Articles Posted in Estate Planning

“Estate planning design and implementation is not only complex but can be highly emotional. Therefore, it’s important to have a basic understanding of the estate planning process, before approaching a professional.”

The decision to start an estate plan is critical for all families, but it can also be a challenge. In many cases, the greatest impediment families face initially is discussing death, especially the deaths of family members. Forbes’ recent article entitled “Estate Planning 101: Tackling Your Estate Plan” suggests several life events that will trigger the need to create an estate plan for your family or business.

The article also reminds us that it’s important to think about what might happen to you or someone in your family, in the event of a substantial life change. Here are some life events that can necessitate the need for an estate plan and a visit with your attorney:

“Planning for the end of your life can be intimidating. When you are a farmer, your business is not only your livelihood and your passion, but, often, it is also intermingled with your family life. For that reason, estate planning — arranging for the management of your assets once you die — is especially important for aging farmers.”

The Bangor Daily News explains in its article “How farmers can start an estate plan” that we all know we’re going to die, but it’s not our favorite thing to talk about. However, it’s important to start these conversations.

The article helps aging farmers who want to get started with the estate planning process, by sharing some tips to clear up some of the confusion, eliminate questions in the process and motivate you to begin your estate planning journey.

Depending on the situation, the probate process can be a nightmare. For this reason, many believe probate should be avoided whenever possible. However, avoiding probate depends on the circumstances of each individual situation. While creating a Houston estate plan that avoids probate will be beneficial in most circumstances, there are certainly some situations where the level of planning required to avoid probate is unnecessary.

What is Probate?

Probate is the court-guided process through which a decedent’s property is distributed accordingly. Through this process, the court authenticates the decedent’s will, notifies potential heirs, accounts for the decedent’s property, and addresses tax obligations before estate property is distributed to beneficiaries. The court is also responsible for appointing an executor of the estate to oversee the process and protect the interests of the estate and its beneficiaries. In the case of an intestate estate (where the decedent dies without a will) probate serves the same functions, with the only difference being that property is ultimately distributed according to state intestacy laws.

For individuals of all ages and familial structures, it is important to have a comprehensive Houston estate plan for two reasons. First, it provides instructions regarding the distribution of someone’s hard-earned assets, ensuring that their property is distributed according to their desires. Second, an estate plan provides end-of-life instructions that can help ensure an individual’s last days can be spent peacefully. While an estate plans should be a priority for any individual or family, an estate plan is even more critical for those in long-term relationships with someone whom they are not married to.

For unmarried couples, if one partner dies without an estate plan the results can be disastrous. State law assumes and protects the interests of married partners by ensuring them part of the estate through communal property. Married partners also have the presumed right to make medical and other important decisions on behalf of their significant other. Unmarried couples on the other hand do not have the same sort of protection. If one partner dies or becomes incapacitated, the other partner can only inherit from their estate or make important decisions on their behalf if careful estate planning has not already taken place. Below is a list of estate planning tools that are useful for unmarried couples who want to protect and provide for one another.

1. Will

Traditionally, a Houston estate plan has primarily focused on the distribution of tangible property upon a person’s death. However, now that we are firmly in the digital age it is important for everyone to consider how digital assets should be addressed in an estate plan. Digital assets and information include just about anything that is primarily accessed through a digital platform. Examples include social media accounts, email accounts, photos and videos stored on a computer or in the cloud, online banking and investment accounts, and even cryptocurrency.

How do Digital Assets tie into your Estate Plan?

It is important to spell out how such assets and information should be treated within an estate plan. Those who do not have a will leave their loved ones and estate administrators with no access to them. This could result in the permanent loss of data and information stored on an electronic device. With all of the memories we capture and store using our phones, that could be the equivalent of losing years’ worth of family memories. Perhaps even more alarming is the prospect of losing access to financial accounts that are primarily accessed through online banking. If an estate plan is silent about such assets, loved ones may have to put up with the headache and added expense of getting a court order just to access a decedent’s digital accounts and information.

Many young people do not think much about estate planning. But having children makes estate planning an important consideration for any family. Young families with children should consider taking certain steps when going through Houston estate planning.

