What do Digital Assets Have to Do With Estate Planning?

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What do Digital Assets Have to Do With Estate Planning?

What is a digital asset and why do I care? If you have an email account, social media access, or use your computer to access accounts – you have digital assets. As we go through our day-to-day lives, we do not often consider – what happens to these accounts when I die or become incapacitated?

What is a digital asset?

A digital asset is anything that exists in a computer format (sometimes referred to as binary code format) that also comes with the right to use. If data does not include the right of use, it is not considered a digital asset. Simply put, Digital assets include but are not exclusive to: digital documents, audible content, motion picture, and other digital data such as email accounts, online financial accounts, personal blogs, and social media and networking websites, as well as computer accounts and passwords.

Why do I care?

What happens when you can longer access your digital accounts? Is important information lost forever? Are your social media accounts left on forever? What if you wanted someone to be able to access, control, turn off, or otherwise manage your digital access once you were no longer able to do so yourself?

Planning for digital assets is important because:

·         It makes things easier on loved ones

·         Prevents losses to an estate

·         Helps prevent the loss of personal information

·         Prevents information from being revealed to people that you would not want to have access

·         Can help to prevent identity theft

How Can I Plan for My Digital Assets?

The law regarding access to another person’s digital assets are scattered and different across the states and many states do not have specific laws addressing the issue. One of the ways that you can plan for your digital assets is to include appropriate language in your will, trust, and financial power of attorney.

By expressing your wishes as to who can access and control your digital assets and in what way you would like them to handle your digital accounts, you have the ability to specify your wishes for the disposition of your digital assets. Although some states may not recognize your wishes concerning the disposition of digital assets, Texas DOES recognize the use of these provisions in your estate plan.

In Texas, if you have not used an online tool provided by your digital service provider to state your instructions regarding access and disclosure of your digital asset – then your instructions in your power of attorney, will, trust, or other plan document will control the access to and disclosure of your digital assets. If you give directions directly to a service provided (for example, your email provider), those instructions will supersede any contrary language in your power of attorney, will, trust or other documents. If you provide no instruction at all, the terms of service with each service provider will apply.

What Should I Do?

Despite the differences state-to-state regarding digital assets, the best action is to be proactive. You should state your wishes as part of your estate plan. Although not all states have the laws in place to officially recognize estate planning regarding your digital assets, a majority of states have laws in place to recognize these important assets and the remaining states have legislation under active consideration.

Justin T. Crain is an estate planning attorney in the Plano, Texas office of Thomas Walters Estate Planning where he provides legal services including Wills, Trusts, Gun Trusts, Guardianship Administration, Probate, Estate Administration, Medicaid Planning and Nursing Home Planning to those in the surrounding areas of North Texas.

 

The Benefits of Having An Estate Plan

There are a number of reasons that people create estate plans. By taking the time to plan your estate you will also be able to:

Leave an Intentional Legacy to Your Family

If you want to make sure your spouse is taken care of when you die and that there are no complications, unnecessary legal issues or unexpected expenses and delays or if you want to ensure that your children’s upbringing and education are assured, a proper plan can ensure that your legacy is intentional and effective.

Quickly Disperse Property to Beneficiaries

There are a number of options that an experienced estate planning attorney can walk you through to help ensure that your property passes quickly and without complication. Arrangements can be made to help your family avoid the probate process, which is the legal process by which the court is asked to approve your will and the distribution of your assets. It can sometimes be a costly and lengthy process and options include living trusts, enacting and updating proper beneficiary designations, insurance policies, updating property titles and taking advantage of other laws that can simplify and expedite the transfer of your assets according to your wishes.

Choose Executors/Trustees for your Estate

Choosing competent people to be in charge after you are gone and giving them the necessary authority will save money, reduce the burden on your survivors, and simplify administration of your estate.

Justin T. Crain is an estate planning attorney in the Plano, Texas office of Thomas Walters Estate Planning where he provides legal services including Wills, Trusts, Gun Trusts, Guardianship Administration, Probate, Estate Administration, Medicaid Planning and Nursing Home Planning to those in the surrounding areas of North Texas.

Who Are The People Involved In A Trust?

Who are the people involved in a trust?

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Every trust has one or more settlors, trustees, and
beneficiaries. The Settlor is typically the person who
sets up the trust.


The person who sets up a living trust is called the
settlor, grantor, or trustor. If a married couple creates
a trust together, it is a joint trust and both are
considered the settlors of the joint trust. The settlor
creates the trust document that contains all of the
terms, conditions, and directives of the trust.

The trustee is the individual or individuals who
have the power over the trust property. The initial
trustee may be the person or people who established
the trust. If you and your spouse set up the trust
together and elect to stay in charge together, then you
are considered co-trustees. When one spouse dies in
this scenario, the other will become the sole trustee.

The person or people who make the trust work
after you die, or after you and your spouse die if you
are co-trustees, is called the successor trustee. The
primary responsibility of the successor trustee is to
distribute trust property to the beneficiaries who were
named and according to the terms detailed in the trust
document. This individual (or these individuals)
should be someone you feel is trustworthy and capable
of doing this important job.


