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.

 

Trusts for Blended Families

A blended family is one that includes at least one spouse with a child or children from a prior marriage. The structure of a blended family can vary greatly and can include a husband with his own children, a wife with her own children, and even children born to the husband and wife together. In these situations, where individuals each have assets that they have brought to the marriage, they typically want to both provide for their spouse’s needs and ensure that their assets will ultimately go to their children. Without a detailed estate plan, a surviving spouse can easily disinherit whoever he or she chooses, including the deceased spouse’s children. To guarantee that what you want to happen with your assets will actually happen when you pass away, it is imperative to establish a plan ahead of time. Assuming your family will “work it out” after your death is a recipe for disaster. Additionally, letting the courts determine how your assets will be distributed can be very difficult for the family and loved ones. If you want to provide for your spouse and your children, particularly when your spouse is not the parent of your children, you may want to structure your estate plan so that assets are left in trust for them after your death. Not doing so can create a tragic outcome.

A married couple of a blended family could, for example, establish a joint trust that includes protection for the children and each spouse. This type of trust can provide great peace of mind in later years and eliminate hard feelings and strife within your family.

Example: Scott and Allyson have both been married before and each had two children from prior marriages. Scott brought significant assets into the marriage. To protect the surviving spouse and their respective children, and with the guidance of an estate planning attorney, Scot and Allyson established a comprehensive estate plan that included a trust. Both Scott and Allyson are designated income beneficiaries of the trust. Upon Scott’s death, Allyson becomes the sole income beneficiary of the trust and she can use the principal of the trust for her health, education, maintenance, and support. Upon Allyson’s death, the remaining trust assets will go to Scott’s children.

You will reap uncountable benefits in the long run if you have honest conversations with your spouse about your goals for the future and how you expect your assets to be distributed. If your children are adults, it may be advantageous to include them in the conversations so everyone knows what to expect. Blended families are very diverse and estate planning for blended families can be complicated. It is beneficial to obtain guidance from an estate planning attorney who specializes in these practices to ensure that, upon your death, your assets are distributed according to your desires.

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.

 

 

 

 

Avoid Nursing Home Poverty

Most people do not want to think about the possibility of spending time in a nursing home. However, a large percentage of the population spend a portion of their life in a long-term care facility and, if they do not plan in advance, they may be thrown into a state of poverty. The average cost of nursing home care for a private room in Texas in 2016 was $5,931 per month or $71,172 per year. A nursing home stay can quickly deplete your assets to the point where Medicaid would pay for your stay. However, most people would prefer to give their hard-earned assets to their children and not spend them on nursing home care. A solution is to create a nursing home protection based plan centered around an irrevocable trust to protect your assets and allow you to become eligible for Medicaid.

Instead of spending your assets on long-term nursing home care, Medicaid will cover the expense. This type of trust is structured in such a way that the assets will not be spent or lost when you go into a nursing home in the future. At the same time, it allows you to manage your assets including all of the income produced by the trust assets through your lifetime.

In order for these trusts to work effectively, they must be set up and funded at least five years before going into a nursing home. You are not permitted to remove assets from the trust and put them back into your name, but you are allowed to make distributions from the trust to your beneficiaries (often an adult child) and they can (among other things) give those assets back to you the same day, all without affecting your Medicaid eligibility.

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.

Do I Have to Hire an Attorney When My Loved One Dies?

So, do you have to hire an attorney to navigate the probate court process in Texas? Most of the time, yes.

Texas courts usually require an executor to be represented by an attorney in a probate matter because an executor not only represents himself, but also the interests of beneficiaries and creditors. Texas law only allows a licensed attorney to represent the interests of others, therefore, preparing and filing pleadings in a probate matter without the assistance of counsel would constitute the unauthorized practice of law. Although courts allow limited exceptions to this rule, the result is that executors in Texas almost always have to hire an attorney to navigate the probate process.

The following is an example from the Denton County Probate Court’s Local Rules, explaining that the court does NOT allow individuals to represent themselves (also called “Pro Se”) in probate matters before the court:

 

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.

Does your Last Will and Testament avoid Probate?

A Will is how you express what you want to happen to your things after you are no longer here. Your "things," which is better known as "assets," is collectively called your "Estate," but your family will not avoid the probate process just because you have a will.

