Estate Planning

Planning for Retirement with a Special Needs Child

Published on: October 12, 2022 | By Thomas W. McCulloch

Planning for retirement can already seem intimidating: it can be seen as time-consuming, stressful, and expensive. For parents of special needs children or adults within their care, retirement planning may seem impossible.

Retirement planning usually involves analyzing income, expected income, and assets and planning those inflows against expected outflows, or expenses, from retirement to the end of life. But parents of children with special needs may need to ensure their children are cared for even beyond their lives, necessitating a multi-generational time horizon in planning. In addition, one or both parents may make career and lifestyle changes to care for their children themselves, which can impact the cash coming in to fund retirement. If a caretaker passes on, extra expenses or decreased income to the surviving parent may result from hiring full-time care or taking on those roles. Finally, costs can be higher for special needs children and may increase as these children become adults. Insurance premiums, and the costs of health and medical care, caretaking, special programs, rehabilitation and therapy, and adaptive or assistive equipment may all need to be factored into the equation.

A skilled estate planning attorney can make this daunting process more navigable. One tool estate planning attorneys can use is to help their clients set up special needs trusts to protect their children’s government benefits while also giving them a stream of additional income.

Special Needs Trusts

Special needs trusts work like any other trust: a grantor establishes a trust to help the beneficiary receive property and assets and names a trustee to administer the trust. Special needs trusts allow an individual to receive funds without impacting their income eligibility for much-needed special needs benefits from the government, such as Medicaid or Social Security. These programs help fund direct medical and living expenses. Special needs trusts, in contrast, cannot be used for living expenses or anything covered by government programs, but can be used for supplemental expenses such as job training or tuition or non-essential costs like furniture, personal services, or hobbies.

Estate Planning for High-Net-Worth Individuals

Published on: October 12, 2022 | By David W. Miller

Many of the same tools used in ordinary estate planning apply to high-net-worth individuals. Estate planners of all income and asset levels should consider utilizing a last will and testament, guardianship designations, trusts, life insurance policies, planning for incapacity, and various powers of attorney documents. In addition, the complexity and sheer volume of high-net-worth individuals’ assets necessitate further consideration. High-net-worth clients may consider gifting to reduce tax implications on their estates. Charitable donations can also generate a tax benefit for the estate. Tax planning in general should be carefully considered by high-net-worth individuals, as substantial rates can diminish the amount left to your beneficiaries.

A skilled team of estate planning attorneys can help navigate these strategies and formulate a plan tailored to you and your family’s needs and special circumstances. A good attorney will help you minimize your tax exposure with their up-to-date knowledge of ever-changing tax laws.

Who is Considered High Net Worth?

Net worth, or a simple calculation of your household’s debt minus your household’s liquid assets such as cash, cryptocurrency, and other investments, can help determine your estate planning strategy. Forbes has classified high-net-worth individuals or households as holding liquid assets between $1 million and $5 million. Between $5 million and $30 million is considered very high net worth. Finally, assets in excess of $30 million fall in to the ultra-high-net-worth category.

Should I Have an Estate Plan?

Published on: October 6, 2022 | By McCulloch & Miller, PLLC

The short answer: Yes. Nearly everyone needs an estate plan, regardless of income level or family structure. Even for young people without substantial assets or children, medical and financial powers of attorney, among other estate planning tools, can help protect your wishes in the event of incapacitation or emergency. For the long answer, see below for five reasons you should have an estate plan.

Everything Might Not Go Directly to Your Spouse (or It Might)

You may assume that everything may go to your spouse in the absence of a will. Intestate succession laws vary by state and may not be consistent. And you may have assets that have been joint titled to someone other than your spouse, leaving that asset’s disposal up to the surviving owner. You may have also named beneficiaries to accounts and forgotten to update them. Naming beneficiaries can clear up confusion, but an attorney can help review all of your accounts and make sure they are consistent with a clearly detailed estate plan.

Have a Plan in Place in Case of an Emergency

In addition to deciding where you want to leave your assets, an estate plan can also help you in the event you become incapacitated or unable to make financial or medical decisions. An estate planning attorney can help you craft powers of attorney, which authorize a person you choose to act on your behalf. There are several types of powers of attorney, including financial and medical. And you can draft medical directives that dictate the types of medical treatment you would like to receive if you cannot make decisions while ill.

Planning for Unequal Inheritances

Published on: October 6, 2022 | By David W. Miller

In an ideal world, parents remain connected to all of their children and feel confident and comfortable equally dividing their assets among them. Unfortunately, real life is not always ideal—relationships can become strained, or parents may have other compelling reasons for giving their children varying amounts in their wills. A skilled estate planning attorney can help navigate creative solutions and prepare for any challenges or contests in the event of unequal inheritances.

Consider that Every Family is Different

If you are a parent considering an estate plan that results in unequal inheritances for each of your children, you may be experiencing feelings of guilt, frustration, or even resentment. Understanding that these feelings are common but that you are doing your best to bring about an equitable and fair solution can help you see more clearly to best communicate your needs and effectuate your end-of-life plans. Family and personal differences may mean that fair does not mean equal. An estate planning attorney can help come up with ways to make sure everyone is taken care of based on their unique family needs.

Explore Creative Solutions

If, for example, a family has two high-income adult children with steady jobs and families of their own and one who has struggled to hold steady employment, parents may feel at a loss for what to do. They may fear that the third heir would mismanage the money and end up worse off.

What Happens if You Die Without a Will in Texas?

Published on: September 30, 2022 | By McCulloch & Miller, PLLC

In a perfect world, every individual would have a clearly defined estate plan and a will before they pass on. Unfortunately, life circumstances and the unexpected can get in the way of perfect planning. In Texas, state intestate succession laws define the way your assets will go to your closest family members in the event you pass without a last will and testament.

