Articles Posted in Estate Planning

As a younger generation, many individuals assume that millennials do not need an estate plan yet—mainly because they are far from needing to use it. However, this is not always the case. Millennials are creating estate plans at a record rate. They recognize the importance of planning for the future and ensuring their loved ones will be taken care of—regardless of their net worth—and not delaying the process. Viewing the estate planning trends that many millennials are using can be instructive in finding the estate plan that works best for others. Below are some of these trends and how people can utilize them in their estate plans.

What Motivates Millennials to Create Estate Plans?

Everyone has a different motivation for drafting estate plans and planning for their future. According to a recent survey, millennials were most motivated to make a plan because they had a child. Often when someone has a child, they want to ensure they are financially and physically taken care of—this includes leaving them assets in their will and appointing guardians for the kid in case the parents pass away. More so than other generations, millennials are designating non-blood relatives as a guardian.

Divorces are often emotionally difficult and draining—big life changes are occurring, which are stressful enough on their own. But when people are going through this process, often the last thing on their mind is updating their estate plan. However, estate planning nightmares may occur if individuals do not update their estate plans after a divorce. Former spouses and stepchildren may be able to take advantage of the estate plan if it is not changed—regardless of the person’s intentions. Below is information and advice for newly divorced Texans, explaining why updating their estate plan as soon as possible is essential.

Why Do I Need to Update My Estate Plan After My Divorce?

Estate planning may not seem like a top priority after a divorce. However, this is incorrect. While former spouses no longer have certain benefits from an estate plan—even if the estate plan is not changed—there are some designations that are not automatically revoked unless the estate plan is actively changed. For example, in Texas, unless a person actively removes their former spouse from their life insurance policy, the ex-spouse can still stand to receive the policy benefit if the individual passes away.

As their parents get older, many millennials are having to step in and become caregivers. Because of this, many millennials are becoming interested in estate planning themselves—seeing its benefits and their need for the future. For many of them, they are not only taking care of their parents but also their children. This has put them in a unique situation that heightens the need for estate planning even more. Studies have shown millennials’ reasoning for estate planning, their unique “Sandwich generation” requirements, and other factors to take into consideration during this process. Below are a few of these findings and how young adults can incorporate them into their estate plan.

What Prompts Millennials to Create Estate Plans?

Children, Loved Ones, and Death

As the weather starts to get warmer, people begin planning for their summer vacations plans. For those individuals with a vacation, or second, home, these vacation plans might seem easier. There are many benefits to owning a vacation home: always having a place to stay and long-lasting family memories. However, there are detriments on the estate planning front that come from having a vacation home if individuals do not plan accordingly. Below are ways to incorporate vacation homes into estate plans, so families are prepared for the future.

Deciding What to Do with the Property After You Pass Away

When it comes to vacation homes, one critical aspect of the estate planning process is to decide what to do with the property after the owner dies. For most individuals, this will be leaving the property to someone else in their will. If they decide to gift the property, owners should think carefully about who they wish to receive per the will. Many times, parents will want to give the home to their children. But this can be more complicated when they want to gift it to all of their children, rather than a single individual.

When people think about talking with their aging parents about the future, they are often stressed and nervous. How will the conversation go, how will their parents react, and what should they say? Because of this, children often put off this conversation, delaying it for as long as possible. However, delaying too long can be dangerous—as parents get older, it may be more difficult for them to make decisions about their future, which could lead to even more hurdles. Below are a few questions children should ask their aging parents about estate planning, and why there is such a need to do so as soon as possible.

Questions to Ask Your Aging Parents:

What Are Your Future Plans for Your Money?

Creating an estate plan is an important task when thinking about the future. However, there are often mistakes that can be made if these documents are created without the assistance of an estate planning attorney. Some of these most common errors include unintentionally leaving assets to former partners or spouses after divorce or separation. There are ways to avoid these common estate planning mistakes and ensure ex-spouses are not inheriting the other person’s money. Below is advice on how to make sure assets are untangled from an estate planning perspective after a divorce—along with how professionals can assist in creating an estate plan that works for each person and their situation.

