Estate Planning

How a Lady Bird Deed Can Help Texas Homeowners Avoid Probate

Published on: March 30, 2025 | By Thomas W. McCulloch

How a Lady Bird Deed Can Help Texas Homeowners Avoid Probate

One common goal in the estate planning process is crafting a plan that allows your beneficiaries to avoid probate. Probate can often be a long and drawn-out process, and many of our clients use various estate planning tools to avoid probate court altogether. One such tool, which we discuss on today’s blog, is the lady bird deed.

What Is the Lady Bird Deed?

The lady bird deed is a kind of deed that allows a homeowner to directly pass his property to a beneficiary upon his death. The name “lady bird deed” came from former president Lyndon Johnson’s wife, Lady Bird Johnson. President Johnson transferred his property directly to his wife upon his death, and the now common estate planning strategy ended up bearing her name.

With a lady bird deed, the homeowner formally names the beneficiary that will inherit the property. At the same time, though, as long as he is alive, the homeowner retains full control of the property. He can mortgage the property, sell it, lease it, or reside in it according to his own wishes. He is not required to consult the beneficiary for any major or minor decisions. Then, as soon as he dies, the property goes straight to the homeowner’s beneficiary without any probate court’s involvement.

How Medicaid Estate Recovery Affects Your Assets and How to Plan Ahead

Published on: March 24, 2025 | By Thomas W. McCulloch

Medicaid estate recovery is a scary process, and it can affect families across the country during already difficult times. How can you plan ahead and help guard against Medicaid estate recovery? This blog serves as a starting point, but remember that each person’s circumstances are different, and each person might benefit from a slightly different strategy when thinking through their own opportunities moving forward.

What is Medicaid Estate Recovery?

Medicaid estate recovery is the process through which the government seizes a decedent’s assets after he or she passes away. Typically, the government will initiate this process when the decedent benefited from Medicaid and when that person’s estate has assets that the government can use to recoup the money spent on his or her healthcare.

The government can legally seek reimbursement for any costs that the decedent used for a nursing home or long-term care facility, home services, prescriptions, and/or hospital services. The government is only allowed to seize the decedent’s assets that are part of their probate estate – so if you have an asset that is set up to bypass probate entirely, it will not be subject to the recovery process. Assets that are part of probate and would be subject to recovery can include (but are not limited to) a home, cash, and personal belongings.

Charitable Giving Through Estate Planning

Published on: March 16, 2025 | By Thomas W. McCulloch

Many of our clients have causes or organizations that matter deeply to them and that they want to financially support. There are many ways to incorporate charitable giving into your estate plan, and the tool you end up choosing to structure your charitable giving will depend on your own goals and finances.

Option 1: Use Your Will or Trust

You always have the option of giving assets to a charity by naming that charity directly in your will. You can also establish a trust to give money – there is a) a charitable lead trust, which allows you to donate during your lifetime while still leaving money for your heirs, and b) a charitable remainer trust, which provides income during your lifetime but gives the leftover assets to a charity at the end of the trust’s term.

Option 2: Leverage Your Retirement Account

Certain retirement accounts are eligible for charitable giving, meaning you can leave the retirement assets to a nonprofit when you die. By gifting the money in your retirement account, you both avoid a major tax penalty in your estate and allow the receiving charity to avoid paying income taxes on your gift.

The Role of Affidavits of Heirship in Texas: When and How They Can Be Used

Published on: March 13, 2025 | By David W. Miller

An affidavit of heirship is a relatively simple estate planning tool that can have a major impact on certain beneficiaries. On today’s blog, we review the basics around affidavits of heirship, so that you can familiarize yourself with when and how they can be used for your advantage. If you or your loved ones have specific questions about these affidavits, contact a Houston estate planning attorney you can trust.

What is an Affidavit of Heirship?

An affidavit of heirship is a legal document that plainly states the names of a decedent’s heirs. Any individual declaring that they are an heir must swear that they bear a relation to the decedent. At least two people who are not involved in the decedent’s estate (but who did know the decedent) must sign the affidavit, which helps boost its reliability. The affidavit requires certain facts regarding the decedent’s information, each heir’s information, and the property to be distributed. When filling out an affidavit of heirship, it is important to make sure these details are accurate in order to ensure a smooth transfer of property from one party to the next.

Why Use an Affidavit of Heirship?

Affidavits of heirship come most in handy when A) a person dies without a will and B) that person’s estate is relatively small. The affidavit of heirship is most commonly used to transfer real estate, as opposed to cash or accounts. The decedent’s heirs can file the affidavit with the court, and once the court approves the affidavit, the heirs can bypass probate entirely. This saves beneficiaries time and money, and it helps ensure efficiency as assets transfer from the decedent’s estate to the beneficiaries.

What Happens if a Beneficiary Dies Before You Do?

Published on: March 9, 2025 | By Thomas W. McCulloch

As part of your estate planning process, you choose beneficiaries to inherit different parts (or the totality) of your estate. What happens, though, if a beneficiary dies before you do? Today’s blog covers several different possible outcomes that your loved ones could expect in this scenario.

To start, if one of your known beneficiaries passes away, you should contact your estate planning attorney as soon as possible to update your will. You should generally update your estate plan every 3-5 years or after a major life event. The death of a beneficiary qualifies as one of these major life events.

If you are not able to amend your estate plan in time, though, there are several possible outcomes for your assets. The first possibility occurs when you have named both a primary beneficiary and a contingent (or secondary) beneficiary in your estate plan. In this scenario, if your primary beneficiary dies, the contingent beneficiary will stand to inherit.

