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When people are listing the property and items they will give to loved ones during the Houston estate planning process, stocks and other securities often do not come to mind. A stock is a fractional share representing ownership of a small portion of a corporation. Stocks can be gifted as part of an estate plan and benefit the inheritor if they appreciate in value. Although stocks may seem complicated overall—and the process of gifting them even more so—estate planning attorneys can help to simplify the process. Below are common questions that individuals have about gifting stock and its inherent benefits.

How Do I Leave Someone Shares of Stock After My Death?

For individuals who want to leave loved ones their stock after their passing, they will incorporate this gift into their estate plan. Beyond including this as a part of a person’s will, there is another document that Texans should include in their estate plan. It is called a Transfer on Death Document. This document allows assets—like stocks—to be given to beneficiaries after the person’s death without having to go to court. A person creating a Transfer on Death designation names the beneficiary—the person receiving the stock—as well as which stock the beneficiary will receive and how many shares they will get, if the person is bequeathing the stock to more than one person.

People know the inherent benefits of having life insurance. They also know the need to have an estate plan in place. However, not many individuals know that life insurance can be utilized within an estate plan to benefit a person’s loved ones after their passing. For families in Houston, this can maximize their wealth to take care of the people they love most—even after their death. For many, the preferred method to use a life insurance policy in an estate plan is to establish an irrevocable trust, which can allow the benefit to be transferred to loved ones after the person’s death without tax implications. By creating a life insurance trust, individuals transfer ownership of the life insurance policy to the trust.

Building an irrevocable trust may seem like a complicated process, but with the help of an estate planning attorney, the trust can be created with ease. The first step is to establish the trust, where the life insurance policyholder names another party to serve as the trustee. The trustee uses the assets in the trust to pay life insurance premiums. After the creation of the trust, the trust itself “owns” the life insurance policy until the person’s death. It is important to note that the trust is irrevocable, meaning the individual cannot change the terms of the trust after it has been established.

While this option may seem strange for many, there are inherent benefits to doing so. For one, turning the life insurance policy into an irrevocable trust has a tax advantage. The proceeds that beneficiaries receive from this trust are generally excluded from the beneficiary’s gross income. Since the trust technically “owns” the life insurance policy, it is not an asset that would be taxed like normal inheritance would be. Beyond the tax advantages, a life insurance trust provides a guaranteed source of income for loved ones. As long as a beneficiary—a loved one or close friend who the individual wants to receive the funds—is named on the policy, the benefit proceeds are directly paid out to the beneficiary without going through the probate court process. This speeds up the process so the heirs can use the funds to pay for immediate costs, like estate taxes or funeral expenses—if necessary.

For many people, organ and tissue donation is a final act of good that they can do after they have passed. In many states, individuals can tell if they are an organ donor based off of their driver’s license; however, they assume this is all they need to do. Even if a person’s driver’s license contains an organ or tissue donor statement, adding this directive to a Houston estate plan is still important. Although this may seem like a complicated process, below are steps individuals should take if they are an organ donor—or if they wish to become an organ donor.

Individuals who are an organ or tissue donor must notify the person named in their health care proxy. A health care proxy is a document that names someone to act as their proxy—or agent—to make health care decisions on the person’s behalf if they become incapacitated or are unable to make decisions on their own. By letting the health care proxy know about this directive, it can help them as they are making critical medical choices. In many circumstances, these are time-sensitive choices: if a proxy is looking through old writings or trying to recall conversations to remember what the person would want, it will be too late.

If an individual does not leave instructions about organ donation, Texas law decides who will make the decision for them after their passing. For minors who have passed away, the parents get to choose whether or not to donate their organs. Per Texas Code, the right to decide about organ donation for adults goes to their health care proxy—if they have named one. This is another reason why having a health care proxy in place is so critical. If a person has not named a health care proxy, their spouse, adult children, parents, and adult sibling can make the decision—in that order.

For individuals moving to the great state of Texas, there are many tasks they need to complete: updating their address, obtaining a new driver’s license, and finding new doctors and dentists. However, there is another task that is essential to add to the list: updating their existing estate plan. Because every state has different requirements for trusts and estates, individuals may need to change their estate plan to comply with the laws of Texas. Below are areas of estate plans that should be carefully evaluated after moving to a new state—they are the most likely to be affected by various Texas estate planning laws and regulations.

Medical Care Provisions

Often, medical care provisions—like healthcare powers of attorney and other medical directives—vary state-to-state. Many medical forms are slightly different in each state; this means that if a person is unable to make decisions for themselves, their agent’s authority may be delayed due to an out-of-state document.