Beneficiaries are the people or organizations you
choose to inherit your trust property. The beneficiaries
of the trust can be anyone you desire and you can leave
each beneficiary whatever trust property you wish.
Beneficiaries can be income and/or principal
beneficiaries. An income beneficiary will receive
everything that is earned by the principal of the trust,
such as stock dividends, interest earned on bank
accounts, rent from real estate owned by the trust, and
earnings received from a business the trust owns. In
contrast, a principal beneficiary will receive the
principal or assets of the trust at some future date.

In many trust arrangements, the parents are the
settlors, the initial trustees and the first income
beneficiaries. A successor trustee or co-trustees are
designated (often an adult child or children) and the
children are designated as the principal beneficiaries to
receive the trust assets after the parents die. When the
parents pass away, the trust assets are not frozen and
trust assets do not have to go through the court probate
process to be transferred. The trust instrument and
Texas trust law permits the successor trustee to
distribute the trust assets in accordance with the
instructions provided in the trust agreement.

Justin T. Crain is an estate planning attorney in the Plano, Texas office of Thomas Walters Estate Planning where he provides legal services including Wills, Trusts, Gun Trusts, Guardianship Administration, Probate, Estate Administration, Medicaid Planning and Nursing Home Planning to those in the surrounding areas of North Texas.

Changes In The Law: Durable Powers of Attorney

The Texas legislature made a number of changes to the law concerning probate, trusts, and guardianship. Many changes went into effect on September 1, 2017 including changes to Durable Powers of Attorney.

Changes to the Durable Powers of Attorney include:

·         A power of attorney is now required to be accepted by third parties (Estate Code Section 751.201)

·         The format of the statutory durable power of attorney has changed – meaning attorneys should use the new language that went into effect September 1, 2017 (Estate Code Section 752.051)

·         Now the agent is entitled to compensation and reimbursement unless expressly provided otherwise (Estate Code Section 751.024)

·         There is now a duty required of agents to preserve the principal’s estate plan (Estate Code Section 751.122)

·         The law now defines when an agent is held to a fiduciary duty (Estate Code Section 751.022)

·         New powers of attorney no longer revoke prior powers by default (Estate Code Section 751.135)

 

With recent changes in the law, now is a good time to review your estate plan to ensure your wishes are being met in light of law (and perhaps life changes) that have occurred since you last addressed these goals. If you don’t have a plan in place, or if you need to review and update, take steps today to leave the legacy you intend for tomorrow.

 

Justin T. Crain is an estate planning attorney in the Plano, Texas office of Thomas Walters Estate Planning where he provides legal services including Wills, Trusts, Gun Trusts, Guardianship Administration, Probate, Estate Administration, Medicaid Planning and Nursing Home Planning to those in the surrounding areas of North Texas.

Texas Estate Codes: Real Property Transactions

§ 752.102.  Real Property Transactions.

(a)  The language conferring authority with respect to real property transactions in a statutory durable power of attorney empowers the agent, without further reference to a specific description of the real property, to:

(1)  accept as a gift or as security for a loan or reject, demand, buy, lease, receive, or otherwise acquire an interest in real property or a right incident to real property;

(2)  sell, exchange, convey with or without covenants, quitclaim, release, surrender, mortgage, encumber, partition or consent to partitioning, subdivide, apply for zoning, rezoning, or other governmental permits, plat or consent to platting, develop, grant options concerning, lease or sublet, or otherwise dispose of an estate or interest in real property or a right incident to real property;

(3)  release, assign, satisfy, and enforce by litigation, action, or otherwise a mortgage, deed of trust, encumbrance, lien, or other claim to real property that exists or is claimed to exist;

(4)  perform any act of management or of conservation with respect to an interest in real property, or a right incident to real property, owned or claimed to be owned by the principal, including the authority to:

(A)  insure against a casualty, liability, or loss;

(B)  obtain or regain possession or protect the interest or right by litigation, action, or otherwise;

(C)  pay, compromise, or contest taxes or assessments or apply for and receive refunds in connection with the taxes or assessments;

(D)  purchase supplies, hire assistance or labor, or make repairs or alterations to the real property;  and

(E)  manage and supervise an interest in real property, including the mineral estate;

(5)  use, develop, alter, replace, remove, erect, or install structures or other improvements on real property in which the principal has or claims to have an estate, interest, or right;

(6)  participate in a reorganization with respect to real property or a legal entity that owns an interest in or right incident to real property, receive and hold shares of stock or obligations received in a plan or reorganization, and act with respect to the shares or obligations, including:

(A)  selling or otherwise disposing of the shares or obligations;

(B)  exercising or selling an option, conversion, or similar right with respect to the shares or obligations; and

(C)  voting the shares or obligations in person or by proxy;

(7)  change the form of title of an interest in or right incident to real property;

(8)  dedicate easements or other real property in which the principal has or claims to have an interest to public use, with or without consideration;

(9)  enter into mineral transactions, including:

(A)  negotiating and making oil, gas, and other mineral leases covering any land, mineral, or royalty interest in which the principal has or claims to have an interest;

(B)  pooling and unitizing all or part of the principal's land, mineral leasehold, mineral, royalty, or other interest with land, mineral leasehold, mineral, royalty, or other interest of one or more persons for the purpose of developing and producing oil, gas, or other minerals, and making leases or assignments granting the right to pool and unitize;

