Estate Planning

Five Estate Planning Tips in Texas

Published on: May 31, 2024 | By David W. Miller

Estate planning doesn’t have to be overly complicated. While it’s important to make sure your plan is thorough, accurate, and thoughtful, you should also be able to draw up your documents without too much stress. To aid in that process, today we offer five tips that you can use to help guide your estate planning journey in Texas.

Tip 1: Start Early

Some people think that estate plans are only for older adults or for those with a lot of money. In reality, it’s never too early to start your estate plan. Without a plan in place, rules of “intestacy” (i.e. the state’s order of priority for distributing your money) will apply. Even if you don’t have significant assets to your name, creating an estate plan can help you ensure that your money goes exactly where you want it to go when you pass.

Tip 2: Plan for Potential Incapacity

Life is full of the unexpected, and we recommend that you include a provision in your estate plan to cover what will happen if you become incapacitated. For example, do you name a power of attorney? Does your power of attorney cover medical decisions, financial decisions, or both? By naming a trusted person that can take over for you if needed, you can be prepared for whatever lies ahead.

Probate Avoidance Techniques in Texas

Published on: May 31, 2024 | By Thomas W. McCulloch

Probate is the process through which a court determines the validity of a person’s last will and testament. Once the court determines that a decedent’s will is valid and enforceable, the court approves the process of passing the person’s assets to his or her chosen beneficiaries. Probate can take anywhere from several months to a year (or, in some cases, it can take longer). Probate can also end up costing families significant resources, chipping away at the estate that the decedent left behind.

There is, however, good news: with the right strategies in place, you and your loved ones can avoid probate altogether. Today’s blog covers a few basic probate avoidance techniques in Texas. To find out if these strategies might work for you, contact a Houston estate planning attorney you trust.

Trusts

The first, and perhaps most commonly used, probate avoidance technique is the formation of a trust. By definition, a trust is a legal arrangement where a person gives an appointed trustee the right to hold assets on his or her behalf. The creator of the trust, or the trustor, communicates to the trustee how the money should be used. Trusts can shield assets from outside influences like debtors, creditors, and probate.

Estate Planning Gifting Strategies in Texas

Published on: May 22, 2024 | By David W. Miller

Many of our clients come to us with questions about how to effectively pass on assets from one generation to the next. When done well, giving money to children and grandchildren can have benefits not only for the beneficiaries but also for the person gifting the money. On today’s blog, we cover some fundamental strategies that can help you figure out how to gift money without suffering unnecessary tax penalties. As always, these recommendations are general tactics, and we recommend speaking with an experienced Houston estate planning attorney to find out how to apply these strategies to your individual circumstances.

Annual Exclusion Gifts

Under 2024 federal regulations, each individual is able to give a beneficiary up to $18,000 in tax-free gifts. For couples, this amount increases to $36,000. If you have three children, then, you could give each child $18,000 as an individual or you could give each child $36,000 with your spouse. If you instead choose to leave this money in your estate for when you pass, the money could be subject to a hefty estate tax, and by giving it away annually, you allow yourself to avoid the possibility of suffering these taxes.

Educational Gifts

As another gifting tool, you could pay for a child or grandchild’s education in part or in full. If you pay an educational institution directly, it both benefits your loved one and allows you to bypass any tax penalties. This strategy once again allows you to tangibly pass wealth onto the next generation without suffering a hefty estate tax later on.

Updating Your Will After Your Children Move Out of the House

Published on: May 22, 2024 | By Thomas W. McCulloch

It is common to wonder when you should update your will and estate planning documents – after all, life circumstances are always changing, and these circumstances might bring important updates to your long-term plans. As a general rule, we typically advise clients to update their estate plans every three to five years, or when there is a life change that warrants an update. One such change might be having children that move out of the house. Below are some of the ways you might want to consider updating your will when this occurs.

Updating Your Estate’s Executor

The first way you might want to change your will after your children move out is by considering an update to your estate executor. As your children transition into young adulthood, they might make competent and responsible executors that could carry out the terms of your will after you pass. This is not a decision to take lightly, and it is not necessarily recommended if your children are still in their late teens or early twenties. As they age, however, they could be a smart choice for your estate executor.

Preparing for Your Child’s Marriage

If and when your child gets married, this might also warrant an update to your estate plan. For example, would you like to name your child’s spouse specifically in your estate plan? Or, conversely, would you like to set up a trust so that your child’s spouse is unable to access your assets once you pass? Making your will as specific as possible is always a good idea, and this level of specificity helps you leave nothing to chance.

Three Estate Planning Must-Haves in Texas

Published on: May 15, 2024 | By Thomas W. McCulloch

Estate planning does not have to be unnecessarily complicated, especially if you have an experienced attorney to guide you through the process. While the details of every estate plan are important, and while it is crucial that your details are thoroughly reviewed, there are a few main elements to every estate plan that comprise the fundamentals. Today, we review what we see as the three “must-haves” in estate planning, so you can think through your own estate planning journey accordingly. To find out how these fundamentals apply to your circumstances, take the next step, and reach out to a Houston estate planning attorney that can offer you additional support.

1. Distribution of Assets

The first, and perhaps most obvious, “must-have” in an estate plan is clear distribution of assets to beneficiaries. Your estate plan must be specific about which assets go to which people, and it must take into account contingencies. For example, if you pass everything to your spouse, but your spouse tragically dies at the same time you do, does your estate plan have specify who will inherit in your spouse’s place? You should not leave any major assets out of your plan, so that nothing is put to chance in the future.