Offering a Last Will and Testament without discussing an alternative such as a Trust is not uncommon when speaking with an attorney or law firm that does not focus on Estate Planning.

In order to be sure you have a plan that best fits your needs, you should discuss and understand things like:

  • How the probate process can take months or even years to complete before your assets are distributed to your heirs;
  • How much of the estate assets your heirs will lose due to court costs, attorney fees, executor costs and fees, accounting costs, appraisals, etc.; and
  • Other possibilities in making your last wishes known.

Discussing and understanding your concerns with an attorney will increase success when creating a suitable Estate Plan.

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

 

 

 

 

 

 

 

When is the Best Time to Plan an Estate?

“Procrastination is like a credit card: it’s a lot of fun until you get the bill.” - Cristopher Parker

Life rarely happens as we expected or planned. A
“normal” progression of life might be where you go to
school, get a job, get married, have kids, get kids
through college, retire, become grandparents, enjoy
life, and then … after a long and fulfilling time, we
know that we will eventually die. But everyone knows
that real life isn’t perfect and rarely happens that way.

People have children and don’t get married, people
divorce, they marry more than once, some don’t have
a family or marry, others are faced with unexpected
circumstances – all of which are unpredictable and
unplanned. Real life is full of choices, surprising twists
of fate and unforeseen occurrences. Like with many
things in life, if you have been procrastinating when it
comes to planning for the realities of life, it’s like the
credit card that’s easy to put off today but not a lot of
fun when you get the bill.

There is no better time than now to plan for both the
unexpected and the inevitable things in life.
Wouldn’t it be better to ensure that the people you love
and care about will be taken care of the way you want,
especially if your life were to end suddenly and
unexpectedly?

Preparing today with an effective estate plan
doesn’t mean that you will die tomorrow just as
buying car insurance today doesn’t mean that you will
have an automobile accident next week. What it does
mean, however, is that if you act now you won’t have
to worry about what could happen tomorrow, next
week, or next year to your family if your life doesn’t
follow the “normal” progression you may have
expected. So when is the best time to plan your
estate? Right now!

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.

 

 

 

Can Mom Give Away $14,000 Gifts Before Going Into the Nursing Home?

If mom is trying to avoid losing money to nursing home expenses by giving away her remaining money before entering the nursing home, this approach won’t work.

 

I was talking to a concerned daughter recently who told me her mom wanted to give away $10,000 to each of her five children before she went into the nursing home. Her mom wanted to give the money to the children so that she wouldn’t lose the last $50,000 she had to nursing home expenses. The question was, how can mom give away money without being penalized. She had heard there was a $14,000 limit of some kind on gifts and wanted to discuss how this applied to her situation.

 

There is something called a gift tax exclusion which allows any person to give away $14,000 or less to another person without having to report that gift to the IRS. If you give away more than $14,000 to any one person, you are required to file a gift tax return. Giving away more than $14,000 does NOT mean that you automatically will pay a gift tax. In 2017, you only pay a tax if your reportable gifts total more than $5,490,000. These are all IRS rules.

 

When applying for Medicaid to help pay for nursing home care, you are working within Medicaid rules (not IRS rules). Medicaid rules are different and the gift tax exclusion rule under the IRS has no bearing on your Medicaid application. Medicaid rules will count any transfers that a person makes in the five years before they apply for Medicaid. You can make the argument that the gift or gifts were not made to qualify for Medicaid, but you will have to spend time and significant effort proving that to be the case.

 

If mom wants to give $50,000 away by giving $10,000 a piece to each of five children, she can do that and she will not have to report those gifts to the IRS because the IRS rule allows her to exclude gifts under $14,000. However, if mom applies for Medicaid within five years of making those gifts, under Medicaid rules mom will be required to report each of the five $10,000 gifts to Medicaid and they will disqualify her for coverage for the first $50,000 of her care.

 

If there is a chance that you or a loved one will be entering a nursing home in the future, I would recommend speaking to an attorney before gifting and before you are in the nursing home to ensure that you avoid penalties and problems and that you will experience the best results under both IRS and Medicaid rules.

 

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.

Planning for Minor Children

If you have minor children, or if you plan on leaving a bequest to your young grandchildren, you should consider a trust.