(C)  entering into contracts and agreements concerning the installation and operation of plants or other facilities for the cycling, repressuring, processing, or other treating or handling of oil, gas, or other minerals;

(D)  conducting or contracting for the conducting of seismic evaluation operations;

(E)  drilling or contracting for the drilling of wells for oil, gas, or other minerals;

(F)  contracting for and making "dry hole" and "bottom hole" contributions of cash, leasehold interests, or other interests toward the drilling of wells;

(G)  using or contracting for the use of any method of secondary or tertiary recovery of any mineral, including the injection of water, gas, air, or other substances;

(H)  purchasing oil, gas, or other mineral leases, leasehold interests, or other interests for any type of consideration, including farmout agreements requiring the drilling or reworking of wells or participation in the drilling or reworking of wells;

(I)  entering into farmout agreements committing the principal to assign oil, gas, or other mineral leases or interests in consideration for the drilling of wells or other oil, gas, or mineral operations;

(J)  negotiating the transfer of and transferring oil, gas, or other mineral leases or interests for any consideration, such as retained overriding royalty interests of any nature, drilling or reworking commitments, or production interests;

(K)  executing and entering into contracts, conveyances, and other agreements or transfers considered necessary or desirable to carry out the powers granted in this section, including entering into and executing division orders, oil, gas, or other mineral sales contracts, exploration agreements, processing agreements, and other contracts relating to the processing, handling, treating, transporting, and marketing of oil, gas, or other mineral production from or accruing to the principal and receiving and receipting for the proceeds of those contracts, conveyances, and other agreements and transfers on behalf of the principal; and

(L)  taking an action described by Paragraph (K) regardless of whether the action is, at the time the action is taken or subsequently, recognized or considered as a common or proper practice by those engaged in the business of prospecting for, developing, producing, processing, transporting, or marketing minerals; and

(10)  designate the property that constitutes the principal's homestead.

(b)  The power to mortgage and encumber real property provided by this section includes the power to execute documents necessary to create a lien against the principal's homestead as provided by Section 50, Article XVI, Texas Constitution, and to consent to the creation of a lien against property owned by the principal's spouse in which the principal has a homestead interest.

Here's What People Are Saying About Thomas Walters Estate Planning!

“We are just a typical retired couple trying to make the best of our retirement on a very meager Social Security Income. When God chooses to take us from this Earth, we have wishes and desires concerning our Estate and our children. Unfortunately, we procrastinated on getting our affairs in order because of expense, and it really just seemed like too big a deal! Then we received an invitation to a free lunch and seminar. We needed some direction and answers to our questions and of course, a free lunch! There we met Justin T. Crain, Attorney with Thomas Walters, PLLC, and a homegrown West Texas boy graduating from Texas Tech in Lubbock. Being from Lubbock ourselves, we just really clicked with Justin. He seems very sincere about wanting to help us to fulfill our needs and wishes concerning our Estate and he is willing to work with us financially. He has walked us through a simple process and has provided us with an affordable customized plan to fit our needs and desires. Thanks to Justin’s expertise and his willingness to listen and spend time with us, we now have peace of mind that the handling of our Estate will not be a burden for our children and our desires will be met. We have placed our trust and confidence in Justin and will highly recommend him and his services to everyone!”

“Being a senior citizen – I needed to get my affairs in order (Will, DNR, Power of Attorney, etc). Justin Crain was very helpful in understanding. He was very detailed and efficient. I was very pleased with the results.

“I met Justin Crain at an informational seminar on estate planning in December 2016. The session provided an excellent overview of estate planning with enough detail to explain the process without overwhelming the audience. As a result of the seminar, I booked an appointment with Mr. Crain. There were no surprises or hidden fees at the actual appointment. It was just as he said it would be. Mr. Crain was very patient and explained each document, what was required, and why. He did not rush me through the process and I felt comfortable taking as much time as needed. I read every document in the package – about 100 pages – before signing. I have my estate notebook, as mentioned in the informational seminar, catered to my specific needs. It was a pleasure working with Mr. Crain and his staff.”

Justin T. Crain is an estate planning attorney in the Plano, Texas office of Thomas Walters Estate Planning where he provides legal services including Wills, Trusts, Gun Trusts, Guardianship Administration, Probate, Estate Administration, Medicaid Planning and Nursing Home Planning to those in the surrounding areas of North Texas.

 

What are 529 accounts, and are they really as good as everyone seems to think?

Yes, 529 accounts may be that good. In fact, they may be one of the best ways--and many people think they are the best way--to save for a child's education. You have a number of options when it comes to saving for college. There are Uniform Transfers to Minors Accounts, education IRAs, and prepaid tuition plans, to name a few. All the options have their advantages, yet 529 accounts seem to combine the best features of all of them to make a fairly good investment vehicle. 

The main advantage is that the earnings and most withdrawals are income tax free. Even though you must use after-tax money to create the accounts, all capital gains, dividends, and interest are generally tax free. Withdrawals are subject to income taxes only when they are not used for tuition, room, board, and other authorized expenses. 
Another advantage is that gifts to a 529 account not only qualify for the $14,000 annual gift tax exclusion, but you can even make five years worth of gifts today and elect to treat them as being made equally over a five year period. In other words, if a married couple with four grandchildren can give as much as $140,000 to each grandchild right now, for a total of $560,000 to the four grandchildren. Each grandchild will be treated as receiving $28,000 per year for five years. 

