Articles Posted in Estate Planning

People love their pets. And in many households, pets are a beloved part of the family. Because of this—and since pets cannot take care of themselves—many Texans worry about who will care for their pets when they pass away. So while they may not be the first thought when putting together an estate plan, incorporating pets into the process is extremely important. Below are various questions that pet owners have about including their pets in their estate plan along with solutions to these problems.

Who Will Care for My Pet?

The first step in including a pet in their estate plan is to list in their will who would have physical custody of the pets. Sometimes, it may be a simple answer to who would take care of a pet if its owner passes away. However, this is not always the case. Even if the answer seems apparent, it is important to include this in an estate plan.

There are many things to consider when deciding who will take care of pets. First, is the individual willing to provide lifetime care to the pet? This often can be a major commitment, and it is essential to discuss this with the person before naming them as the pet’s caretaker in the will. Secondly, are the pets comfortable around the individual? Considering that a change in owners can be emotionally challenging for the pets, it is important to choose an individual the animals enjoy being around.

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When going through a divorce, there are many complex emotions. And of all the tasks a person must accomplish during this process, updating their estate plan is often not the first thing on the list. However, it is critically important for recently divorced people to speak with an estate planning attorney and determine the appropriate changes that should be made. Below are explanations about how divorce can affect an estate plan and what people should do and change when going through this situation.

Changing the Will

In most situations, recently divorced individuals will have to change their will because their now ex-spouse was a primary beneficiary—meaning, they were set to receive most of the assets and property owned by the individual when they pass away. While most people assume they should only change the portions of the will that mention the ex-spouse, most estate planning attorneys recommend revoking the will and drafting a new one instead. Otherwise, making a series of slight revisions to the current document will often be more expensive and time-consuming than just creating a new will altogether.

When Texans think about passing on their assets to others, many wish to keep assets in their family through their i. While they may assume this will automatically occur—and there is no need to create a will or estate plan—this is not necessarily the case. Instead, there are specific actions that individuals should take to ensure their money and property are handed down to the people they actually want to receive it. Otherwise, a probate court judge will have the final decision in who is given the deceased’s assets. Below are some tips and options for Texans who wish to better control where their assets go and ensure they are utilized responsibly.

Drafting a Will

When most people first think about estate planning, they envision drafting a will. And this is one of the most essential and basic estate planning methods, as drafting a will allows individuals to dictate how their assets will be divided after they pass away. However, in Texas, if someone does not have a will in place when they die, their estate will be divided in probate court. There, a judge will decide how the assets are split up—generally, the individual’s closest kin will receive a majority of the assets regardless of the deceased’s feelings toward them. Because of this, it is important to draft a will so Texans can leave their money to their family—or others—according to their actual wishes.

Creating a Trust

Other individuals may hope to keep their assets in their family but worry about how the beneficiaries will utilize the funds. For people like this, it may be wise to create a trust. In setting up a trust, the individual appoints a trustee, who administers the funds according to the purposes specified in the document. Not only does this allow the individual creating the trust to develop terms, but the trustee will also then make sure heirs follow the stipulations if they want to receive the funds.

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When people begin drafting their estate plan, they often debate who to give their personal assets to after they pass away. Often, these assets include real estate, monetary funds and sentimental items. For those individuals who worry about gift and estate taxes and want to pass their assets onto their children, they should consider creating a limited liability company—called an LLC. While LLCs are often used for small businesses, they have tax and other financial advantages. Below are so common questions and explanations about including an LLC in an estate plan.

What Is an LLC?

A Limited Liability Company, or an LLC, is a popular type of business structure that protects owners from most legal liability, like a corporation. This means LLC owners are typically not liable for debts incurred by the LLC business—meaning personal assets like personal bank accounts cannot be collected. However, LLC owners do report income and losses from the company on their personal tax returns.

How Can I Include an LLC in my Estate Plan?

For individuals with large estates who are worried about taxes but want to pass their assets onto their children, attorneys will often advise them to create an LLC. To include an LLC in an estate plan, parents and children create the LLC together and transfer assets into it. These assets often include monetary funds and real property. The parents are then made managing members of the LLC; this allows them to have control over the assets. Then, the parents will transfer assets in the LLC to their children—often named non-managing members of the entity.

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As the new year quickly approaches, many Texans have end-of-year goals they would like to accomplish before 2022. Be it buying presents for the holidays, reconnecting with friends and family, or cleaning out the house, the end of the year is often the busiest time. However, many people forget that this is the perfect time to ensure estate planning matters are handled. While this may seem overwhelming, there are many small tasks that can be accomplished to make the estate planning process easier and ensure Texans are up to date with their retirement, elder care, and other planning needs.

