Estate Planning

Health Savings Accounts in Texas Estate Plans

Published on: February 9, 2022 | By McCulloch & Miller, PLLC

Many individuals think about various accounts listed in their estate plan—financial bank accounts, insurance policies, and others. However, health savings accounts function differently than most other accounts but can be critical. They benefit both the creator of the estate plan and their beneficiaries—the individuals who will receive the assets and property after the creator of the estate plan has passed away. Below are common questions and solutions to estate planning problems involving health savings accounts. While Texans will have various uses for their health savings account, this information can assist individuals in their estate planning decisions.

What is a Health Savings Account?

A health savings account is an account that allows an individual to set aside money to pay for health expenses in the future. These funds are placed on a pre-tax basis, meaning they can be used to pay for deductibles, copayments, or other medical necessities.

How to Assist Loved Ones with Cognitive Decline in Texas Estate Plans

Published on: February 8, 2022 | By McCulloch & Miller, PLLC

estate planning with a cognitive decline

When a loved one begins to show signs of cognitive decline, it can become difficult to emotionally reconcile who they once were with who they are becoming. They also will need more assistance with many daily activities—this may include their ability to handle their finances. While it may seem like an uncomfortable or awkward subject to approach, loved ones of the individual in cognitive decline should help develop a financial plan as soon as possible. Below are tips that individuals should take into consideration when planning for the future with loved ones with cognitive decline.

Start the Process as Early as Possible

It is critical to begin financial planning with a person whose mental faculties are declining as soon as possible. This increases the likelihood that the person in cognitive decline can still explain their wishes and wants about their future with their family. By having these discussions, family members assisting with the process will be confident later on they are making decisions that the person would have wanted. The loved one can then express their preference about these financial decisions, including who they want to manage their finances, how to use their money to pay for their future expenses and the bounds of these expenses. A great first step is executing a durable (financial) power of attorney.

How to Modernize a Texas Estate Plan

Published on: February 1, 2022 | By McCulloch & Miller, PLLC

As time goes on, society, life, and expectations change. One of these major alterations over the past twenty years has been the emergence and accomplishments of technology. While estate planning may not be the most noticeable area in which technology is relevant, technology has dramatically impacted this area and made estate planning accessible for more Texans than ever before. However, problems may also arise if people rely too much on this technology. Below is information on the current role of technology in estate planning and emerging technology in the industry.

The Current Role of Estate Planning and Technology

Estate planning can often be complicated and complex. Individuals have very specific needs and family dynamics that need to be represented in an estate plan in order for it to be effective. Technology—especially the internet—has been useful thus far to individuals wishing to create an estate plan; however, this information is often misapplied with devastating consequences.

How to Determine if a Particular Asset is Included in a Texas Estate Plan

Published on: January 31, 2022 | By McCulloch & Miller, PLLC

While Texans often have an overview of the estate planning process, most are unclear of the specifics that constitute an estate plan. Many people will then ask whether a certain asset is included in their estate. However, the answer to this question is highly dependent on the asset itself and how the person is defining “their estate”—as estate can have various meanings. Because this designation may be confusing, estate planning attorneys are here to answer these questions and help Texans in crafting their estate plans.

What Assets are in My “Estate?”

When a person passes away, their estate has different meanings depending on the context. It may refer to their estate for estate tax purposes, their probate estate, or whether an asset is able to be passed onto their heirs. Many people are unaware they must pay a tax if their estate is valued over a certain amount. Individuals whose estate is worth more than $12.06 million must pay a federal estate tax. There is no state estate tax in Texas.

How Texas Estate Planning Can Contribute to Family Stability

Published on: January 26, 2022 | By McCulloch & Miller, PLLC

When parents have a home that they would like to one day pass to their children, they may worry about the logistics of this process. It is safe to say that creating an estate plan is the best way to ensure children will one way receive the assets and property that the parents wish to give them. However, within estate planning, there are multiple ways to do this—whether including it in a will for the children to receive upon the individual’s passing or gifting the funds from selling the property. Below are various options on how to pass property onto children—along with the various legal and tax implications of each choice.

Giving a House to Heirs in a Will

The most common way that individuals will leave property to family, especially children, is to bequeath the assets in a will. In doing this, the parents would write in the will that the children are to be given the house after the death of the last parent. One benefit of including property, like a house, in the will is that children will be given the property on a stepped-up basis. This means the property’s value is adjusted to its fair market value and reduces the capital gains tax owed by the beneficiary. However, the beneficiary may still be liable for estate taxes, unlike if the property is gifted in a trust.

Gifting the Property to Children in a Trust

Some parents would rather be able to give their children more money, rather than property after they pass away. The best way to do this is to create a revocable trust rather than leaving the property to the children in the will. In this case, after the parents die, the property is sold, and the funds from the sale are given to the children. For example, the parents would create a revocable trust and name a trustee. Once the parents passed away, the trustee would then sell the property and then the funds from the sale would be given to the listed beneficiaries.