As far as estate taxes are concerned, all amounts you contribute to the account will be excluded from your estate even though you are the person controlling the account. However, you should note that if you elect to spread your contributions over five years for gift tax purposes, and you die within that five year period, a portion of the gift will be included in your gross estate. You can also designate a successor to yourself to control the account should you die before a grandchild goes to college. 

There are a few downsides worth noting. Unlike some of the other alternatives available for saving for college, 529 accounts don't let you choose the investments yourself. All you can pick is the type of investment portfolio the account will maintain. Also, if you use funds in the account for non-qualified purposes, a 10% penalty will apply to the portion of the withdrawal which constitutes investment gains. Importantly, as well, some of the tax laws which make 529 accounts so great may expire in 2011 if Congress fails to extend the new tax laws, and other key benefits can always be changed during a future session of Congress. 
Overall, 529 accounts present you with an unbeatable combination of features. The accounts offer income tax free growth and withdrawals with no gift taxes, no estate taxes, retained control of the funds, and flexibility in the future should circumstances change. 
Call your broker or financial planner for details on how to set up the 529 accounts. 

Justin T. Crain is an estate planning attorney in the Plano, Texas office of Thomas Walters Estate Planning where he provides legal services including Wills, Trusts, Gun Trusts, Guardianship Administration, Probate, Estate Administration, Medicaid Planning and Nursing Home Planning to those in the surrounding areas of North Texas.

Tax Avoidance Techniques

 

Much has been said and written about avoiding federal estate tax and other taxes at death. The increase in the estate tax exemption to $5,490,000 will exclude many estates from being subject to the tax. However, for those families that are still subject to the estate tax, the following are popular estate tax planning tools:

Prepare Your will or Trust Properly

For many people (especially married couples), having your Last Will and Testament or Revocable Living Trust conform to the estate tax laws will avoid estate tax completely. Properly prepared estate planning legal documents allow married couples to exempt up to $10,980,000 from estate tax.

Make Annual Gifts

You can give away $14,000 to as many people as you want, every year, to reduce your estate. If you have four children and eight grandchildren, you could (if you wanted to) reduce your taxable estate by $168,000 each year by making $14,000 gifts to each of them.

Use Life Insurance to Pay Estate Tax

This is a tool made popular by the life insurance industry. You are not reducing your estate tax by purchasing life insurance, but you are making gifts to children or others and the gifted money is used to purchase life insurance on your life that might pay the estate tax liability when you die.

Avoid Capital Gains Tax

Don’t put appreciated assets in your kids’ names without first considering the capital gains tax effect. Your heirs will enjoy the step-up in basis only if they inherit assets from you when you die, not if you donate assets to them during your lifetime.

Make Gifts to Charity

What you leave to a qualified charity completely avoids estate tax. If Bill Gates and his wife leave their entire estate to their charitable foundation (or any other charity) no estate tax will be due at their deaths. There are many ways to donate or bequeath money to charity – some simple and some complex.

Justin T. Crain is an estate planning attorney in the Plano, Texas office of Thomas Walters Estate Planning where he provides legal services including Wills, Trusts, Gun Trusts, Guardianship Administration, Probate, Estate Administration, Medicaid Planning and Nursing Home Planning to those in the surrounding areas of North Texas.

The Benefits of a Power of Attorney

You should have a power of attorney if:

·         You want to assign a representative for yourself should someone else need to act on your behalf in the future.

·         You have been diagnosed with a serious illness.

·         You have children that must be provided for if you become incapacitated.

·         You have a business or property that must be maintained if you are unable to manage your own affairs.

·         You want to assign someone to be able to make decisions on your behalf for other reasons.

Why Have a Power of Attorney?

There are many reasons to sign a properly-drafted power of attorney as part of your estate plan:

·         You will likely avoid burdensome court-supervised guardianship proceedings that would otherwise be necessary if you become incapacitated. Guardianship proceedings can be expensive and embarrassing since they are matters of public record. Additionally, costs quickly mount if relatives disagree with each other.

·         You can designate the person who will handle your affairs if you become incapacitated.

·         You can authorize your agent in your power of attorney to engage in tax planning and Medicaid planning techniques that they would not be able to perform in a guardianship proceeding.

Justin T. Crain is an estate planning attorney in the Plano, Texas office of Thomas Walters Estate Planning where he provides legal services including Wills, Trusts, Gun Trusts, Guardianship Administration, Probate, Estate Administration, Medicaid Planning and Nursing Home Planning to those in the surrounding areas of North Texas.

What if My Spouse & I Die Together? Who Will Care For Our Minor Children?

Guardianship Questions:

Q.        If my spouse and I die together, where would our children live for the first day or week or month until a judge can determine who will be their guardian? What if there are relatives we absolutely don't want them to live with, even temporarily?

A.        There is no simple answer to your question because where your children would live depends on when you die and where your children are when you die.

For instance, you and your spouse may be with your children when you both die, thereby leaving them without immediate supervision. Or your children may be at day care, at school, or with a babysitter, and that means the supervision they are receiving would soon be coming to an end. In these types of situations, it is likely that the police will show up and take charge.

