Estate Planning

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.

Estate Planning with Minor Beneficiaries in Texas

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

It is natural to want to set your children up for success after you are gone. How does naming children as beneficiaries to an estate plan work? How does the process look different if the children are minors? These are important questions to consider. On today’s blog, we explain how to effectively and legally name minors as beneficiaries to an estate. As always, though, if you have questions about how this topic applies to your specific circumstances, contact a Houston estate planning attorney you can trust.

Naming Minors as Beneficiaries

The first consideration to keep in mind is that under the law in Texas, minors are unable to own property or receive assets. If a decedent names a minor in his or her will, then, the court will require the minor to have a guardian to take control of the inherited assets. The guardian will continue to have control of the assets until the minor turns 18. Having the court appoint a guardian for a minor can take considerable time, and we recommend trying to avoid court intervention in this way if at all possible.

Establishing a Trust

To avoid the court-appointed guardian process, which can require considerable time and money, it is more efficient to leave behind assets in a trust. If a minor inherits assets from a trust, the trustee distributes funds according to the instructions the decedent laid out. These instructions can be as tailored and specific as you want them to be, and they can allow your minor child to continue to benefit from your estate in a responsible, efficient way.

Estate Planning Considerations for Texas Farmers and Ranchers

Published on: January 21, 2025 | By David W. Miller

If you own a farm or a ranch, it is important that you are thinking through best practices for including that property in your estate plan. Life is full of the unexpected, and you never know when you might need a solid plan in place for what will happen to your land after you are gone. What are the basic considerations for farm and ranch estate planning in Texas? Today’s blog answers that very question.

Giving the Land to One Heir

The first consideration with farm and ranch estate planning is who you might want to inherit your land. If you have one heir that is involved in the farming or ranching process, this can be an easy question to answer: you can include in your estate plan that the entirety of your farm or ranch goes to your farming-focused heir.

Giving the Land to Multiple Heirs

If you have multiple heirs that you might want to inherit your land, the decision can be a bit more nuanced. You could either choose one heir to inherit the land in its totality, or you could physically divide the land between your heirs. Another option available to you is to allow each heir to inherit parts of the land that align with their lifestyles. You could, for example, give the land itself to a farming-focused heir, while you give the gas and mineral rights to a non-farming heir. This strategy works well if your heirs get along and will work effectively together. Lastly, you could set up a structured purchase plan, which would require one or more heirs to purchase the land from another heir over a long period of time.

Avoiding Probate Disputes Over Collectibles and Heirlooms

Published on: January 14, 2025 | By Thomas W. McCulloch

So many factors go into a person’s estate plan, including a thoughtful inventory of the planner’s assets and a careful decision about how to divide those assets up. At our firm, we sometimes encounter difficult probate disputes over a decedent’s collectibles and heirlooms. On today’s blog, we cover some basic tools you can implement to avoid probate disputes over priceless items.

Create a Detailed Estate Plan

Because a family’s collectibles and heirlooms can often include an emotional value as opposed to just a monetary value, it is best to include detailed instructions about how you want those items to be distributed. Your estate plan should go beyond a typical list of monetary assets and debts. You should write a thorough list of items that you know your heirs might want to inherit, and you should include instructions for exactly who gets which item.

Communicate with Your Loved Ones

It will work out for everyone’s benefit if your loved ones know what to expect when you pass. We always recommend communicating early and often about your collectibles and heirlooms so that your heirs can have a clear understanding of how the items will be passed down. This way, you can also grasp which heirs feel a specific tie to which specific items, and you can keep this in mind when you develop your estate plan.

Updating Your Estate Plan After a Major Life Event

Published on: January 7, 2025 | By McCulloch & Miller, PLLC

Updating Your Estate Plan After a Major Life Event

If you have drafted your estate plan with the help of an attorney, know that you are on the right track to ensuring your assets are protected long after you are gone. It is also important, however, to update your estate plan at various points in your life. When do you need to update your plan? And how do you go about making this happen? Today’s blog answers these questions, with the goal of helping you understand what your possible next steps might be in the estate planning process.

When to Update Your Estate Plan

As a general rule, we recommend updating your estate plan every three to five years. Additionally, though, we recommend updating the plan after any major life event. These life events could include (but are not limited to) the following: a marriage, a divorce, the birth of a child, the death of a beneficiary, the initiation of child support or alimony payments, or a change in your wealth. These are all events that could significantly impact the estate plan you have already drafted.

Too often, we encounter estate plans that were once relevant, before major changes occurred in a decedent’s life. When the decedent’s family is left to sort through his or her estate plan, they have to deal with the fact that even though the plan might no longer be relevant, it is still the authority on the assets the decedent left behind. It is best to avoid this unfortunate reality by making sure your estate plan is up to date with your current reality.