illinois estate tax is a middle class problem in a way the federal tax is not.

Add a paid off home in a strong market, a retirement account built over a full career, a life insurance policy owned personally rather than in trust, and a small business or a farm, and $4 million arrives sooner than families anticipate. Life insurance is the most common surprise, because the death benefit counts toward the taxable estate when the decedent owned the policy.

What planning looks like

The absence of portability is the central design problem, and there are two standard answers. The first is a credit shelter or bypass trust at the first death, which uses the first spouse’s exclusion rather than wasting it. The second is the Illinois-only QTIP election, which lets an estate make a marital deduction election for Illinois purposes separately from the federal election. Used properly, it allows a married couple to shelter the first spouse’s $4 million while still deferring tax and keeping assets available to the survivor.

It is the workaround most Illinois practitioners reach for first, and it has to be built into the documents in advance rather than discovered at the return. Lifetime gifting is often part of the plan, because Illinois imposes no separate gift tax. Be careful with the arithmetic rather than assuming a gift disappears, since adjusted taxable gifts figure into the Illinois computation, and run the numbers with counsel before making large transfers. An irrevocable life insurance trust moves a policy out of the taxable estate. Illinois also provides relief for qualified farm property, which you should examine rather than assume.

The Texas comparison, and a caution about moving

Texas has no state estate tax, which is one reason the move shows up so often in these conversations. But changing your mailing address is not the same as changing your domicile, and Illinois real property remains subject to Illinois estate tax regardless of where the owner lives. A move that is real should be documented as real: voter registration, driver’s license, vehicle registration, where you actually spend your time, and where your advisors and accounts are.

If your Illinois estate is anywhere near $4 million, or if a first spouse has already died without bypass planning, run the arithmetic now. Call or text 512.761.8479.

The Illinois rule

Under 755 ILCS 5/2-8, an Illinois surviving spouse may renounce the will and instead take one third of the entire estate if the decedent left a descendant, or one half if the decedent left no descendant. The renunciation must be filed within seven months after the will is admitted to probate, or within such further time as the court allows where litigation affecting the share is pending.

Illinois also provides a spouse’s award under 755 ILCS 5/15-1, a support allowance of not less than $20,000, plus not less than $10,000 for each dependent child living with the surviving spouse. This is separate from the renunciation and is paid from the estate ahead of general distributions.

There is a large limit on all of this that clients rarely hear. Illinois has no augmented estate.

The renunciation reaches the probate estate, so assets that pass outside probate, including a funded revocable trust, payable on death designations, and survivorship accounts, can substantially reduce what the renouncing spouse actually receives. Illinois has closed that gap in one place, allowing a surviving spouse to renounce a transfer on death instrument within seven months after death, and the existence of that narrow fix tells you what the general rule is everywhere else.

The Texas rule

Texas has no elective share. A Texas will can, in principle, leave a surviving spouse nothing from the decedent’s separate property and from the decedent’s half of the community property. There is no statutory right to renounce and claim a fixed fraction.

What Texas gives a surviving spouse instead is different in kind. Community property law already vests one half of the community estate in the surviving spouse, so a will can only dispose of the decedent’s half.

The homestead right allows the surviving spouse to occupy the homestead for life, and the homestead may not be partitioned among the heirs while the surviving spouse elects to use it. There are exempt property set asides and a family allowance. Those protections are meaningful, but they are protections of possession and support rather than a share of the estate.

Why this matters most in second marriages

The mismatch is worst in blended families. An Illinois couple who moves to Texas may believe the surviving spouse is protected by a right that no longer exists. A Texas couple who moves to Illinois may sign a will that would have been perfectly effective in Texas and is now subject to renunciation seven months after probate.

The planning response is the same in both directions and it is not complicated: say what you mean in writing, in advance, with both spouses represented. A marital property agreement, a premarital or postmarital agreement, or a properly funded trust can produce a result both spouses actually chose, rather than one the statute chose for them after a death.

If you are in a second marriage with property in Texas or Illinois, the default rules are unlikely to match your intentions. Call or text 512.761.8479.

The rule in both states

Tex. Est. Code § 114.055 provides that to be effective, a transfer on death deed must be recorded before the transferor’s death, in the deed records of the county where the property is located.

Illinois takes the same position under its Real Property Transfer on Death Instrument Act, and adds a formality Texas does not: an Illinois instrument must be witnessed as well as notarized, so a document executed the way Texas allows can fail in Illinois. A signature and a notary seal create nothing. Recording is not a formality that cleans up later; it is the moment the instrument becomes capable of transferring anything.

There is no cure after death. No court can record it retroactively, and the beneficiary cannot fix it by filing late.

Why a will does not rescue the situation

Tex. Est. Code § 114.057 provides that a will may not revoke or supersede a transfer on death deed.