The police would allow your children to be placed in the care of a relative or friend as long as they are convinced that person is not unfit to care for the children. The police can use the computer in their car to obtain this type of information. For instance, a relative who has a criminal record would probably not be allowed to take the children.

If your children are old enough to tell the police who to call, the police would likely do so and attempt to leave the children with the proper party. But if your children are too young to know phone numbers, addresses, or even complete names, or if no temporary guardian is available, then the police would take your children to Child Protective Services (CPS).

CPS would care for your children until a suitable family member or friend is located. CPS may place your children in foster care, if necessary, until a judge determines who the permanent guardian will be.

It may be the case that your children are already in the care of a relative or close friend when you both die. In such a situation, the police and CPS may never get involved with the care of the children. Instead, the children would most likely remain with that family until a judge makes a determination as to permanent guardianship.

You mentioned that there may be relatives you don't want your children to live with, even for a brief period. The problem is that if the police don't know how you feel, and if the relative otherwise checks out, the children may be placed in that person's temporary care. Unfortunately, it is too often the case that relatives want to control the children's inheritance, and they know funds will be available if they are acting as guardians.

You could prepare a witnessed and notarized document stating your intention regarding who you do and do not want to serve as guardian. In fact, that information is often contained in a person's will. But the problem is that this document will probably not be available when it's needed. Most people don't think to send their kids to school, daycare, or a friend's house with a copy of their will or other legal documents, and even if they did, the police may not be inclined to rely on the document's validity.

If the police show up and several relatives or friends demand to take care of the children, the police will most likely not make a choice between them, but will instead deliver the children to CPS. An investigation will then be conducted by CPS to determine who is most suitable to take care of the children until a guardian is formally named by the court.

You should be sure to state in your will who you want to serve as the guardian of your children in the event you and your spouse pass away before your children are legal adults--age 18 in Texas. You can name any person you want, and you can also provide a list of persons in order of preference. You can even name two persons to serve, but they must be married to each other.

Please note the answer to your question may be different if you don't live in a large Texas city.

Justin T. Crain is an estate planning attorney in the Plano, Texas office of Thomas Walters Estate Planning where he provides legal services including Wills, Trusts, Gun Trusts, Guardianship Administration, Probate, Estate Administration, Medicaid Planning and Nursing Home Planning to those in the surrounding areas of North Texas.  

 

Medicaid Planning Avoid Nursing Home Poverty

What is Medicaid?

Most of the nursing home residents in Texas have their stay paid for, all or in part, by Medicaid. The cost of a monthly nursing home stay in Texas can vary from city to city but the average nursing homes cost is $5,931 or more each month. If a married couple is in a nursing home, and they are paying for their care and their medicines and other necessary living expenses, they could be paying out more than $12,000 each month.

READER ALERT: Medicare does NOT pay for Long Term Nursing Home Care.

An extended nursing home stay can wipe out a family’s entire life savings in a few months or a few short years. This is why so many people are interested in finding out how they can qualify for Medicaid, which pays this nursing home cost.

In order to qualify for Medicaid, you must meet Medicaid’s  definition  of  “poor.”   There areother requirements as well – you must be at least 65 years old, blind or disabled, and your income and assets must be limited.

Title XIX of the Social Security Act, enacted by the Social Security Amendments of 1965, provided for grants to states to implement the Medicaid Program.

Medicaid is a federal-state entitlement program that pays for medical services on behalf of low-income eligible persons. Medicaid is financed from federal and state funds.

Justin T. Crain is an estate planning attorney in the Plano, Texas office of Thomas Walters Estate Planning where he provides legal services including Wills, Trusts, Gun Trusts, Guardianship Administration, Probate, Estate Administration, Medicaid Planning and Nursing Home Planning to those in the surrounding areas of North Texas.  

Trusts

 

Trusts can be a great tool—when used for the right reasons. Trusts may be complicated to the lay person. But when used properly, they can be a valuable estate planning tool. Aside from making your wishes known, some of the common uses for trusts include: avoiding probate, minimizing federal estate tax, protecting your children from squandering their inheritance, providing for grandchildren’s education or other needs, protecting your spouse from your children of a previous marriage, protecting your children from a previous marriage from your spouse, protecting the inheritance of a special needs child, and much more.

What is a trust?

A trust is a legal arrangement in which a property owner (in this instance called a settlor) transfers ownership of his or her assets to a trustee, who then manages or controls the assets for the benefit of a third person called a beneficiary.

Think of a trust as a safe into which you put your assets, with the intention that they will eventually go to another party, the beneficiary. The beneficiary (or beneficiaries) can be one or several people, or even an organization such as a charity. Trusts are an effective tool for clients who want control over when and how their assets are used both during their lifetime and also how they are distributed upon their death. As you might suspect, there are many rules and regulations to be aware of when establishing trusts.

Example: In George’s living trust, he made a gift to be made at his death of $50,000 to his son, George Jr., as successor trustee of the trust for the benefit of George’s 12-year-old minor grandson, George III. George provided, among other things, that the principal of the trust could be used for the health and education of George III, and George also provided that if the assets had not been used by the time George III reached the age of thirty, then the trust would terminate and the remaining trust assets would be distributed to George III. When George later died, George Jr. was immediately in charge of the Trust and George Jr. managed the account as the successor trustee in charge for the benefit of George III.

