Wealth Management in Texas

Where Texas wealth comes from

Texas is home to about 31.7 million people, and its wealth is more varied than its reputation. Royalty checks arrive from the Permian Basin and the Eagle Ford. Founders and early employees hold equity in companies around Austin and Dallas. Doctors and hospital executives earn high incomes in Houston and San Antonio. Ranch families in the Hill Country and the Panhandle hold land that has gained value as cities grow toward them.

According to the U.S. Census Bureau, 2020-2024 American Community Survey, the median household in Texas earns about $78,476, and about 33.8 percent of adults have a bachelor’s degree or higher. The households that look for wealth management usually sit well above those medians, with assets spread across several kinds of property and several tax treatments.

The work a wealth manager takes on

Think of the role as project management for your money. The manager runs the portfolio, but also keeps your CPA, your attorney and your insurance agent working from the same facts. A good one will tell you when a tax move in one account undercuts an estate goal in another.

In practice that means a yearly rhythm: a review of holdings against your targets, a pass at tax moves before December, a look at beneficiary forms and trust documents, and a conversation about any life change since the last meeting. Our tax planning guide and estate planning guide explain the pieces the manager coordinates.

Paying for it

The usual arrangement is a yearly percentage of the assets under management, billed each quarter and trimmed as the balance grows. Some firms quote a flat annual retainer instead, which can suit people with large illiquid holdings such as land that the firm does not manage.

Underlying fund costs, trading charges and insurance or annuity commissions are separate. Ask the firm to add everything into a single yearly figure.

Situations that push Texans toward a wealth manager

A new royalty stream is the classic trigger. The first large check shows up, then the second looks different, and the owner realizes there is no plan for the money or for the tax bill. Another is a liquidity event, when a company sale or a stock vesting turns paper wealth into cash in a single year. A third is a death in the family, which leaves a surviving spouse with accounts, land and papers they have never managed.

Physicians and tech executives reach the same point from a different direction. Their pay is high and arrives early, with stock options or deferred pay layered on top, and they want the retirement accounts, the taxes and the insurance handled as one package.

Texas law and tax rules that change the plan

Income tax. Texas does not tax wages, interest, dividends or gains. Federal brackets, the surtax on investment income for higher earners and the timing of large sales set the real cost.

Estates. Texas has no estate or inheritance tax. Only federal estate tax can apply, and only to the largest estates. Trusts still earn their place for control, privacy and blended families.

Marital property. In a community property state, earnings and purchases during a marriage generally belong to both spouses. Gifts and inheritances stay separate if they are kept apart. At the first death, community assets can get a new cost basis for the full value, which can erase a large capital gain.

Homestead. A Texas homestead is shielded from most creditors, and retirement accounts and many insurance values get strong protection too.

Property tax. The state raises revenue through property tax instead of income tax. Homestead exemptions, a school tax ceiling for owners 65 and older and an appraisal protest can lower the bill.

Curious how your holdings are taxed?

An advisor who works with Texas families can walk through your accounts, stock awards and estate papers, free and with no pressure.

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Wealth manager versus the alternatives

Registered investment advisers owe clients a fiduciary duty on their advice. Brokerages and insurance-based practices are paid partly through commissions. Both can serve you well if you understand which one you hired. Our investing basics guide shows how portfolios are built.

Questions to ask before you hire

1. Who will actually manage my account, and who do I call with a question?
2. What is my total yearly cost once fund expenses are added?
3. Do you act as a fiduciary on all advice, and will you say so in writing?
4. How have you handled mineral interests, land or a family business before?
5. Which regulator oversees you? Check the SEC adviser database, FINRA BrokerCheck and the Texas State Securities Board.
6. Where is my money held, and who can move it?

Video meetings widen your choice of firms well beyond the nearest big city.

Ranch and land succession in Texas

Texas families often hold wealth in land that has been passed down for generations. A ranch or farm can be worth far more than the household’s cash, and the person who works the land may not be the only heir. Fair treatment does not always mean equal pieces of dirt. Families use a mix of tools: a family limited partnership or an LLC to hold the land, buy-sell agreements among heirs, life insurance that gives non-ranching children value in place of acreage and a written plan for who may lease, sell or borrow against the property. Agricultural and timber valuations can lower property tax, and a change in use may end them, so check before a transfer.

Selling a business in Texas

Owners of Texas companies often prepare for a sale years in advance. Buyers pay more for firms with clean books, documented processes and a team that does not depend on the owner. The structure of the deal matters as much as the price: an asset sale and a stock sale are taxed differently, an earn-out defers part of the payment and rollover equity keeps you invested in the next chapter. Texas has no personal income tax, but a sale still triggers federal tax, and the company may owe state franchise tax in the year of the sale. A wealth manager works with your attorney and CPA to model the after-tax proceeds under each structure and then helps invest the proceeds so the money lasts.

Charitable giving and family foundations

Texans are generous givers, and wealth managers help turn good intentions into a structure that lasts. A donor-advised fund lets you contribute cash or appreciated stock in a high-income year, take the deduction then and recommend grants to charities over time. A private family foundation offers more control and a place for the next generation to learn about giving, though it carries administrative work and stricter rules. Qualified charitable distributions allow people over 70 and a half to send money from an IRA directly to a charity without counting it as income. The right tool depends on how much you give, how often and how much involvement you want.

Giving can also be part of an estate plan. A bequest of a retirement account to charity avoids the income tax your heirs would otherwise pay, while other assets go to family. Review beneficiary forms with your attorney so the gift lands where you intend.

Building a cash and credit plan

Households with substantial assets still need liquidity. A wealth manager typically sets a cash reserve for taxes, emergencies and planned purchases, then arranges credit that can be used if the market falls or an opportunity arises. A home equity line, a securities-backed line or a business line each has costs and risks. Knowing in advance which source you would tap, and what it would cost, prevents rushed decisions during a downturn.

Frequently asked questions