Using Life Insurance Trusts to Protect Your Legacy

Published on: February 20, 2025 | By Thomas W. McCulloch

If you are looking for ways to ensure that your loved ones are well-protected in the event of your death, consider the advantages of a life insurance trust. A life insurance trust is a form of legal agreement that puts the grantor’s life insurance into a trust. The designated trustee gains control of the insurance policy, and when the grantor dies, the trustee is responsible for distributing the money from the policy to the grantor’s designated beneficiaries.

Why Use a Life Insurance Trust?

There are several key advantages to the life insurance trust. First, by putting your life insurance into a trust, you allow the funds from the policy to bypass probate completely. This gets money into your beneficiaries’ hands more quickly, more efficiently, and more privately.

The life insurance trust also guarantees some form of liquidity when you die. The cash from the policy can go toward settling the estate, paying off debts, covering the cost of a funeral, or paying estate taxes. The money could also provide your beneficiaries with immediate cash for payments that you might have been making before your death, so that they can have time to figure out a long-term solution in your absence.

What Houston Families Need to Know When It Comes to Planning for Long-Term Care

Published on: February 16, 2025 | By Thomas W. McCulloch

health savings accounts in estate planning

There’s no way around it: long-term care in the United States is expensive. At McCulloch & Miller, we help families plan for the later years of their loved ones’ lives, and for many clients, this can be a daunting process. After several decades of working in the industry, there are several things that we believe Houston families need to know when it comes to planning for long-term care.

Long-Term Care Costs

To find out a realistic estimate of what long-term care might cost you and your loved ones, we recommend using this resource from carescout.com. The unfortunate reality is that you should expect to spend a minimum of approximately $100,000 per year on long-term care, if you are paying out of pocket. This cost is rising every year, but it is important to note that your cost will depend on factors like the level of care you might need.

Payment Options

There are three basic options when it comes to financing a nursing home, a retirement community, assisted living, or a live-in aide: paying out of pocket, using long-term care insurance, or applying for Medicaid. Paying out of pocket allows the greatest amount of flexibility, but it is unrealistic for most individuals given the rising costs of long-term care. Long-term care insurance is a viable option, but it requires paying into the insurance early on. It also involves some risk, in that if you do not end up needing the care your insurance would cover, you lose the money you have invested.

Charitable Giving Through Estate Planning

Published on: February 11, 2025 | By Thomas W. McCulloch

Many of our clients have causes or organizations that matter deeply to them and that they want to financially support. There are many ways to incorporate charitable giving into your estate plan, and the tool you end up choosing to structure your charitable giving will depend on your own goals and finances.

Option 1: Use Your Will or Trust

You always have the option of giving assets to a charity by naming that charity directly in your will. You can also establish a trust to give money – there is a) a charitable lead trust, which allows you to donate during your lifetime while still leaving money for your heirs, and b) a charitable remainer trust, which provides income during your lifetime but gives the leftover assets to a charity at the end of the trust’s term.

Option 2: Leverage Your Retirement Account

Certain retirement accounts are eligible for charitable giving, meaning you can leave the retirement assets to a nonprofit when you die. By gifting the money in your retirement account, you both avoid a major tax penalty in your estate and allow the receiving charity to avoid paying income taxes on your gift.

How to Incorporate Cryptocurrency into Your Texas Estate Plan

Published on: February 9, 2025 | By David W. Miller

Cryptocurrency, compared to other kinds of assets, is relatively new, and the legal landscape around cryptocurrency is still developing. How, then, do individuals with cryptocurrency incorporate the asset into their estate plan? There are several basic considerations that can be helpful to keep in mind when deciding how to make sure your cryptocurrency is well protected in the event of your death.

Ensuring Possible Heirs Have Access to Your Cryptocurrency

The first consideration for your estate plan and its relationship to cryptocurrency is access to the asset itself. If you are passing your cryptocurrency to your children, do they have a private key to access the cryptocurrency? Do they have access to your crypto wallet? Is there a plan to get your heir access if they do not already have it? These details are important to include in your Texas estate plan.

Deciding How to Categorize Your Cryptocurrency in Your Estate Plan

Your cryptocurrency could be viewed either as a tangible asset or an intangible one, depending on how you store it. If you keep your cryptocurrency offline, like in an external hard drive, a probate court would likely consider it to be tangible property. If you keep your cryptocurrency in online storage, a probate court would more likely view this asset as an intangible asset (similar to an investment or retirement account). For the online cryptocurrency, it is crucial to make sure no one besides your intended heirs has access to the password, because if others are able to use the cryptocurrency, this could complicate the transfer of ownership once the original owner dies.

How Divorce Impacts Your Estate Plan in Texas

Published on: February 4, 2025 | By McCulloch & Miller, PLLC

When you go through a divorce, does your estate plan automatically update to remove your ex-spouse? Or are there steps you need to take to make sure everything is in line with your wishes? At McCulloch & Miller, we consistently tell our clients that they should update their estate plans every three to five years, or, in the alternative, after every major life event. A divorce certainly qualifies as a major life event, and it requires each individual to review their estate plan so that they can make any necessary changes post-divorce.

Automatic Revocation in Texas

In Texas, unlike in some other states, a divorce automatically removes your ex-spouse as a beneficiary in your estate plan. This means that if you had your spouse as an inheritor of your assets, your accounts, your life insurance policy, or your real estate, that person will no longer have any rights to your assets when you die. If you do want your ex-spouse to continue to be a beneficiary to your estate, you will need to explicitly state that in your will after your divorce.

It is therefore necessary, after a divorce, to name a new person or group of people who will inherit from your estate. You might also need to change your power of attorney from your ex-spouse to another person. These amendments are important; because Texas is an automatic revocation state (meaning your ex-spouse is automatically removed from your estate plan when you divorce), it is up to you to fill in the gap that is left behind.