In Texas if a minor (a child under the age of 18) inherits in his or her own name, then a court- supervised guardianship proceeding is necessary. The court will appoint a guardian to oversee the minor’s inheritance, and any payments to or on behalf of the minor must be approved in advance by the court. This is an expensive and cumbersome proceeding.

If you have minor children, you should designate in your will that any inheritance your children receive will be placed in trust so that the trustee that you name can manage the assets and use it for the right reasons without having to get the courts involved.

If you would like to leave a gift to your grandchildren, you should do the same, particularly if your grandchildren are young and unable to manage an inheritance for themselves.

Example: Grandma and  Grandpa want to leave $50,000 to each of their five grandchildren (who currently range in age from 15 down to 2). If the grandchildren inherit this money while they are minors, a guardianship proceeding will be required in which the court will appoint a guardian to oversee the funds. If the money needs to be used prior to the grandchild’s 18th birthday, a judge must approve the expenditure. At the grandchild’s 18th birthday, the guardian must turn the funds over to the grandchild.

A better alternative is to provide in the revocable living trust or last will and testament of Grandma and Grandpa that these funds for the grandchildren will be placed in trust after the death of Grandma and Grandpa. Perhaps each grandchild’s parents could be the trustees of the trust, and Grandma and Grandpa would authorize the trustees to use the funds for the grandchild’s health, education and welfare. Perhaps Grandma and Grandpa could also provide that whatever funds remained in the trust when the grandchildreached the age of 25 (or some other age when it is more likely that the grandchild would have matured) would be turned over to the grandchild.

What Will An Estate Plan Accomplish? Protect Your Children

Would you like to provide a final gift to your children by leaving them an inheritance? There is a great peace of mind that accompanies a finely tuned and properly executed plan that can protect what you have for your children and future generations.

Maybe you are taking the advice of some who advocate spending your children’s inheritance while you can. While that may be true today, I am confident that you would rather leave what you have when you are gone to your children rather than to the government, lawyers, courts and others that you would have never selected if you had the choice.

There are a number of complications that can arise when leaving assets to your children. Effective planning can resolve those complications and ensure your legacy is intentional and that your wishes are carried out as expected.

If you have young children, it is imperative that you have an estate plan. If you die before your children reach the age of 18 and you do not have the proper people and planning documents in place, a judge will determine who will raise your children until they reach 18 years old. A judge will determine who will control any financial assets that your children were supposed to receive from you when you died and all of these court decisions are made without your input as to who will receive your assets and if applicable, how your children are raised including where they will live and who they will live with.

Do you have children that that are, were, or may become married? There are additional considerations to be made because many marriages end in divorce. You need to take action to protect your children’s inheritance from their past or future divorces. While many people are aware that divorce rates have risen dramatically in the past decades, many people do not know or think about how inherited assets may be divided in the event that your children inherit and then subsequently get divorced. Your child may have to share that inheritance with their ex-spouse unless the proper planning is in place.

If you have children from a prior marriage, estate planning accomplishes significant protections. It is common for children to get nothing due to a step- parent receiving all of the assets.

For example: Charles had two children in a prior marriage with First Wife. Charles divorced First Wife and later married Wife Two. Everything that Charles had went to Wife Two when he died and nothing went to his two children from his marriage with First Wife. When Wife Two died, she left all of her assets (including what she received from Charles) to her children and Charles’ original two children never received an inheritance at all.

Proper estate planning achieves protection from these problems. Charles could have arranged a comprehensive estate plan that ensured Wife Two was provided for but that assets were also protected and passed to his two children from his first marriage.

A comprehensive and customized estate plan can protect your children:

·         From Guardianship problems and proceedings. If your children are under the age of 18, an estate plan can be arranged to avoid the court supervised guardianship proceeding by specifying who raises your children and who will be responsible for their inheritance;

·         From divorce and the possibility that you may unintentionally leave your assets to your son- in-law or daughter-in-law in the situation where your children have been divorced or may get divorced in the future;

·         From a second marriage potentially excluding your children from a prior marriage from inheriting.

 

 

 

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

What Will an Estate Plan Accomplish? Protect Your Surviving Spouse

What will an Estate Plan Accomplish?

