Does Your Homestead Exemption Survive If Your Home Is in a Trust?

One of the most common questions we hear at seminars is whether putting your house in a living trust will cost you your homestead exemption. In Texas, the short answer is no. A home held in a properly drafted revocable living trust keeps its homestead exemption, including the over-65 tax ceiling. But “properly drafted” matters. The trust has to meet the Texas definition of a qualifying trust, and a few practical steps keep the appraisal district from dropping your exemption by mistake. Here is how the homestead exemption and a trust work together in Texas.

What the Homestead Exemption Is Worth Now

The stakes went up in 2025. Texas voters approved raising the school district homestead exemption from $100,000 to $140,000, and the extra exemption for homeowners who are 65 or older or disabled from $10,000 to $60,000. That is a combined $200,000 off the taxable value of the home for school taxes. On top of that, the homestead exemption brings the 10% cap on annual increases in your home’s taxable value and, once you turn 65, a ceiling on your school taxes. Losing any of that because of a paperwork problem with your trust would be expensive, which is why the trust language matters.

What Makes a Trust a “Qualifying Trust” for the Homestead Exemption

Under Texas Tax Code § 11.13(j), a home can be a residence homestead if it is owned “through a beneficial interest in a qualifying trust” and the trustor lives there as their principal residence. The “trustor” is the person who put the home into the trust, or that person’s spouse. In plain terms, a trust qualifies when:

• The trust (or the deed) gives you the right to live in the home as your principal residence, rent-free except for taxes, insurance and upkeep.
• That right lasts for your life, for a set term, or until you revoke the trust.
• The home was transferred into the trust by a recorded deed that describes the property.

Most well-drafted Texas revocable living trusts include this language. Many online and out-of-state trust forms do not, which is one reason we review trusts for clients who have moved to Texas.

Homestead Protection From Creditors Is a Separate Rule

Texas also protects your homestead from most creditors, and that protection has its own “qualifying trust” definition in Texas Property Code § 41.0021. It is similar to the tax rule but not identical. A trust drafted for Texas should meet both definitions, so your home keeps its property tax breaks and its creditor protection after it goes into the trust.

Steps to Keep Your Homestead Exemption When Your Home Goes Into a Trust

1. Use a Texas trust with qualifying-trust language. If your trust came from a website or another state, have it reviewed.
2. Record a proper deed. The deed should transfer the home from you to yourself as trustee and should reference your right to occupy it. (See How to Fund a Living Trust in Texas.)
3. Tell the appraisal district. Once the deed records, the appraisal district may see a new owner and ask for a new homestead application. Filing one with your deed and a certification of trust heads off problems.
4. Watch your next appraisal notice. Make sure the homestead and any over-65 or disability exemption still appear. If one is missing, contact the appraisal district right away.

What Happens to the Exemption After You Die?

A surviving spouse who keeps living in the home generally keeps the homestead exemption. A surviving spouse who is 55 or older can usually keep the over-65 school tax ceiling too. Once the home passes to children or other beneficiaries who do not live there, the homestead exemption ends for the next tax year. If a child moves in and makes it their principal residence, they can apply for their own exemption. Your trust can also give a surviving spouse or a family member the right to live in the home for a period of time.

Trusts vs. Lady Bird Deeds and Transfer on Death Deeds

A lady bird deed or a transfer on death deed also keeps your homestead exemption, because you stay the owner until death. These can be good tools for a single property. A living trust does more: it covers incapacity, manages property for beneficiaries and keeps all of your assets under one plan. We compare the options in Transfer on Death Deeds vs. Lady Bird Deeds in Texas and Do I Need a Trust If I Own a Home in Texas?

Common Mistakes That Put the Exemption at Risk

• Using a trust form that never gives you the right to occupy the home.
• Recording a deed into the trust and never checking the next appraisal notice.
• Moving the home into a business entity, like an LLC, instead of a trust. An LLC generally cannot claim a residence homestead.
• Moving the home into an irrevocable trust without checking whether it still qualifies.

How We Help

Every trust we draft at Henington Lewis Law Firm PLLC includes Texas qualifying-trust language for both property tax and creditor protection. We prepare and record the deed to your home and walk you through what to send the appraisal district. Your plan is handled for a flat fee, quoted in writing after a free consultation. (See How Much Does a Living Trust Cost in Texas?)

Frequently Asked Questions

Will putting my house in a living trust raise my property taxes?

No, not if the trust is a qualifying trust. Your homestead exemption, the 10% cap and any over-65 or disability benefits stay in place.

Do I need to reapply for my homestead exemption after moving my home into a trust?

Sometimes. Practices vary by appraisal district. Some update the record automatically. Others send a notice asking for a new application. Filing a new application with your deed and certification of trust is the safest approach.

Does the over-65 tax ceiling survive if my home is in a trust?

Yes. As long as the trust qualifies and you still live in the home, the ceiling stays in place.

Can my children keep the homestead exemption after I die?

Only if they live in the home as their own principal residence and apply for the exemption themselves.

Does this apply to a home in an irrevocable trust?

It can, if the trust gives you the right to live there rent-free. Irrevocable trusts raise other issues, so have one reviewed before transferring your home.

Worried your trust might not protect your homestead exemption? Call (512) 737-8404 or book a free consultation, and we will review it with you.

Reviewed by Turner Henington, attorney, Texas Bar No. 24148206 · Updated November 2026