Basic Estate Planning Needs for Young Families

First, families should sit down with an attorney to write a will. Writing a will ensures that a parent decides who property and assets will go to in the event of the parent’s death. Writing a will is particularly important for parents because they need to name a guardian for their children. The guardian is the person who would care for the child or children if both parents were unable to care for their children. In the absence of a named guardian in a will, a court would generally choose a guardian for the children. Having a named guardian ensures that that person is appointed as guardian.

Preferred Partnership Freeze

It is no secret that a well-put-together Houston estate plan can save younger generations an enormous amount of money. However, few are aware of the rare opportunity for estate tax savings caused by the economic conditions surrounding COVID-19. By taking advantage of a Preferred Partnership Freeze (PPF), high net worth individuals can avoid costly estate taxes and continue to take full economic advantage of their assets. Individuals will want to act quickly to seize this opportunity, as this is hopefully a once-in-a-generation opportunity that may not be around for long.

The recent economic shutdown due to the COVID-19 pandemic has decreased the value of many assets, including closely held businesses, investment portfolios, and real estate properties. A Preferred Partnership Freeze allows individuals to freeze the current valuation of such assets, and recognize certain benefits down the road as a result. For assets expected to appreciate, future interests can be placed into a trust avoiding estate taxes on the increase in value. For depreciable assets such as rental real estate, individuals can take advantage of estate tax deferral as well as a tax-free step-up in basis, and increased depreciation and amortization.

When was the last time you reviewed your estate plan? Most people have not reviewed their estate plan since they put it together with the help of their attorney. Although it is relatively common, taking a set-it-and-forget-it approach to estate planning is risky business. As time passes, life circumstances change, as does the law regarding estates. For these reasons, it is essential to review an estate plan every three to five years. Below are a handful of common mistakes that can easily be caught and corrected by reviewing all estate planning documents.

Updating Your Fiduciaries

Knowing who is named as the executor of a will or as the trustee of a trust is crucial to making sure that an estate plan is properly carried out. Each fiduciary plays a critical role in the administration of an estate. Over time, relationships often change. People drift apart and may even fall completely out of touch. People also grow old and pass away. Thus, it is crucial to check in with an estate plan every so often to make sure the named individuals are still up to the task. Even if the fiduciary is still willing and able, you may find on further inspection that there is a better person for the job.

Benefits of Charitable Giving

When it comes to planning your Houston estate plan, one tool that should not be forgotten is charitable giving. As an estate-planning tool, charitable giving has two primary benefits. First and foremost, it provides an opportunity to give back and support the causes we care about. Secondly, charitable gifts reduce the taxable assets within an estate, potentially resulting in significant tax savings, particularly for substantial estates. A charitable trust allows Texans to achieve these two important estate-planning goals simultaneously.

A trust is an arrangement in which property is placed in the hands of a trustee to be managed and used for the benefit of a beneficiary. In the case of a charitable trust, the beneficiary is a charitable organization chosen by the grantor. Creating a charitable trust can have multiple tax benefits. For starters, a trust can be structured so that any donations made during the grantor’s lifetime can be deductible from their income tax. Furthermore, when the grantor dies, the assets within the trust are not included within the grantor’s estate. As a result, the tax burden on substantial estates can be reduced significantly through the creation of a charitable trust.

It can be difficult to face the mortality of a loved one. Unfortunately, when a loved one is diagnosed with a serious brain disease, family members do not have a choice. Diseases such as Alzheimer’s, Parkinson’s, and ALS bring families face to face with the reality of a family member’s condition. This makes it important to take action to secure their legacy and clarify their wishes. Putting together a Houston estate plan can accomplish this.

A recent article in Forbes discussed some estate planning considerations for people diagnosed with life-threatening neurological conditions. Below is some information family members can use to help a loved one in making sure their estate plan is complete.

Encourage Them To Review And Update Their Estate Plan: After creating an estate plan, people often forget to update it as circumstances change. Then life happens, and people find that the plan they put in place no longer suits their current situation. It is important to encourage loved ones to review and update their estate planning documents. If they have not previously put together an estate plan, now is the time to do it. Doing so will help ensure that their wishes are respected with regard to future medical care, as well as the distribution of their property upon their passing.

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