Justin T. Crain is an estate planning attorney in the Plano, Texas office of Thomas Walters Estate Planning where he provides legal services including Wills, Trusts, Gun Trusts, Guardianship Administration, Probate, Estate Administration, Medicaid Planning and Nursing Home Planning to those in the surrounding areas of North Texas.  

Delays and Costs Associated With Probate

What Can Delay Probate?

Many  things  can  cause  a  delay  in  the  probate process, including:

·        The family or the attorney have difficulties in determining all of the assets and liabilities of the estate;

·        A personal representative (executor or administrator) needs to be confirmed or appointed to handle matters during probate;

·        Someone may contest the probate or disagree with how it is being handled (this could cause completion of the probate to be delayed for years);

·        Either the attorney, an heir, or family members who are in charge procrastinate;

·        A federal estate tax return must be filed. This requires that certain probate assets be appraised and often requires that assets be sold to pay the tax bill. The federal estate tax return is due nine months after the death of the decedent and often the probate is not complete until federal estate tax matters are concluded.

What Costs Are Associated with Probate?

The overall cost of probate will vary depending on the type and value of the assets that are being probated. In general, the greater the value of the estate and probate property, the more it will cost. The various fees and costs associated with probate typically include:

·        Court Fees – Court fees in Texas range from a few hundred dollars to over $1000, depending on your county of residence.

·        Attorney Fees – In Texas, attorneys can charge any fee they believe to be “reasonable” to probate an estate. As of 2016, the average hourly rate for a Texas attorney is $288 an hour. In contrast, attorney fees in other states may be based on a percentage of the estate that is subject to probate.

·        Accounting Fees – These fees will vary depending on the value of the estate and the types of assets included. If the estate is taxable, then the accounting fees may include the preparation and filing of the tax returns.

·        Appraisal Fees – These fees are imperative to determine the date of death values of real estate, personal property, and business interests. Personal property appraisals can range from a few hundred to a few thousand dollars. Business valuation fees will typically cost several thousand dollars.

·        Miscellaneous Fees – Other fees may include bond fees, postage, insurance, storage, shipping and/or moving personal property.

Justin T. Crain is an estate planning attorney in the Plano, Texas office of Thomas Walters Estate Planning where he provides legal services including Wills, Trusts, Gun Trusts, Guardianship Administration, Probate, Estate Administration, Medicaid Planning and Nursing Home Planning to those in the surrounding areas of North Texas.  

What is Probate? What are the Different Ways to Probate a Will?

In simple terms, probate is the legal court process necessary to recognize a person’s death and administer their estate. It is a course of action that few people understand, but it is a necessary one to wrap up a loved one’s affairs. There are few things as devastating as the death of a spouse, parent or sibling, but it is something everyone will face at some point in their lives. Family members experience tremendous grief and, depending on the extent of the deceased’s estate plan, they can also be faced with the difficulty of probate, including interacting with insurance companies, identifying assets and investments, and coping with disagreeable family members. The probate process can sometimes be lengthy and expensive for those who have a will, and even more so for those without one.

Texas has two kinds of formal probate, as well as a more simplistic method that can be used in limited circumstances.

Dependent Administration

If a Will is not in place at the time of death, Texas law requires for the estate to fall under strict oversight by the probate court. This is known as dependent administration and the administrator must seek court approval for every step in the process of settling an estate, such as posting bond, hiring appraisers, filling an annual inventory, petitioning the court for permission to sell property or distribute assets, and submitting a final report with the court. The cost of probate with dependent administration is driven up substantially with additional reports that must be filed and judicial approval that must be sought. Unfortunately, the dependent administration may use up much of the estate property and funds that would have gone to the beneficiaries. However, if there is significant conflict or distrust between heirs, dependent administration may be the preferred method.

Independent Administration

In Texas, the level of court participation in the probate process is contingent on whether there is a dependent or independent administration. Most Texas Wills instruct the executor to pursue independent administration since it is quicker, easier, and less expensive than a dependent administration. If the executor is confirmed as an independent executor, he can take the necessary actions to administer the probate, such as pay debts, sell assets, or distribute assets without having to obtain a judge’s approval each time. Even if the Will does not provide for this type of administration, the executor or administrator can ask the probate court for the authority to act as an independent executor if all the beneficiaries agree.

Small Estate Affidavit

If there is not a will and the decedent’s estate (not including the homestead and exempt property) does not exceed $50,000, then those who inherit property can prepare a simple affidavit to collect the property. However, it should be noted that the complexity of the Probate Code poses many pitfalls for non-lawyers attempting to comply with the Small Estate Affidavit requirements. An attorney’s assistance in drafting a Small Estate Affidavit may prevent the denial of an Affidavit where it would have been an appropriate probate procedure if the Affidavit had been prepared correctly.

Justin T. Crain is an estate planning attorney in the Plano, Texas office of Thomas Walters Estate Planning where he provides legal services including Wills, Trusts, Gun Trusts, Guardianship Administration, Probate, Estate Administration, Medicaid Planning and Nursing Home Planning to those in the surrounding areas of North Texas.

What is a Pour Over Will and Do I Need One?

What is a Pour Over Will and Do I Need One?