Review Power of Attorney Documents

When crafting an estate plan, most individuals create both health care proxy and financial power of attorney documents. The person listed on the health care proxy is able to make medical decisions on the other person’s behalf if they are incapacitated. On the other hand, the financial power of attorney is able to make financial choices for the person if the individual can no longer make them themselves. It is important to review these documents yearly or after a major life change has been made. For example, if someone moves across the country, it may be smarter to change the proxy and power of attorney to someone who lives nearby, so they can be close in case of emergency to make these life-altering decisions.

Revisit Your Will and Beneficiary Designations

When people draft their wills—often with the help of an estate planning attorney—it tends to be a well-thought-out endeavor. Despite this, it is critical to review the estate plan and the people listed as the individual’s beneficiaries. Beneficiaries are the individuals named in the will who will receive the individual’s assets.

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During the estate planning process, Texans will try and resolve as many issues as possible. However, sometimes these problems fall through the cracks. While most individuals try to ensure they have no debts when they die—at least to the best of their ability—sometimes this is unavoidable. When this occurs, people may have questions about whether the debt is still owed and who pays the debt. Because this can be a very stressful situation, below are answers to some of the most common questions and how to handle each situation.

Does Your Debt Disappear After You Die in Texas?

Unfortunately, if a person passes away with debt, this debt is not automatically erased. Generally, your estate—through the person you name as executor of the estate—is required to pay off your debt. The process itself is called probate. Probate is accomplished through using the assets listed in the estate plan, such as cars, homes, bank accounts, and other assets, to settle the debt. In doing so, a judge will determine the estate’s total value, pay down the debt, and distribute the remaining estate assets to the heirs. The heirs will not be paid until the debt is handled.

At last, the IRS has announced changes to the unified credit and annual gift tax exemption for 2022.

To understand what these changes mean for Houston residents, it is important to first understand how these tax exclusions operate. The lifetime estate and gift tax exemption—also known as the unified tax credit—allows people to make tax-free transfers up to a certain amount during their life and upon their death. The exclusion is said to be “unified” because certain gifts transferred during a person’s life will count against the total amount of transfers that can be made tax-free upon their death.

Outside the unified credit, however, is the annual gift tax exemption. This exemption gives people a free pass to make untaxed gifts up to a certain amount each year without counting it toward the unified credit limit.

Whether you are a firefighter, emergency medical technician, paramedic, or police officer, as a first responder, you put your life on the line during every shift to help those in your community. With this extraordinary risk and sacrifice comes an urgent need to protect you and your family’s financial future. With careful estate planning, you can rest assured that your assets will be managed appropriately should you be injured on the job, or if your work results in the ultimate sacrifice.

Estate Planning for First Responders

An estate plan can offer substantial peace of mind for first responders. If a first responder were to die without an estate plan, then under Texas law, the courts would be forced to distribute that person’s assets according to formulaic legal guidelines. These guidelines do not account for factors such as personal preferences or complicated family matters. The results can be devastating, such as a long-estranged spouse inheriting a significant portion of the first responder’s estate.

With Thanksgiving and other holidays fast approaching, it is the time that families come together to celebrate and reflect on what they are grateful for. And while gathered around the Thanksgiving dinner table, family members catch up, discuss hot-button topics, and sometimes have difficult conversations. Especially when aging loved ones attend these holiday functions, it is an important time to talk with them about the future, including their wants and needs as they relate to estate planning. Although these may be tough conversations to initiate, it is essential to plan ahead and avoid uncertainty and stress in the future. Below are some of the conversations people should consider having with their aging loved ones this holiday season.

1. Money and Living Situation

As people get older, it becomes harder to live alone and complete everyday tasks without the assistance of others. Because of this, individuals may want to talk with elderly loved ones about their long-term living situation preferences. Some people prefer moving to a long-term care facility, while others may prefer to stay with family—and either have a loved one take care of them or hire a home health aide to come into the house.

A federal bill working its way through Congress will have dramatic implications for Texans and their estate plans. Once the bill becomes law, some of the estate planning techniques that have assisted Americans with sizeable estates will no longer be available. Fortunately, there is still time for Houston residents to take advantage of several favorable laws still in place.

Changes to the Gift and Estate Tax

Perhaps the most notable change to the law will be a sweeping reduction in the unified credit amount. The unified credit amount for a married couple is currently $12 million. This means that married estate holders can make a combined total of $12 million tax-free transfers in the form of lifetime gifts and transfers upon death.

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