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.