Protect Your Surviving Spouse

Do you want to ensure that your spouse has financial security when you die? An effective estate plan accomplishes that goal and is one important reason that people put a plan in place. Without an effective estate plan, what you own may be directed by the court to benefit someone other than the surviving spouse. As a result, it is important to take action to give your surviving spouse the security they need.

For example: James inherited stock in Widgets, Inc. from his parents. The stock from Widgets, Inc. paid dividends that James and his wife, Nancy, used to pay for their living expenses. If asked, James would want Nancy to continue to get the dividends if he dies first, but James never takes any action to protect Nancy. He didn’t have a Last Will and Testament written or take action with any of the other options that were available and due to James’ inaction, Nancy was not protected or taken care of in the way that James would have wanted. When James died unexpectedly, the Texas courts had to get involved and because there was no plan in place, the judge followed rules that resulted in court orders stating that their children immediately receive two-thirds of the stock that James had inherited.

There was also the issue of the house. Even though James and Nancy both had their names on the title to the home, because they had not put a plan in place that stated their specific wishes, the home was not automatically 100% Nancy’s. When Nancy went to sell the home, she discovered that in Texas that two or more people listed on a deed, even if married, cannot automatically leave the house to their surviving spouse unless they use specific language. James and Nancy had not specified their wishes because there was no plan in place, and so an attorney had to be hired and the court was involved to determine when Nancy had the authority to sell the home.

Prior planning can prevent the courts from being involved in making decisions on your behalf and will allow you to ensure your spouse is protected according to your wishes when you die.

Estate planning can protect your spouse by:

  • Arranging for your assets to be immediately available for your spouse after you die;
  • Arranging your affairs so your spouse will have the immediate freedom to sell your home, other real estate, or other assets after you die (without requiring the permission of the court and necessity of hiring attorneys and being subject to court proceedings); and
  • Ensuring that your exact wishes are carried out to protect your spouse as you see fit.

 

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

Common Misconception – My Spouse Will Own Our House Outright When I Die.

One the most common misconceptions about homeownership among married couples is that when one spouse dies, that the house simply goes to the surviving spouse automatically because they both own the home. This is often not the case in Texas. Many surviving spouses have decided to sell their home only to discover that they don’t have the authority to sell on their own because the home had to be administered as part of their deceased spouse’s estate in order to transfer their share of the home to the surviving spouse.

 

Tenancy in common is the most common type of joint ownership in Texas. Texas law presumes this type of ownership unless otherwise stated on the deed or in writing. (Tex. Estates Code § 101.002.) This is the type of ownership that most married couples have. With respect to a tenancy in common, all owners hold an individual, undivided ownership interest in the property. Whenever multiple people join in acquiring an asset they are automatically presumed to be tenants in common. Unless specific language has been inserted on title documents saying otherwise, each joint owner will be a tenant in common with the others.

 

Texas provides that when two or more people jointly own property and one passes away, the deceased owner's interest does not pass to the remaining owners and instead passes by will or intestacy. (Tex. Estates Code § 101.002.)

 

If two joint owners own the property and one passes away, the other does not take the deceased owner’s interest. (Tex. Estates Code § 101.002.) Instead, the surviving owner becomes a tenant in common with whoever inherits the deceased owner’s interest. Even if the deceased owner’s interest was their spouse, this type of ownership does not avoid probate.

 

Tenancy in common property must be administered as part of the decedent’s estate in order to transfer the decedent’s interest. One owner can leave his or her interest in jointly owned property to another owner of the same property by will. However, the will still must be probated to transfer the interest to the remaining owner.

 

So is it true that when one spouse dies that the other spouse automatically has full legal rights and ownership of the home? No – in most instances the surviving spouse will need to go through probate to ensure that the interest of their deceased spouse is legally transferred.

 

To learn more about the options available to simplify the process of passing your home to your surviving spouse and children or other beneficiaries according to your wishes without court involvement, delay or additional expense, you should speak with a qualified estate planning attorney who will help you determine the best way to meet your family’s current and future needs.

 

Justin Crain

Many People Think They Have an Estate Plan - But They Don't

Would you consider building one room and calling it a home? Probably not, but many people do just that when it comes to estate planning.

Some statements that illustrate this point come in the following forms:

  • I have a will. That’s all I need, right?
  • I created a trust 15 years ago, so everything is taken care of.
  • I only have house and a few dollars. My plan is just to give my house to my kids now so I don’t need to do anything else.
  • I don’t think I need to do anything because I’m not wealthy.

