Estate Planning

The Importance of Beneficiary Designations

Published on: September 30, 2024 | By Thomas W. McCulloch

As you think through your estate plan, it is important to be thoughtful about your beneficiary designations, especially as they pertain to your life insurance policy, retirement plan, and financial accounts. What’s more, you should consider updating your beneficiary designations regularly, in order to make sure your estate plan reflects your current circumstances and wishes. On today’s blog, we cover some of the basics regarding beneficiary designations and how they relate to your estate plan.

What is a Beneficiary Designation?

In the legal world, a beneficiary designation is the act of naming an individual who will inherit any part of the designator’s estate. When the designator dies, that person’s assets then go to his or her named beneficiaries.

Why is Beneficiary Designation Important?

If you fail to name a beneficiary or beneficiaries in your estate plan, the state of Texas is left to divide your assets according to the laws of intestacy. These laws essentially dictate which members of the decedent’s family receive the estate. The order of intestacy does not always reflect the decedent’s wishes, and it makes it difficult for other family members and loved ones to contest the distribution of assets.

Texas Intestacy Laws: What You Need to Know

Published on: September 30, 2024 | By David W. Miller

In Texas, if a person dies without a will or estate plan, that person’s assets are distributed “intestate.” This means that the probate court distributes the person’s estate in accordance with Texas’s pre-set laws and order of inheritance. While we certainly do not recommend leaving things to chance and opting not to write a will or estate plan, it is worth reviewing the state’s intestacy laws to know what is at stake if you die without any kind of plan in place.

Possibility #1: Dying Intestate Without a Spouse

If a person dies with no will, and if that person did not have a spouse, his estate will go first to his children. In the absence of children, his estate will go to his parents; if only one parent is living, the estate will go to both the surviving parent and to the persons siblings. Without parents, the estate goes to the person’s siblings. And, finally, if the decedent has none of these relatives alive, the estate goes to the person’s grandparents.

Possibility #2: Dying Intestate with a Spouse

Dying without a will but with a living spouse is a bit different. If the decedent has children, one-third of the estate will go to the spouse, while two-thirds will go to the children. If there are no children, the spouse inherits the personal estate in its entirety.

Estate Planning Basics: Joint Tenancy with the Right of Survivorship

Published on: September 22, 2024 | By Thomas W. McCulloch

One effective tool for property owners that are thinking through their estate plans is joint tenancy with the right of survivorship. While this form of ownership might not be right for everyone, it can certainly be an efficient, effective way to both maintain property and avoid probate down the line. Today, our blog offers some basics around joint tenancy with the right of survivorship, with the goal of helping you become well-versed in the strategy as you begin to think through whether it might be a tool you implement for your own assets.

What is Joint Tenancy with the Right of Survivorship?

Joint tenancy with the right of survivorship means that multiple individuals own a piece of property at the same time (“joint tenancy”). It gives each person an equal share of the property they own. Importantly, if one owner dies, the other owner becomes the sole owner (“right of survivorship”). If there are more than two owners and one owner dies, the remaining owners then take an equal share of the property upon the first owner’s death.

What are Some of the Benefits of Joint Tenancy with the Right of Survivorship?

One major advantage of this structure of ownership is that when one owner dies, the property does not have to pass through probate. Instead, ownership is automatically transferred. This can save significant time and money. It also allows the living owner(s) to own the property without any delay; that is, they do not have to wait for the completion of any legal processes before taking ownership of the property, since the property is already in their possession.

What is a Living Will? Do I Need One?

Published on: September 15, 2024 | By David W. Miller

When drafting a will or other estate plan in Texas, it is easy to think about including provisions for the distribution of assets and debts. What many people don’t realize, however, is that it is also smart to draft a living will. By definition, a living will is a legal document that provides instructions for a person’s medical treatment if that person is unable to make medical decisions for him or herself. This inability could be due to illness or unconsciousness, and it often occurs when a person is under some kind of life support. Does it make sense to include a living will in your estate plan? Why or why not?

In short, we at McCulloch & Miller recommend that our clients draft a living will as soon as possible. The first reason it makes sense to draft a living will is simple: we never know when the unexpected will hit us. Even if you are a healthy person, life can change in an instant. While this is not a pleasant reality to think about, it is important to realize that no one is immune from severe and unexpected illness. If and when an illness does strike, you want to have a detailed plan in place.

Second, there are so many options for which medical decisions might arise during an emergency situation. For example: what are your preferences for pain management? Do you want to donate your organs? Do you want doctors to resuscitate you if they need to make an instantaneous decision? Because these decisions can be complicated, it is always better to have your preferences written down far in advance.

How to Pay for Long Term Care in 2024 and Beyond

Published on: September 15, 2024 | By David W. Miller

In Texas and in other states, long term care is expensive; nursing homes, private care, and health aides are costly, and as Americans age, they face the issue of figuring out how to unlock crucial medical services. In general, there are three main ways to pay for long term care, all of which we will review in today’s blog. The reality is that each person’s financial circumstances will be different, and each person will have a slightly different method that allows them to access important long term care resources.

Option 1: Pay Out of Pocket

First, you could pay out of pocket for long term care. This, of course, is difficult for most Americans. It also requires significant financial planning prior to old age. Paying out of pocket does allow for maximum flexibility in both how you access your services and in choosing the services you access. If you are financially able to choose this option, it is the best course of action to take.