That cuts both ways. A will cannot undo a properly recorded deed, and it cannot substitute for an unrecorded one. If the deed never took effect and the owner also left no will, the property passes by intestacy to the heirs the statute names, which is frequently not the person the owner had in mind when signing.

What actually happens next

The property still has to be transferred, just through a different and more expensive door. Depending on the facts, that means an application to determine heirship, an affidavit of heirship, a small estate affidavit, or a full administration.

Where the heirs agree, the outcome sometimes ends up matching what the deed intended, through a family settlement agreement or deeds among the heirs. Where they do not agree, or where one heir is a minor, incapacitated, or unreachable, the cost climbs quickly.

The lesson for anyone holding an unrecorded deed today

If a signed transfer on death deed is sitting in a file, a safe deposit box, or a lawyer’s office rather than in the county records, it is not a plan. Record it. The filing fee is trivial compared to the probate it prevents.

One related point, because it fails the same way. If plans change, revoke properly. Revocation takes a later instrument, acknowledged after the original and recorded before death, not a note in a file.

This week: Search your county clerk’s online records for the deed by your name. If it is not there, take the original to the clerk and record it. Confirm the legal description matches the deed records rather than the tax statement.

Check the county records this week. It takes ten minutes and it is the difference between a plan and a piece of paper. Call or text 512.761.8479.

Validity usually survives the move

Texas generally honors a will that was validly executed under the law of the state where it was signed. An Illinois will properly executed in Illinois is not void because the testator later became a Texan. So the fear that a move silently revoked the will is almost always unfounded.

The reverse direction deserves more caution than it usually gets. Texas recognizes a holographic will, wholly in the testator’s handwriting and signed, with no witnesses at all. A document like that is not a safe thing to carry into another state, and anyone leaving Texas with one should have it re-executed rather than assume it travels.

Validity is not the same as workability

A will can be perfectly valid and still create an expensive probate. Several features matter enormously in Texas and are usually absent from an Illinois-drafted document.

The first is independent administration. Texas allows an executor to administer an estate with very little court supervision, which is the single largest cost saver in Texas probate, and the will should say so expressly. If it does not, the situation is awkward rather than hopeless: under Tex.

Est. Code § 401.002 the distributees may agree to independent administration even where the will is silent. That works when the family is united and fails exactly when it is needed most, which is why the language belongs in the document rather than in a hoped-for agreement.

The second is the bond waiver. Without express language waiving bond, the estate may have to purchase one.

The third is the self-proving affidavit. Texas has its own statutory form. A will proved by other means can still be admitted, but doing so may require locating witnesses years later, which is exactly the problem the affidavit exists to avoid.

The fourth is the executor. A nonresident who has not appointed a resident agent for service of process in Texas can be disqualified from serving, so an out-of-state executor needs that appointment on file, and the practical burden of administering Texas real property from Illinois is real even where it is permitted.

The fifth is a deadline nobody mentions at the closing table. A Texas will generally must be offered for probate within four years of the date of death. Miss it and the estate is usually treated as intestate, with the property passing to the heirs the statute names rather than the people the will named. A will that sits in a drawer through a move, a decline, and a funeral can run out of time.

What the move actually changes

The property law changes, and that matters more than the will. Texas is a community property state and Illinois is not.

Assets acquired during marriage after establishing Texas domicile are characterized differently than the same assets would have been in Illinois. Texas has strong homestead protections and a surviving spouse’s right of occupancy that has no Illinois counterpart. Illinois gives a surviving spouse the right to renounce the will and take a statutory share, which Texas does not.

The tax picture flips too. Illinois imposes its own estate tax at a $4 million exclusion. Texas has no state estate tax. That is a substantial reason people move in this direction, and a substantial reason to make sure domicile is documented rather than assumed.

What to review after a move

Update the will for independent administration, bond waiver, and a Texas self-proving affidavit. Replace the financial and medical powers of attorney with Texas statutory forms, because acceptance by banks and hospitals is a practical problem more than a legal one.

Review beneficiary designations, which the will does not control. And if real property was left behind in Illinois, plan for it specifically, because that property will be governed by Illinois law no matter where the owner lives.

This week: Find your will and check three things: does it name an independent executor, does it waive bond, and does it have a self-proving affidavit. Then locate your powers of attorney and note which state’s form they use.

If you moved between Texas and Illinois and your documents did not move with you, have them reviewed rather than assumed. Call or text 512.761.8479.

I have been licensed in Illinois since 1996 and in Texas since 1997. I lived in Illinois from 1995 to 2017, Illinois was the center of my practice through 2018, and I still serve clients in the Chicago area from my Austin office. That two-state practice means I regularly meet families who moved from one state to the other, or who own property in both, and discover that the estate planning rulebooks differ far more than they expected. I make these comparisons often in my published Justia answers; here are the differences that matter most.