2. A Plan for Potential Incapacity

Your estate plan should specify a person with the authority to make important decisions on your behalf in the unlikely event that you become incapacitated. This authority can come in the form of power of attorney or a guardianship, depending on your goals. Texas statutes define an incapacitated person as either a minor or an adult who is “substantially unable” to care for his or her own physical needs or financial affairs due to a health condition. By including a specific person in your estate plan who can take over in the event of your incapacity, you can ensure your medical and financial needs are in good hands, no matter the circumstances.

When It’s Time to Update Your Estate Plan

Published on: May 7, 2024 | By Thomas W. McCulloch

It takes initiative and forethought to create an estate plan, and if you have taken the step to draft and finalize your plan, you are on the right track. One of the next important questions then becomes: when should you update the estate plan you’ve created? Today, we review some basic guidelines to help you consider whether or not updating your estate plan is the right move for you.

Time

The first principle to guide your estate plan updates is that once three to five years have passed since drafting the plan, you should think about revisions. It’s possible the legal landscape has changed, or there might be life circumstances affecting your plan that you haven’t considered.

Refreshing your estate plan every three to five years also helps you make sure you are still happy with what you’ve included in your documents, and it keeps you in consistent communication with your beneficiaries. We find that the more our clients are involved in their own estate planning processes, the more they talk with their loved ones about what the plan will be when they pass, and the more their loved ones can be adequately prepared for when that moment comes.

How to Account for Issues of Capacity When Creating an Estate Plan

Published on: April 30, 2024 | By Thomas W. McCulloch

In Texas, to create an estate plan, you must have sufficient mental capacity to understand what is going into the document. If your estate plan is later going through a probate court, and the judge decides that you did not have the proper mental capacity when signing your will, your beneficiaries will have problems getting the assets you left behind. On today’s blog, we review some basic components of capacity; if you have questions about whether a loved one is in the right mindset to draft an estate plan, speak with a Houston estate planning attorney that can help you apply these requirements to your circumstances.

Basic Capacity Requirements

In Texas, to create a will, there are three important requirements to consider. Importantly, you must meet only one of these three requirements: 1) you are at least 18 years old, 2) you are or have been legally married, or 3) you are a member of the U.S. military.

As long as you meet one of the three requirements, you will be able to create a will if you also have the capacity to understand the legal document. For individuals without this mental capacity, called “testamentary capacity” in legal terms, it might be necessary to retain a power of attorney or a legal guardian to help get the will drafted and finalized.

How to Effectively–and Legally–Bypass Probate in Texas

Published on: April 30, 2024 | By David W. Miller

In Texas, there are several basic strategies you can implement to bypass probate. If you have been part of probate proceedings following a loved one’s death, you know that probate can be difficult to navigate and frustrating to deal with when you have other things on your mind. The process can also take time and resources that unnecessarily delay the process of passing assets from the descendent to his or her beneficiaries. Today, we cover some probate avoidance strategies that you can implement to bypass probate with your own assets.

Create a Revocable Living Trust

One basic tool we often recommend to our clients is the revocable living trust. This tool allows you to put assets in a trust, essentially sealing the money from outside influences such as creditors, debtors, and probate. While creating a revocable living trust, the grantor often names him or herself as the trustee, therefore allowing him or herself to maintain control of the assets.

Once the grantor dies, however, control passes to a second trustee, often named in the estate planning documents. The next trustee then distributes assets however the grantor asked for them to be distributed.

Planning for Senior Benefits in Texas: The Basics

Published on: April 23, 2024 | By Thomas W. McCulloch

health savings accounts in estate planning

Aging is inevitable and, unfortunately, aging is also expensive. For many people, getting older means acquiring more medical needs and different life circumstances. Many of our clients, for example, transition to long-term care facilities or nursing homes once they get older. Planning financially for whatever might come your way can be tough, and as experienced elder law attorneys, we cannot underestimate the importance of making sure you are prepared for your elder years.

Medicaid

The state of Texas offers Medicaid for people who are elderly or have disabilities. The insurance covers long-term care services as well as basic health coverage. Individuals who are 65 and have limited financial resources qualify for Medicaid; meanwhile, those who are under 65 and think they might qualify can start gathering their necessary documents to submit when they do turn 65. More details about how to apply for Medicaid can be found here.

Long-Term Care Planning

Importantly, Medicaid covers long-term care, such as the cost of a nursing home, while Medicare does not. For those who do not qualify financially for Medicaid, Medicare will likely be the health insurance available at the age of 65. Given that Medicare does not cover the cost of long-term care, older individuals without Medicaid are left to pay for nursing homes out of pocket.

Estate Planning and Tax Season: What You Need to Know

Published on: April 23, 2024 | By David W. Miller

As we move past tax season, it is an apt time to think about the crossover between estate planning and tax filing. For many individuals, filing taxes can bring up important questions about updating an estate plan. On today’s blog, we review some of the advantages of using tax season as a springboard for revising your estate planning documents. As always, with fact-specific questions, we recommend you contact a Houston estate planning attorney to talk through your personalized goals and priorities.

There are a few reasons that tax season is one of the best times to review your estate plan. First of all, filing taxes gives you a full picture of your assets, debts, and income. The momentum you gain by gathering the necessary documents and imputing financial information allows you to consider whether your estate plan might be outdated.

Secondly, a change in your financial status means that your estate planning documents should also change. If you’ve acquired a new home, for example, you’ll want to add a provision to your will about who you’ve chosen as the beneficiary. If you’ve come into an inheritance, you’ll have to write out a plan for how that money will be distributed to your loved ones. Adding this information into your tax submissions can trigger a reminder to add the information to your estate plan.