Option 2: Use Long Term Care Insurance

Second, you could use long term care insurance to pay for your nursing home or care facility. The insurance company will subsidize your care, offering significant savings. Of course, this option requires that you opt into a specific kind of insurance. To access the insurance, you must 1) pay a significant cost and 2) plan to enroll in the insurance early on.

Important Power of Attorney FAQs

Published on: September 15, 2024 | By McCulloch & Miller, PLLC

Power of attorney is an important part of any estate plan that individuals tend to overlook. To cover some of the power of attorney basics, today’s blog focuses on the most frequently asked questions on the topic. With specific questions about how power of attorney applies to you or to learn more, we recommend that you contact a Houston estate planning attorney today.

What is Power of Attorney?

Power of attorney is a legal document that allows another person to act on your behalf. The document creates a relationship between the person appointed (the agent) and the person signing over the right to act in certain situations (the principal).

What Makes a Power of Attorney Legally Valid in Texas?

To create a power of attorney, there are several legal requirements. These include: signing the document in front of a notary public, being at least 18 years old, and having decision-making capacity when you sign the document. Without these requirements, the power of attorney may not be legally valid and may not hold up in court.

What is a Revocable Living Trust? Should You Have One?

Published on: September 7, 2024 | By Thomas W. McCulloch

The estate planning process in Texas offers a variety of tools for those looking to avoid probate. One such tool that we encounter often in our practice is the revocable living trust. On today’s blog, we cover the basics of the revocable living trust as well as a couple of signs that might indicate a revocable living trust might be right for you.

The Revocable Living Trust

A revocable living trust is a trust that you make 1) during your lifetime and is 2) revocable (meaning you can revoke, amend, or change it at any point during your lifetime). This trust is a vehicle you use to hold title to other assets. For example, your house or your brokerage account might be contained in a revocable living trust. This trust helps you control what happens to your assets when you pass, and it helps your loved ones avoid probate when administering your estate plan down the line.

How to Know if Your Estate Plan is Up to Date

Published on: September 7, 2024 | By David W. Miller

Drafting an estate plan is an important first step in every person’s estate planning journey, but the work does not end there. Importantly, your estate plan should be up to date as you navigate life’s twists and turns. Today, we answer a common question we receive from our client community: how do you know if your estate plan is up to date?

Updating Your Plan Every Three to Five Years

As a general rule of thumb, you should update your estate plan approximately every three to five years. If five years have passed since you last looked at your estate plan, this is a sign that your plan may not be current. At McCulloch & Miller, we recommend having an estate planning attorney review the plan during this timeframe to ensure the plan is up to date with any changes in the legal landscape. As laws around probate and estate planning change, so should the will or trust associated with your estate plan.

Updating Your Plan Along With Life Changes

Your plan might not be up to date if you have undergone a change in life circumstances. For example, have you gotten married, separated, or divorced? Have you had children, or have your children moved out of the house? Have you acquired new property or debts? Are you subject to a new court order, such as a child support or alimony order? If any of these apply to you, your estate plan should reflect your change in circumstances.

A Will or a Trust: Which is Right for You?

Published on: August 29, 2024 | By McCulloch & Miller, PLLC

There is no “one size fits all” approach to estate planning. Each person brings his or her own set of circumstances, goals, and opportunities to the table. One of the first questions we discuss with our potential clients during a first meeting is whether they would like to move forward with a will or a trust. There are basic differences between the two tools, and these differences can help clients decide which tool (if either) is right for them and their families.

How Much Do You Value Privacy?

If it is important to you for your assets, debts, and estate plan to be kept private, a trust might be better for you. A will passes through probate court, meaning a judge will have to validate the will before approving the distribution of the assets. These proceedings become part of the public record. A trust, on the other hand, allows you to forego probate altogether, which shields your estate plan from public view.

How Complex is Your Estate?

In general, a more complex estate lends itself better to a trust than to a will. While there are certainly exceptions to this rule, if you have assets such as an interest in a business, multiple real estate properties, or significant investments, you may want to consider a trust over a will. It is sometimes easier to tailor a trust to a client’s specific estate, and if you have a complex estate, the trust might allow you to more easily meet your personalized goals.

Estate Planning Mistakes in Texas and How to Avoid Them

Published on: August 22, 2024 | By David W. Miller

If you are starting to think through your estate planning process, it can be difficult to know where to start. In our decades of practicing as Houston estate planning attorneys, we have noticed several mistakes that are common for people to make as they start their estate plans, and we have developed helpful tools for how to avoid them. On today’s blog, we will review these estate planning mistakes in hopes of helping you get a strong start in your estate planning journey.

Mistake #1: Not Starting Early

It is tempting to wait until you are “later in life” to begin your estate plan. Unfortunately, the reality is that we never know what life has in store for us. No matter your age, it is prudent to speak with an estate planning attorney that can help you figure out how to draft a plan that works for you. If something unexpected were to happen and you did not have a plan in place, your loved ones would be left in disarray trying to make arrangements for your assets.

Mistake #2: Using a “One Size Fits All” Approach

We understand the allure of using a DIY will that you can find online. In reality, though, every person has a different set of needs and circumstances. In fact, a will might not be right for you at all: a trust might be a better tool for your estate plan, in that it could help you avoid probate and get money to your beneficiaries more efficiently. Without taking the time to explore different options, you could miss out on important tools to shape your estate plan. Exploring these options also reinforces the importance of including provisions that many people forget to include in their plans, such as power of attorney, end of life care instructions, funeral arrangements, and instructions for your digital footprint.