Mistakes that Allow Ex-Spouses to Inherit from an Estate Plan

Most individuals do not intend to leave their former spouses any of their assets when they pass away. However, many people are unintentionally doing so by not changing their estate plans after their divorce. People who do their research may recognize that state laws, including Texas, usually say that former spouses lose all property rights to each other’s assets. But since pensions and retirement funds are governed by federal law, these state laws may not apply.

This blog is for informational purposes only. McCulloch & Miller does NOT handle guardianship matters, we are a guardianship avoidance firm. 

When most people think of guardians or guardianships, they think of children needing someone to protect them when their parents cannot. However, older adults may also require a guardian when they are incapable of managing their own affairs. Guardianships are not something to enter lightly, but they are critical in certain situations. Finding a guardian—and recognizing the responsibilities and duties of a guardian—may be a difficult endeavor, but it is important to know more about this process. Below is information on when to seek a guardianship, how this is incorporated into estate planning, and who to select as a guardian.

What is a Guardianship and How Do I Know if a Loved One Needs One?

While there are many intricacies to estate planning, married couples may utilize some different strategies when crafting their estate plan. This may include assessing the couple’s tax liability and deciding who to gift their assets and property to if they were both to pass away. And there are many tax benefits that spouses can take advantage of—both federally and in Texas—during their lives and after one spouse has passed away. Below are common questions about spousal trusts and estate plans and explanations to these potential queries.

What Tax Differences Are There for Married Couples?

One tax advantage for married couples in Texas is they are given a higher estate tax exemption limit. This means the total value of their estate may be higher before they are required to pay an estate tax—as compared to a single individual. In 2022, a single individual must pay an estate tax if their estate is valued at over $12,060,000. However, a married couple must pay the estate tax if their estate is more than $24,120,000. It is important to note that this exemption limit is set to decrease in 2026 to $10,000,000 per married couple.

Most Texans are under the misassumption that estate planning is similar for all people—regardless of socio-economic status, gender, age, and other factors. However, this is not the case. While estate planning is critical for everyone, the type of estate plan and the strategies taken will depend on the person’s unique situation. This is why no two estate plans are the same. For example, there are inherent retirement risks that many women uniquely face that should be factored into their estate plan. Below are questions and tips on how women specifically can plan to avoid potential retirement risks in their estate plans.

What Are Some Potential Retirement Risks for Women?

Statistically, women live longer than men of the same age. While this may not seem critical for estate planning purposes, it does impact the potential resources they will receive as they age, along with the funds they have to pay for services. For example, many seniors will have to balance paying for medications or other healthcare services against their savings—for women who live longer, they may not have the money for these expenses.

When individuals are crafting their estate plan, they often think about the younger loved ones in their lives—be it children, nieces and nephews, or grandchildren. They may want to leave property, financial assets, or family heirlooms to these minors. However, because minors usually lack the legal capacity to own property, there are different rules in place for gifting to those under 18 years old. Because of this, it is important for individuals to reach out to experienced estate planning attorneys who can help them navigate the process and ensure they are complying with federal and Texas estate planning laws.

How to Include Children in an Estate Plan

Because minors cannot legally inherit property, individuals wishing to include their children in their will must take additional steps. Texas estate law provides for minors who are given assets and property through an estate plan. Under the Texas Uniform Gifts to Minors Act, children’s assets are held in a managed account until they reach the age of 21. While individuals are usually only considered a minor until they turn 18, the law considers a minor anyone under 21 years old. In the will, the parents must designate a custodian who will manage the assets for the child’s benefit until they are no longer a minor. While this may be upsetting to some children, the point of this law is to ensure the funds are not irresponsibly spent. Instead, with the supervision and assistance of a custodian, there is a much higher chance the funds will be sensibly spent—if used at all—until the minor is older.

However, the requirements of the Uniform Gifts to Minors Act do not mean that the funds given to minors cannot be touched until they are 21 years old. The custodian is given a lot of discretion in utilizing the funds—so long as it is for the minor’s benefit. For example, if the minor needs funds to pay for college or assistance with transportation, the custodian can either purchase items for them or pay tuition on their behalf. Since the custodian has a lot of discretion, individuals should not make this decision lightly: who do they trust implicitly, would communicate well with their children, and make the best—and responsible—decisions on their behalf.

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