2022 Tax Updates to Keep in Mind for Texas Estate Plans

Published on: January 11, 2022 | By McCulloch & Miller, PLLC

A new year often brings new changes. Along with New Year’s resolutions that individuals make to become healthier, improve their lifestyle, and be kinder, others may resolve to create or update their estate plan. Because of this, it is important to know the federal and Texas estate planning laws that impact estate plans. Some of these laws have provisions that changed at the beginning of 2022, so even individuals with estate plans in place may want to alter them so they can benefit from these changes. Below are some of the key tax concepts and changes that Texans should pay attention to in crafting their estate plan.

Increases to the Annual Gift and Lifetime Estate Tax Exclusion Amount

In a very notable change, the federal estate tax exemption amount has increased. If an estate is valued over the exemption limit, then the estate will be taxed before assets are distributed to beneficiaries. In 2021, if an estate was worth less than $11.7 million—or $23.4 million for a married couple—then the estate would not be taxed. However, in 2022, the exemption limit has increased to $12.06 million—or $24.12 million for a married couple.

Can I Include My Family Heirlooms in My Texas Estate Plan?

Published on: January 10, 2022 | By McCulloch & Miller, PLLC

Many Texans have family valuables or heirlooms that are passed down through generations. Whether it’s an antique ring or a grandmother’s china, some people do not think about including these items in their estate plan. However, putting these valuables in an estate plan can reduce family disagreements and simplify potential future issues. Below are some tips and advice from estate planning attorneys on how to handle family heirlooms and why it is better to include these objects in an estate plan.

What Are the Benefits of Including Family Heirlooms in an Estate Plan?

One benefit of listing heirlooms in a will is so the valuables are given to the person the deceased actually intended to receive it. While the individual may tell someone that they want them to have the heirloom after they pass away, there is no guarantee they will receive it unless it is included in the will. This could lead to family fighting where multiple people claim they are the rightful recipient of the heirloom. Only by including the valuables in the estate plan will the estate executor be able to make sure the objects go to who the deceased actually intended.

Common Mistakes Made in Texas Estate Plans

Published on: January 3, 2022 | By McCulloch & Miller, PLLC

Putting together an estate plan is often a long but well-thought-out process. However, last-minute mistakes can lead to future complications. These last-minute mistakes may be changing a designation in the plan at the last second, taking advice from someone and not consulting with their attorney, or not paying attention to changes to applicable laws. Individuals assume their estate plan is setting them up for the future, but if mistakes are made, then the estate plan may not work as intended. Below are two of the most common estate planning mistakes seen by attorneys, along with steps on how to avoid them.

Not Leaving Enough Assets to Fund a Trust

Many people create a trust as part of their estate plan. A trust allows a third party, a trustee, to distribute funds to a named beneficiary. The creator of the trust will provide specific instructions on how funds—or gifts—are to be disbursed to the beneficiary. But when creating a trust, certain individuals forget to make sure there are enough assets in the trust to pay for what has been intended to be given. Estate planning attorneys recommend putting additional funds in the trust in case assets decrease in value over time. Then, the beneficiaries will still be able to receive the amount intended.

How the COVID-19 Pandemic Has Texans Reevaluating Their Estate Plans

Published on: December 30, 2021 | By McCulloch & Miller, PLLC

The COVID-19 pandemic has impacted every aspect of life. From health concerns to mental well-being, people approach everyday life—and their future—differently than they did prior to March of 2020. Because of these changes, people are considering their goals and how to secure the financial security of loved ones in case they were to get sick. This can all be accomplished through estate planning. By creating health care and financial-related documents as part of an estate plan, Texans can ensure their affairs are in order before the need arises. Below are a few types of documents that all individuals should include in their estate plan, along with descriptions for why these directives are necessary.

Advance Health Care Directive and Medical Power of Attorney

An advance health care directive is a legal document that details the type of medical care an individual wants to receive if they are incapacitated and cannot make the choice for themselves. When crafting this document and deciding on the level of care a person would want, it is important to take into account one’s family medical history and potential treatments they would not want. The more detail an individual provides in their advance health care directive, the better.

How Do I Know if My Estate Plan Is Out of Date?

Published on: December 27, 2021 | By McCulloch & Miller, PLLC

Most Texans do not have an estate plan in place to dictate what should happen to their assets and finances after they pass away. And after they create an estate plan, they tend to not think about it often after that. While having the estate plan itself is commendable and important, estate plans can become out of date and less useful for the individual who created them. Because of this, it is important to know if an estate plan is out of date and have an experienced attorney review the document every few years.

Why Is It Important to Have an Estate Plan in Place?

It is a common misconception that estate planning is merely deciding who will receive a person’s assets after they pass away. While this is a critical part of estate planning, a person’s estate plan will often include other directives, including a fiduciary power of attorney and healthcare directive. These documents will provide someone else with the power to make medical and financial decisions on the other person’s behalf if they become incapacitated and cannot make these choices for themselves.