Articles Posted in Estate Planning

Thinking about death can be extremely upsetting. People do not want to imagine their loved ones coping without them or having to handle their affairs after they have passed. However, some of these worries can be avoided. Older Texans can help their heirs before they die by keeping their affairs orderly and having a Houston estate plan in place. These steps may seem unnecessary but can help loved ones avoid key errors that often occur after a person’s death. Below are some tips everyone can follow, so their beneficiaries and loved ones will be able to efficiently execute their estate and wishes.

Have an Estate Plan in Place

While this tip may seem obvious, having a detailed estate plan in place is the only way to truly ensure a person’s wishes are honored after their passing. Estate planning is arranging – during a person’s life – the management and disposition of their estate after they have passed away. Often, this includes writing a will and naming beneficiaries who will receive any assets or property the person owns. Without an estate plan, loved ones will need to go to probate court before any assets can be distributed. The time and money spent going through this process – often a considerable amount – could all be avoided if the individual had created an estate plan. Then, their loved ones could focus on grieving and emotionally recuperating, rather than paying legal and court fees as the probate court process drags on.

When people start to think about the Houston estate planning process, they often think about doing it themselves. Either because of cost or other reasons, they believe this to be a better option than hiring an estate planning attorney. These estate plans, nicknamed DIY estate plans, are often riddled with mistakes and can be extremely expensive to fix. In fact, it is often far cheaper to hire an estate planning attorney to draft the plan first than to create a DIY estate plan that ultimately cannot be executed. Below are some common questions individuals have when debating whether to create an estate plan themselves, or to contact an experienced estate planning attorney.

What if I Have a Straightforward Situation?

People often assume they only need to hire an estate planning if they have millions of dollars in assets or have a complicated familial situation. However, these are not the only people that can benefit from utilizing an estate planning attorney because there is no such thing as a straightforward situation. Not surprisingly, every person and their loved ones are unique, so their estate plan needs to be unique too. DIY estate planning websites do not ask very specific questions about the client, instead just inquiring about their relatives and who they would want to care for their minor children if they were to pass away. This does not delve into the questions necessary to create an appropriate estate plan.

Most individuals have heard of a power of attorney but are unaware of what a power of attorney actually is. In short, a power of attorney gives another person the ability to act on another’s behalf, either for a temporary or permanent amount of time. There are different types of powers of attorneys, each of which is utilized for different purposes. Below are some common questions about power of attorney documents and why they are critical Houston estate planning documents.

What Is a Power of Attorney, and Are There Different Types of Powers of Attorney?

A power of attorney is a legal document that authorizes a designated individual – the agent – to take action on behalf of another, called the principal. There are different types of power of attorneys. Depending on the purpose of designating a power of attorney, the principal may give the agent very broad power or limit their authority to a single purpose or transaction. For instance, a special power of attorney is utilized for a single occurrence, such as when a person wants to buy a house but cannot attend the closing.

Individuals are normally told not to share their passwords with anyone for security purposes; however, there is one important exception. Individuals should make sure they have shared their passwords with a loved one, in case of their death. Doing so can be critical, as digital assets have become more and more prominent. People store important information online now, with no recourse if the person dies without giving someone else permission to access their digital information after their death. Below are some tips that individuals can use – either when crafting their Houston estate plan or afterward – to ensure their digital assets are not lost after their passing.

Creating a Digital “Vault”

Estate planning advisors will often tell their clients to create a drive or “vault” to store important documents and information. This can include estate planning documents, copies of personal identification, credit card information, and mortgage paperwork. Individuals should also include their digital login information and passwords too in this drive, so estate executors and loved ones have the ability to access it.

Despite the importance of having a Houston estate plan, over 60% of people do not have a will. Those without a will often cite several reasons, including that they do not believe a will is necessary, and the cost of creating a will is too high. These misconceptions stop people from creating a will or estate plan, when it is actually vital for everyone – despite age or health – to have one in place. Below are common misconceptions that many Texans have about estate plans, and why people should contact an estate planning attorney right away.

Misconception: “I’m Young, I Don’t Need an Estate Plan”

Many people – even those with families – do not believe they need an estate plan because of their youth. Unfortunately, tragedies occur every day, and it is impossible to predict the future. If a person owns any property or assets – regardless of their age – they should have an estate plan in place, so their wishes are honored after their passing. Otherwise, the individual will have no say over how their assets are bequeathed. When a person dies without a will in Texas, a judge will decide who inherits the assets. Although the assets are often given to the deceased’s spouse, children, or relative, this process is complicated as the court evaluates the assets and necessary evidence.