Each of these statements describes a single action or thought that represents only a component of estate planning and often people have neglected to establish a complete estate plan. It’s like building one bedroom and calling it a home.

So what does a comprehensive estate plan consist of? Estate planning is defined as the process of legally structuring the future disposition of current and projected assets. A comprehensive estate plan will plan for the future disposition of all of your current and potential assets in a way that fits your specific desires and needs while also minimizing the time, cost and delay of the process for your future heirs. If you haven’t planned for all of your assets, you haven’t completed your estate plan! Your plan should also answer questions such as, who you would want to make decisions for you should you become disabled and what are your wishes concerning life support and other medical treatment in circumstances where you can no longer make decisions yourself?

Every estate plan is different and should be customized to meet each person’s specific needs. Some examples of documents and planning that should be discussed in the process include:

  • Wills, Trusts and estate administration considerations
  • Medical planning
  • Living Will / Medical Directives
  • Powers of Attorney (e.g. property, medical, etc.)
  • Business Succession Planning
  • Special Needs Planning
  • Tax Planning
  • Reviewing existing documents after life-changing events and revisions in the law

Maybe you have built one room but need to finish the rest of the home or maybe you haven’t even taken the first step toward completing your estate plan, but in either case it is in your best interests to take the next step toward completing your estate plan. A consultation with a competent estate planning attorney can help you evaluate which way is best suited to you and your family’s needs and ensure that you have addressed all of your estate planning needs.

Suing Dad - The Stress of Guardianship

Suing dad. What happens when you can’t make decisions anymore, when you can’t sign your name, when you can’t request your medical records or do what needs to be done? You may reach a point in your life where you are unable to take care of daily necessities or make effective choices, and under those circumstances, your loved ones may have to sue you to properly take care of you.

Richard has Alzheimer’s disease and lives alone. His children are worried about their dad because his neighbors had called for the second time to let them know that they helped Richard get back home after finding him lost walking around the neighborhood. Richard left the stove on recently and started a small fire that thankfully didn’t harm anyone, but did cause some smoke damage in the house. Richard has also lost a significant amount of money after some phone scammers convinced him to give them his bank account number. Richard’s children are worried about him and are afraid that they can’t be there enough of the time to make sure that he is safe as his condition worsens. The problem is that Richard refuses assistance from the meal delivery and home-care services that the children have tried to set-up and is refusing any further care that the children believe is necessary to protect him.

All Richard’s children want to do is to protect their dad’s health and well-being and keep him from being exploited financially again in the future. Richard did not have anything in place to address this type of situation, and as a result, his children have to sue their dad to obtain Guardianship over him. Guardianship will give them the same authority that parents have over their minor children and will allow them to take care of Richard, who is now mentally incapacitated due to Alzheimer’s disease.

To obtain Guardianship over their dad, the children will need to sue their dad, have a judge declare that Richard is incompetent and prove to the court that they are the appropriate guardian in this situation. This process can be emotionally draining and expensive depending on the circumstances surrounding the individual with mental incapacity. It may feel like racing against time if they are in danger of being exploited financially or are in physical or other danger as a result of their condition.

Many people would rather avoid the guardianship process altogether as it takes time, can be expensive, and the details of your incapacity may become public knowledge since the process involves court proceedings. One part of effective estate planning includes determining who will have authority to care for you and your finances if you are no longer capable of doing so for yourself. The good news is, that if you plan in advance, a comprehensive estate plan will allow you and your loved ones to avoid the guardianship process altogether.

Effective options that avoid Guardianship include powers of attorney and living trusts. Powers of attorney are legal documents that allow you to give authority to someone to conduct your affairs. It is important to understand that these are only voluntarily accepted in Texas, meaning that a bank or title company may choose not to accept the documents which would could still result in Guardianship proceedings. A living trust is another option that can avoid a guardianship, and does so by allowing you to name a successor trustee to manage your assets should you become incapacitated in the future.

Regardless of what stage of life you are in, unforeseen circumstances can occur, and it’s important to prepare for the unexpected. Effective estate planning allows you to answer the question, what happens when I can’t make decisions anymore? A customized and well-thought out plan made today will keep you and your loved ones from having to consider or experience – suing dad.