How the Increased Texas Older Adult Property Tax Exemption Might Affect Estate Planning

You might understand the need to revise your estate plans when a noteworthy life change occurs, such as a divorce or birth in the family. Significant financial shifts could also prompt you to evaluate your asset distribution strategy. However, you should also be aware of changes in the law that can affect your wealth. A recently passed bill in Texas could have a substantial impact on older residents of the state.

Under Senate Bill (SB) 23 and Senate Joint Resolution (SJR) 85, the school tax homestead exemption for Texans who are disabled or at least 65 years of age has been raised from $10,000 to $60,000. This means that this amount would not be counted when a property is assessed. Moreover, the standard homestead exemption was hiked from $100,000 to $140,000, giving seniors the ability to exclude up to $200,000. For homes valued at less than that amount, no school tax would be applied. 

Each situation is unique, but some older homeowners will see considerable reduction in property tax liabilities, effectively cushioning them from escalating home values. School district taxes are also frozen the year someone qualifies for the exemption due to age or disability. By lowering property taxes, the law allows elderly and disabled homeowners to retain more of their income. This financial relief might allow them to devote additional assets to estate planning vehicles while still having what they need to cover daily living expenses and healthcare costs. 

Depending on the particular circumstances, there could be a stronger incentive for older family members to retain their primary residences because of the reduced tax burden. Accordingly, they might make passing this property to children or grandchildren part of their estate planning strategy. 

Medicaid eligibility and long-term care planning is also a key concern for older individuals and their families. Strategic use of the homestead exemption and other options, such as a Medicaid trust, can help people fund nursing home expenses without worrying about severe financial consequences for themselves or their loved ones. 

As these and other legal developments unfold, it is important to consult with a knowledgeable attorney to ensure that you’re getting the most possible out of your estate plan under current laws. At Grob & Associates Law Firm PC, we help Texans leverage their opportunities by preparing a full range of estate planning documents for them. Please call 972-777-5701 or contact us online to schedule an appointment at one of our offices in Rockwall or Wylie.