Start with death taxes. Texas has no state estate or inheritance tax. Illinois has its own estate tax, with an exclusion of roughly four million dollars as of this writing, well below the federal exemption and, unlike the federal exemption, not portable between spouses. That single difference means many Illinois couples need trust planning that a comparable Texas couple can skip entirely, and it means a move between the states can change the right plan overnight, in either direction.

The property systems differ at the root. Texas is a community property state; Illinois is not. That affects who owns what during a marriage, what each spouse’s will can actually control, and how income tax basis works at death. The deed tools differ too: both states offer a transfer-on-death deed (Texas’s Transfer on Death Deed and Illinois’s Transfer on Death Instrument), but the requirements are not identical, and the Lady Bird deed so common in Texas planning is not an Illinois practice. Homestead protection is another gulf: Texas homestead protection is famously broad, while Illinois’s exemption is modest by comparison, which changes the asset protection conversation entirely.

The takeaway is simple: an estate plan drafted for one state should be reviewed when you move to the other or buy property there, because documents and strategies that work beautifully in Austin can misfire in Chicago, and vice versa. Because I practice in both states, I can tell you what travels, what does not, and what needs to be redone.

If you have moved between Texas and Illinois, or own property in both, have your plan reviewed by someone licensed in both states. Call or text 512.761.8479.

What each deed does

Both instruments leave you in complete control while you are alive: you can sell, mortgage, lease, or change your mind, and the beneficiary has no enforceable interest until you die. The TODD is a creature of statute with prescribed requirements and a built-in revocation procedure. The Lady Bird deed accomplishes a similar result through an enhanced life estate: you keep a life estate plus the retained power to sell or convey without the beneficiary’s consent.

The differences that matter

They are not interchangeable, and the differences show up at inconvenient times. Execution is one: a TODD generally must be signed by the owner personally and cannot be signed by an agent under a power of attorney, while a Lady Bird deed may be executed by an agent if the power of attorney authorizes it, which can be decisive once a parent has lost capacity. The mechanics of contingent beneficiaries and revocation differ between the two. And title companies treat the instruments differently in practice, which can affect how smoothly a later sale or refinance closes. Which deed fits depends on your facts, not on which form is easier to find online.

The Medicaid estate recovery angle

For many families, the cost of long-term elder care is now the single biggest threat to the estate. Texas’s Medicaid estate recovery program seeks reimbursement for certain long-term-care costs from a deceased recipient’s estate, but generally only from assets that pass through probate. Property that passes at death by TODD or Lady Bird deed generally passes outside probate, which is one reason these deeds appear in long-term-care planning. Timing matters enormously: transfers made too close to a Medicaid application can create penalty periods, so this planning belongs years in advance, not weeks.

When these deeds are not the answer

Property passing outside probate can still be reached by creditors of the estate for a period after death, so the deeds are not an asset-protection force field. They fit awkwardly with minor or spendthrift beneficiaries, complicated family situations, or a portfolio of multiple properties. In those cases a trust does the job better. And an uncoordinated deed can quietly contradict your will, sending the house one direction while the will assumes another.

If keeping the home out of probate matters to your family, get the right deed and get it coordinated with the rest of your plan. Call or text 512.761.8479.

How Texas intestacy actually divides property

Texas distinguishes community property (generally, what the couple acquired during the marriage) from separate property (generally, what each spouse brought in or received by gift or inheritance). If the deceased spouse’s surviving children are all also children of the surviving spouse, the deceased’s share of the community property passes to the surviving spouse. But if the deceased had any child from another relationship, the deceased’s one-half of the community property passes to the children, not the spouse. Separate property follows its own rules, dividing between the spouse and children, with the spouse often receiving only a fractional or life interest in real estate.

The homestead: a right to stay is not the same as ownership

Texas gives a surviving spouse a homestead right, the right to occupy the home for life, regardless of who inherits title. That protection matters, but it is occupancy, not ownership. A widow who holds a homestead right over a house co-owned with her stepchildren cannot simply sell or refinance it without their cooperation, and when she dies or moves, the title question the family postponed comes due, often with more heirs and less goodwill than before.

The probate consequences

Dying intestate also complicates the court process. There is no named executor, so the court appoints an administrator; a determination of heirship may be required to establish who the legal heirs even are; and the streamlined independent administration Texas is known for is available only if all the heirs agree. Every one of those steps adds time, cost, and opportunities for conflict.

What a will and coordinated deeds fix

A well-drafted Texas will names your executor, authorizes independent administration, and sends the house where you actually want it to go. Coordinated with the right deed and beneficiary designations, it can spare your family most of the process described above. Whether you also need a trust depends on your situation. Multi-state property, privacy, a blended family, incapacity planning, or long-term-care concerns can justify one, but I help you decide what actually fits rather than selling you something you do not need.

A simple will and coordinated deeds are among the highest-value documents you will ever sign. Call or text 512.761.8479 to put yours in place.