Intestate Succession in Texas

Texas law defines the order of succession for various possible circumstances. The first few circumstances are relatively simple. If you die with living children but no spouse, your children inherit everything. If you die with a spouse but no children, your spouse inherits everything. Likewise, if you die with parents but no siblings and no spouse or children, your parents inherit everything, and the same goes for if you have siblings but no living parents, spouse, or children.

5 Reasons Beneficiary Designations Don’t Work Well for Estate Planning

Published on: September 20, 2022 | By David W. Miller

It’s no question that estate planning can seem daunting. Beyond your last will and testament, there are a bevy of other documents that may seem unnecessary, duplicative, or just plain overwhelming. You may think making beneficiary designations, or forms that allow you to transfer assets directly to individuals without dealing with your will and the probate process, simplifies the entire endeavor. Unfortunately, there are a number of pitfalls that can happen when individuals simply settle for beneficiary designations without utilizing other estate planning tools with an experienced attorney.

1.) Your Beneficiary May Pass Away

Although this may seem obvious, many people do not consider that their beneficiary may pass away. With multiple assets, you may forget to change your designation in the event of your beneficiary’s death, leaving your asset stranded. You may be incapacitated in some way, which could render you unable to update your designations. Without proper mechanisms in place, you would be left without an avenue for passing on your assets.

2.) Your Beneficiary May Not Follow Your Wishes

You may name a beneficiary with the idea that they equitably share the asset or account you’ve left to them with other individuals, such as among siblings or children. Unfortunately, this may not always be the case. Proper planning can ensure your wishes are carried out exactly as you specify, without leaving it up to chance.

The Importance of Having a Business Succession Plan

Published on: September 10, 2022 | By Thomas W. McCulloch

For many business owners, the future of your business and life’s work is at the forefront of your mind. Business succession planning should also be at the forefront of your estate planning. Beyond the complexities of regular estate planning, business succession planning must carefully consider unique tax implications and asset protection strategies. In addition, choosing the right person to control your business—or the right plan for sale or closure—is imperative in ensuring your preferences and wishes are carried out.

Who Will Control Your Business?

When it comes to who will control your business, any business owner knows the right leader is crucial to the success of the company. If you can no longer run your business, you have several options.

First, you could transfer ownership to someone you’ve selected yourself. While many owners believe this will ensure their life’s work is carried out with their preferences in mind, owners should carefully consider who they should pass the business to and what training will need to be done. In addition, there are tax liability issues at play in the transfer of a business.

Estate Planning Considerations for Cat and Dog Owners

Published on: September 10, 2022 | By David W. Miller

Individuals thinking about estate planning may already be considering their spouses, children, and even important charities and foundations that are meaningful to them. It is important for planners to also consider implementing estate plans for their beloved cats and dogs. While you cannot leave money to your pet in your will, there are other tools to ensure your pets are cared for in your absence.

Choosing a Caretaker

In many cases, it may be clear and undisputed who your pet’s caretaker may be. You may think just telling your executor who will care for your cat or dog will be enough. But in the unfortunate event a dispute arises or your caretaker can no longer accept the responsibility, a formal arrangement in your will can ensure your pet is properly cared for. If you do not have a trusted loved one, many arrangements exist that will ensure your pet has a safe caretaker, such as SPCA programs, private pet sanctuaries, and veterinary school programs.

Pet Trusts

Some estates will leave a sum of money to their chosen caretaker to cover expenses related to animal care. Others, however, may choose to create a pet trust. Pet trusts are recognized in every state, including Texas, as legal estate planning instruments. Similar to other types of trusts, the trust creator places funds or assets into the trust for the benefit of the pet. The pet owner will name a trustee and even a successor trustee charged with managing these funds. Acceptable uses include veterinary and medical costs, food and care expenses, grooming needs, and even end of life plans for the pet, such as burial or cremation. Individuals creating pet trusts should clearly describe and identify their pet in the trust to avoid potential abuse.

Common Estate Planning Mistakes

Published on: August 31, 2022 | By Thomas W. McCulloch

End-of-life planning is an emotionally challenging process. Without the aid of an experienced estate planning attorney, you may fall into some common pitfalls without realizing their harm.

Thinking you don’t have an estate

Some think only the very wealthy have an estate, but this is untrue. Everyone has an estate, and everyone’s estate plans will differ based on their individual needs. Common elements of an estate plan can range from a person’s post-death plans for their body to plans for their home to their vehicle. Even digital assets need to be included in a comprehensive estate plan.

Community Property’s Impact on Texas Probate

Published on: August 21, 2022 | By Thomas W. McCulloch

If you’re considering your end-of-life plans and want to ensure your family’s safety and comfort, you may already know and understand the need for a last will and testament. Understanding what happens after the will is drafted, however, is crucial to best position your estate for a seamless and hassle-free probate process for your loved ones. This includes understanding the legal classification of your assets.

Probate, or the process of distributing a person’s assets after death, can be a lengthy and complicated process. Through this process, the executor of the estate as named by a will must file an application for probate in the relevant county. Then the court will post notice of that application, opening up the process for contesting a will. Even if there is no contest to the will, a court must still hold a hearing to ensure the validity of the will and appoint the executor. Once the executor is appointed, the process continues—the executor must locate and distribute all assets, notify creditors, and resolve any disputes.

Some assets, however, are not so clearly defined. Even if you have employed a Texas estate planning attorney to minimize the assets that must go through probate, there will likely be assets remaining that must go through this process. These assets may include community property.