If you have a trust in place, a pour over will is a necessary part of your estate plan. A pour over will directs that assets outside of your trust that are part of your estate should “pour over” into your trust when you die. A pour over will leaves the balance of a person’s estate to their trust and is a standard part of trust planning. Ideally, there should be no need for the will at death when a trust plan is in place because all of a person’s property should pass through their trust or by other contractual means. In fact, the point of many trust plans is to avoid transfers by will. However, if assets are forgotten or have not been made part of the trust during a person’s lifetime, a probate proceeding could be triggered unexpectedly due to that trust funding problem (or for other reasons). In the case that a probate proceeding is triggered, this type of will “pours” the assets that are outside of the trust into the trust.

Situations that could inadvertently lead to a probate include:

  • Failure to re-title bank accounts and securities to the trust.
  • Failure to re-title real estate to the trust.
  • Creating new financial accounts after the trust is established in an individual capacity instead of as trustee.
  • Purchasing new real estate after the trust is established and taking title in an individual capacity instead of as trustee.
  • Forgetting to retitle real estate to the trustees after conducting a refinancing transaction.
  • Funds becoming payable individually to a person with a revocable trust, such as an inheritance, but the person does not collect the funds before death.
  • Property that cannot be held in trust or is intentionally not held in trust does not have proper beneficiary designations.

Since the pour over will is a safety-net in the event that there is a problem with trust funding, for example, the majority of legal language concerning a person’s assets who has a trust in place is contained in the trust instead of this type of will (the pour over will). The pour over will should be consistent with the trust it references and may go as far as stating that the specific terms of the trust apply even in an instance where the trust is no longer in force or in the event that the pour over will has to be probated.

This type of will typically names the same person who was designated as trustee of the trust as the executor of the pour over will while additionally mirroring the people named as alternates in the trust as alternate executors of the will as well (although common, this is not required). The reason this is common is because if the trustee of the trust is also the person named as the executor of the pour over will and the pour over will has to be used (in probate for example), then the same person will be the trustee of the trust and the executor of the will and will most easily and efficiently be able to distribute funds and assets to the revocable trust at the end of probate administration.

The pour over will is an important and necessary part of a comprehensive estate plan when using trusts in your planning. Working with an estate planning attorney with experience in trust-based planning will help to ensure that you have not only the proper trust program in place but also the necessary safeguards to ensure that you are protected in the event of unexpected circumstances.

Justin T. Crain is an estate planning attorney in the Plano, Texas office of Thomas Walters Estate Planning where he provides legal services including Wills, Trusts, Gun Trusts, Guardianship Administration, Probate, Estate Administration, Medicaid Planning and Nursing Home Planning to those in the surrounding areas of North Texas.

Good Estate Planning Terms To Know

Glossary

Agent – a person who is authorized to act on behalf of another

Estate Administration – the process of settling an estate after someone dies

Executor – the person you designate in your last will and testament who will work with the attorney to settle your estate

Grantor Trust – any trust over which the settlor or other owner retains the power to control or direct the trust’s income or assets, resulting in the income of the trust being taxed to the settlor, rather than the trust

Income Beneficiary – a beneficiary who is to receive the income, as opposed to the principal of a trust

Independent Executor – your executor who is allowed to act pursuant to a simpler probate process because you either authorized it in your Will or all of your heirs agreed to allow the executor to serve as an independent executor. Independent executors typically do not require the court authorization to act that is otherwise required of executors.

Last Will and Testament – a legal document naming your executor and describing, among other things, who is entitled to your assets when you die

Living Trust – a trust that you establish during your lifetime

Living Will – a document whereby you express your intentions regarding the withdrawal or withholding of life support systems

Principal – one who directs or allows another to act on his behalf

Principal Beneficiary – a beneficiary who is to receive the principal of a trust upon the termination of the trust

Settlor – a person who creates a trust (sometimes called a grantor”)

Trust – a relationship resulting from the transfer of title to property to a person (trustee) to be administered for the benefit of another (beneficiary)

Trust Income – any interest earned on the principal of the trust; the right to use trust principal such as a home

Trust Principal – the original money and/or assets placed into the trust

Trustee – the person appointed to hold and manage property in trust for the benefit of another

What Steps Do I take To Hire The Right Attorney?

Step 1: Find an Attorney

Establishing an estate plan may seem daunting, but the first step is to locate a competent attorney who can guide you through the entire process and ensure that your assets will pass to the right people with minimal delays and costs. You will get the best estate planning advice from someone who practices exclusively in the area of Estate Planning and Estate Settlement. The law changes every year. You and your family need someone who keeps up with these changes for you. Also, recommendations are often a reliable means of locating an estate planning attorney. You can look for recommendations from others to see if they describe the type of attorney that you are looking for who can complete the work that you are seeking to be done.

Step 2: Meet with the Attorney

After locating an attorney, set up an appointment to have a conversation about what your estate plan should include. The attorney will likely make certain recommendations to you in order to complete your customized estate plan. Often, people find it most beneficial to work with someone who will consult with them without a fee in order to determine if the attorney and the services they provide are the best fit for them.