Creating a Houston estate plan is a great first step in ensuring a person’s assets and wishes are managed after their passing. However, without frequently reviewing the estate plan and updating it as needed, the process will not go as smoothly as anticipated. Many people are unaware of when an estate plan should be reviewed or updated. Below are some common questions people have about reviewing an estate plan, as well as specific instances that precipitate the need to update the plan.

A New Addition to the Family

Often, young families will create an estate plan and name their children as beneficiaries. However, additions to the family – such as a new child or grandchild – will often be overlooked as a beneficiary if the estate plan was created before their arrival. Because of this, people should update their estate plan after a new addition, so the new family members are named and specifically included as beneficiaries. This process may also include changing the estate plan to remove individuals from the will, either due to death or divorce in the family. Because family dynamics are constantly changing, it is important estate plans are regularly updated to ensure it reflects the current family structure and dynamics.

Social Security benefits can help older individuals in Texas enjoy their retirement without fear of becoming destitute. However, when people claim their benefits at the wrong time, it may leave them cash-strapped. When someone reaches the full retirement age, they can receive their full monthly social security benefits; however, many aging adults will choose to delay their filing for Social Security to receive more per month.

By delaying their filing for Social Security benefits, a senior can grow their benefits by 8% a year, up until age 80. For example, if a senior is entitled to $1,500 per month in Social Security when they reach the full retirement age of 66, they will instead receive $1,860 if they wait until age 70 to file. Many aging individuals wonder if they personally should delay their benefits. While this is a personal decision, below are some common reasons why seniors delay receiving their benefits.

Most common reasons to delay pulling Social Security Benefits

In Texas, a Last Will and Testament, commonly referred to as a will, allows a person to designate and gift property and other assets to a beneficiary. The beneficiary may be an immediate family member, relative, friend, or other charity or institution. There is a mistaken belief that wills are only necessary if a person has significant funds or property. However, in reality, a will is a crucial tool to distribute even modest savings and personal items. A will allows a person to clarify what they want to be done with their property, such as their home, investments, retirement plans, insurance benefits, and personal mementos. Furthermore, wills allow a person to appoint a guardian for their minor children.

There are many reasons people forego drafting and executing this critical document. Some hesitation may stem from the psychological and emotional connection between wills and the thought of passing away. However, putting off a will until a person is emotionally ready can have long-term consequences for their loved ones. If a person dies without a will, their loved ones may need to go through a lengthy and complicated probate process. The probate process can be emotionally charged and cause loved ones to experience hurdles and financial setbacks.

For example, the recent death of beloved actor Chadwick Boseman has shed light on the consequences of not having a will. According to a recent CNBC news report, the 43-year-old who died after battling colon cancer died without a will, leaving his estate’s distribution to the courts. His wife requested the court name her as the administrator of her deceased husband’s estate. Although some of the late actor’s accounts, such as qualifying retirement accounts and life insurance, may not need to go through the probate process.

Many individuals – especially those with children – do not want to think about what would happen to their family if they passed away. Although many people have life insurance to cover the cost of raising a child in the event of their untimely death, they do not think about establishing a trust to hold the money for them. Despite the common misconception, trusts are not just for the rich. Rather, they are critical tools for young families and an important part of a comprehensive Houston estate plan. Below are some of the common questions that individuals have about life insurance trusts.

How Does a Life Insurance Trust Work?

Individuals will set up a trust as part of their overall estate plan, typically, when they are creating a will and naming guardians if they have minor children. A trust holds assets – including property and money – for the listed beneficiaries, and the individual creating the trust details how the assets should be utilized. Additionally, the person appoints a trustee to oversee the process and ensure the assets are handled as written.

In Houston and throughout Texas, living trusts allow property owners to use their assets during their lifetime while ensuring that their assets are securely transferred to their beneficiaries. The legal document is similar to a will in that it allows financial assets and personal property to be passed on to named beneficiaries. However, the terms of a will become effective after they die, whereas a revocable living trust becomes effective immediately. These trusts allow property owners to keep control of their assets while living even if they become incapacitated.

Establishing a legally binding living trust is crucial to ensuring that a person’s wishes are appropriately documented and carried out. The trust documents should list the property, the trustee, and the beneficiaries. The relevant property is transferred to the trust, giving the trust control over the assets. Trustees should designate a successor who will be responsible for effectuating the trustee’s wishes. These trusts are useful for controlling and transferring various types of assets, but it is incredibly helpful for property owners. Regardless of age, marital status, or wealth, living trusts are an inexpensive and effective way to reduce and eliminate the stress of distributing assets while maintaining control and privacy.

Not only do living trusts help individuals avoid probate and court control, but it also allows trustees to control the assets during their lifetime. The trustee maintains the ability to buy, sell, modify, or even cancel the trust. Further, revocable living trusts allow the trustee to efficiently transfer assets such as jewelry, furniture, clothes, and art into the trust.

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