For individuals with a special needs loved one, creating a Houston special needs trust can drastically improve their lives. Special needs trusts allow individuals to still receive government disability benefits while simultaneously receiving property and assets. However, there are two different types of special needs trust: first-party and third-party trusts. While these special needs trusts have many similarities, there are critical differences between the types of trusts. Because of this, knowing the differences between a first- and third-party trust is critical before people decide which trust is right for them and their loved one.

Third-Party Special Needs Trusts

The major distinction between first- and third-party special needs trusts is who is funding the trust. Simply put, a third-party trust is funded by family members, whereas first-party trusts are funded by the individual with special needs.

While people think about their loved ones receiving their assets—and being financially secure—after their passing, they often do not consider how the loved ones will receive these funds. It may seem simplistic; however, there are a few different ways for loved ones to receive their inheritance. These different methods will all impact how quickly beneficiaries—the individuals who will get the assets after the person’s passing—will receive their inheritance. Below are explanations for the various types of asset distributions utilized by Houston trustees at the end of the estate planning process.

3 Ways To Distribute Assets to Beneficiaries

By creating a trust, a three-party relationship is formed between the grantor—the individual creating the trust, the trustee—the individual who will oversee the trust’s management and ultimately disburse the trust funds—and the beneficiaries. All of these parties play a different role in the estate planning process.

The Houston estate planning process can be complicated at any point during a person’s life. Generally, when relationships are altered—either in the case of a marriage or a divorce—changing the estate plan is not the first thought in a person’s mind. However, it is imperative to address the estate plan as soon as possible. Otherwise, the former partner could have legal rights if the individual becomes incapacitated or passes away before the divorce is finalized. For a lot people, this is not a pleasant thought.

Below are estate planning documents that should be altered while going through divorce proceedings:

A Last Will and Testament and Declaration of Guardians

Taking the first step in meeting with an estate planning attorney is a noble and critical endeavor. This is setting up an individual’s plans for the future, so after their passing, their assets and property are handled according to their wishes. However, the productivity of a first estate planning meeting depends on the documents the person brings to the meeting; the more information provided to the attorney, the faster the estate planning process can begin. Below are categories of documents that clients meeting with a Houston estate planning attorney should bring to their initial consultation—having these documents ready will not only help to begin the estate planning process, but also allow the individual to assess the attorney and their merits.

Financial Personal Papers and Banking Accounts

It is critical to bring personal financial papers to the first meeting with an estate planning attorney, so they can assess the person’s assets and discuss how they should be distributed. Financial personal papers include an inventory of valuables, car titles, tax returns, rental agreements, and mortgage documents. Of course, individuals should bring other financial documents they believe are important for their estate planning attorney to know about. Additionally, individuals should be able to speak in detail about their bank and credit union accounts and statements. Even if a person does not bring the credit statements to the appointment, they should have these items organized and stored in a safe place.

With President Biden’s inauguration, many Americans are wondering if the estate and gift tax exemption will revert to a lower level, as well as what they can do to protect their assets. While there are many Houston estate planning options for individuals to shelter funds from the estate tax, SLAT trusts may be the right option for married couples. Because most Texans are unaware of a Texas SLAT—and how it could benefit them—below are the common questions and explanations of why a SLAT might help their loved ones.

What Is a SLAT Trust, and What Are Its Benefits?

A Spousal Lifetime Access Trust (SLAT) is a gift from one spouse to an irrevocable trust for the other spouse’s benefit.  When creating a SLAT, one spouse gifts funds to an irrevocable trust for the other spouse to access once they have passed away. A person creates a SLAT for their spouse to allow them to (i) receive assets up to the federal estate tax exemption; and (ii) prevent the value of the trust from being included in the surviving spouse’s gross estate tax when the spouse dies. The spouse that benefits from the SLAT—often called the beneficiary spouse—can receive assets that are sheltered from the gift tax.

Planning a person’s future—especially as they are aging and struggling to take care of daily tasks—is both daunting and stressful for the individual and their loved ones. Long-term care is a type of service that individuals often need if they cannot care for themselves, either due to illness, disability, or diseases like Alzheimer’s. Long-term care often includes care in a Houston nursing home, supervision at an adult day care facility, and health services provided at home. However, these services are often extremely costly, so loved ones worry about paying for such care. Below we discuss a few options for paying for long-term care, along with explaining long-term care insurance.

How Can I Pay for Long-Term Care?

The cost of the services is based on numerous factors, including the type of care needed, how long the care is required, where the care is given, and what type of medical professional provides it. Because of this, there are a variety of ways to pay for long-term care. These options are personal savings, Medicaid; Medicare; benefits from a life insurance policy; or long-term care insurance.

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