Step 3: Be Prepared to Discuss Your Property and Family

For the initial consultation, it is beneficial to provide the attorney with a general list of your assets and their values. The attorney will be able to determine if any special planning will be necessary to reduce potential tax consequences. When you meet with the attorney, also be prepared to answer the following questions:

·         If you are married, how do you want to leave assets to your spouse?

·         How do you want to leave assets to your children? Do you want to leave assets to them outright or in a special inheritance trust?

·         Who do you want to handle your financial affairs for you during your lifetime in the event that you cannot do it yourself?

·         Who do you want to make medical decisions for you if you are unable?

Once you answer these and other questions, your attorney should have the necessary information to draft the appropriate estate planning documents.

Justin T. Crain is an estate planning attorney in the Plano, Texas office of Thomas Walters Estate Planning where he provides legal services including Wills, Trusts, Gun Trusts, Guardianship Administration, Probate, Estate Administration, Medicaid Planning and Nursing Home Planning to those in the surrounding areas of North Texas.

The Benefits of Working With Thomas Walters Estate Planning

At Thomas Walters, we strive to maintain the highest standards of integrity and professionalism in our relationship with our clients. We help our clients develop a comprehensive estate plan that is tailored to their unique needs, concerns, and goals. We believe that a well thought out and professionally designed financial arrangement will provide peace of mind and make the transitions through generations easy and cost efficient.

With our multi-state presence, we provide insight into a wide variety of estate planning areas to ensure every detail is covered. At Thomas Walters, we possess the expertise to incorporate moves from one state to another, property owned outside the state of residence, and heirs that live in other states.

We are dedicated to developing lasting relationships with our clients. As part of our lifetime estate planning program, our clients remain with us through any and all life-changing events and law revisions. A customized arrangement is established for clients that will cover them now and in the future. With Thomas Walters, there is never any question or confusion about the financial and legal services that are provided.

We develop a customized, comprehensive and ongoing estate planning program that will cover you presently and in the future. No matter what stage of life you are in, or as laws and regulations change, our estate planning attorneys will guide you and your heirs. Thomas Walters estate planning attorneys provide technical expertise to compose documents tailored to the desires of you and your family. Throughout your life, you can stay informed on all estate planning issues through various tools and educational events offered by our firm.

Justin T. Crain is an estate planning attorney in the Plano, Texas office of Thomas Walters Estate Planning where he provides legal services including Wills, Trusts, Gun Trusts, Guardianship Administration, Probate, Estate Administration, Medicaid Planning and Nursing Home Planning to those in the surrounding areas of North Texas.

What is a Power of Attorney? What Decisions Can An Agent Make?

What is a power of attorney? A power of attorney is a document that gives someone else, called your agent, the authority to act for you under certain circumstances.

Example. Bill has one child, Charles. Bill wants Charles to handle his financial matters if Bill ever becomes unable to do so himself. Bill signs a power of attorney authorizing Charles to be his agent and giving Charles the legal ability to handle all of Bill’s financial affairs.

What Decisions Can Your Agent Make?

A power of attorney allows you to state what your agent will be responsible for by designating what powers they have. You may grant them the authority to act on your behalf with the power over:

·         Real property transactions;

·         Tangible personal property transactions;

·         Banking and other financial institution transactions;

·         Business operating transactions;

·         Retirement plan transactions;

Many people mistakenly believe that estate planning only involves getting their last will and testament in place. However, a will does nothing for you in the event that you become incapacitated during your lifetime. You need to make certain that you have the proper power of attorney documents in place, in accordance with the laws of Texas, which may differ from other states.

Justin T. Crain is an estate planning attorney in the Plano, Texas office of Thomas Walters Estate Planning where he provides legal services including Wills, Trusts, Gun Trusts, Guardianship Administration, Probate, Estate Administration, Medicaid Planning and Nursing Home Planning to those in the surrounding areas of North Texas.

 

Trusts to avoid estate taxes

The federal estate tax exemption has increased in recent years from $600,000 to $5,490,000 in 2017. Less than 1% of families are subject to the federal estate tax. However, for those families that are subject to this tax, it can be devastating.

Many individuals and couples who are facing a federal estate tax at their deaths transfer assets to an irrevocable trust during their lifetime to remove those assets from  their  estate.  Each person  can  transfer $14,000 each year either to an individual or to a trust for the benefit of that individual. A married couple, together can give $28,000 each year ($14,000 per spouse) either to an individual or to a trust for the benefit of that individual.

Example: Mom and Dad have a combined estate of $13,000,000. Even with a properly drafted will or revocable living trust, there will be an estate tax bill due to the IRS of about $1,000,000 after the death of the surviving spouse. They have three children and seven grandchildren. Since both Mom and Dad can both transfer $14,000 to an unlimited number of people each year tax free, they decide to create an irrevocable trust for the benefit of their children and grandchildren, and they transfer assets valued at $260,000 each year to the trust. They name their trustworthy son as the trustee of the trust. It will be his job to manage the trust assets until Mom and Dad die, and then distribute the trust assets in accordance with the instructions given him by the trust instrument.

Justin T. Crain is an estate planning attorney in the Plano, Texas office of Thomas Walters Estate Planning where he provides legal services including Wills, Trusts, Gun Trusts, Guardianship Administration, Probate, Estate Administration, Medicaid Planning and Nursing Home Planning to those in the surrounding areas of North Texas.