Estate Planning

Complex Family Dynamics and their Impact on Texas Estate Plans

Published on: October 7, 2021 | By McCulloch & Miller, PLLC

Regardless of the makeup of a family, family dynamics can often be complicated. But fighting about food and what to watch on TV are simple problems compared to disputes about a loved one’s estate. These lawsuits can cost millions of dollars and tear families apart. Instead, there are steps that estate planning attorneys recommend taking in order to avoid these issues—especially during the emotionally charged times after a person has passed away. When it comes to estate planning—like with many other family disputes—communicating can go a long way toward minimizing future problems and estate lawsuits.

Communicating Estate Plan Intentions

Having ongoing conversations with loved ones about estate planning intentions is crucial. While discussing what assets a person intends to leave to others with those people may feel awkward, there can be major consequences otherwise. Lack of communication can lead to family rivalries—and even lawsuits—if a loved one feels they were unjustly excluded from the estate.

Preparing for Death-Related Expenses in Texas Estate Plans

Published on: October 1, 2021 | By McCulloch & Miller, PLLC

Many Houstonians have taken the laudable first step of creating an estate plan, so their assets can be passed off after their death. However, people will often forget to include provisions to handle the expenses that occur at the end of a person’s life. If these costs are not incorporated into a person’s estate plan—by putting money away for them—it can leave family members in a difficult financial situation. Below are some common end-of-life expenses—either that many forget to save for or forget to exist entirely—along with how to make sure on how to save this money.

Funeral Costs

It is important to incorporate funeral expenses into a person’s estate plan. When people either do not have the funds saved for a funeral—either in a savings account or as part of a trust that can be utilized after a person has passed away—they are often shocked by the high cost. According to the National Funeral Directors Association, the average funeral in 2019 cost $7,640. By putting this money away when drafting the estate plan, the family will not have to worry last minute about coming up with these funds during an emotionally difficult time.

How Houston Estate Planning Impacts Blended Families

Published on: September 29, 2021 | By McCulloch & Miller, PLLC

No will is the same; however, some wills are more complicated than others because of family dynamics and related situations. One family dynamic that makes a will slightly more complex is when a blended family is involved. A blended family—made up of families that come together over time with new relationships—often requires navigating more family dynamics to discern who an individual will leave their assets to. This may involve updating the will as relationships change. Below are some of the most common challenges faced by blended families during the estate planning process—along with how to avoid these issues.

How to Divide the Assets in an Estate Plan

For many blended families, it can be difficult for the person drafting the will—called the testator—to decide who to leave their assets to. They will likely want to provide for their family, and this family may include stepchildren, children from a previous marriage, and other close relatives. Therefore, it might be challenging to decide how much to give to each—especially if some loved ones are either not legally connected to the testator or if family members do not get along.

How to Reduce Federal and Texas Estate Taxes

Published on: September 24, 2021 | By McCulloch & Miller, PLLC

While drafting their estate plan, many individuals do not consider the taxes that will be taken from their assets after their passing. Because every state has different tax rates—and there are both estate tax and inheritance taxes to worry about—it can be confusing for Texans to determine what taxes apply to them. Beyond this, once people discover the estate and inheritance taxes their beneficiaries will be forced to pay, they often ask about strategies to limit their tax implications. Below are common questions and explanations about not only estate and inheritance taxes, but also options to reduce a person’s overall tax liability.

What Estate Planning Taxes Should I Be Worried About?

When drafting an estate plan, individuals should be aware of both estate and inheritance taxes. An estate tax is based on the value of the deceased’s estate. Additionally, the tax is paid from the assets of the deceased’s estate. On the other hand, inheritance taxes are paid by the beneficiaries of the estate based on the amount of assets they receive.

How Estate Planning Can Reduce Family Dysfunction

Published on: September 22, 2021 | By McCulloch & Miller, PLLC

There is a common phrase that says, “the days are long but the years are short.” While this phrase was not created with estate planning in mind, the sentiment runs true: people talk about drafting an estate plan but rarely do so over time. However, it is never too early to start a Houston estate plan, especially with the unexpected occurrences that happen in life. And without an estate plan—or by making common estate planning mistakes—families can become dysfunctional and loved ones may show hostility to one another. Below are two common estate planning mistakes that must be avoided to avoid family infighting after a person’s death.

Not Having a Will in Place

Not having a will in place at the time of a person’s death is the worst estate planning mistake that can be made. Families will face dramatic consequences and uncertainty if a loved one dies without a will. A will is the place to express a person’s wishes for how their assets will be handled after their death—without this document, it is called dying “intestate.” This means Texas law—as interpreted by a probate court judge—will determine who receives the person’s assets, regardless of their personal relationship. This may lead to family fighting where one person, who may be genetically but not personally close to the deceased, receives an inheritance and others do not. All of these issues could be resolved by drafting a will.

Not Appointing an Executor of the Estate Plan

While a will specifies a person’s wishes, an executor of the estate plan is necessary to enact these wishes. An executor handles most of the administrative tasks required in an estate plan: they distribute the estate’s assets to the specified beneficiaries, pay any debts the deceased may have, and file the final tax returns. However, if a will does not list an executor, it will lead to a much more complicated and emotionally fraught process. Beneficiaries will not receive their assets in a timely manner and loved ones will have to go to court to see who a judge names the executor. While a spouse or other close loved one is generally named the executor in these situations, this entire process can be avoided if an executor is named in the estate plan.

Texas Estate Planning to Protect Family Wealth Through the Generations

Published on: September 17, 2021 | By McCulloch & Miller, PLLC

Most people understand that it is important to have an estate plan in place from a young age. In fact, most financial planners recommend that every newly minted adult creates a basic estate plan. At the very least, it is crucial to have an estate plan in place once you start a family of your own.

But did you know that you should also be updating your Houston estate plan periodically?

The reason to review and modify your estate plan regularly is simple: Families and life circumstances do not stay static, so neither should your estate plan. Given this fact of life, the general rule of thumb is to update your estate plan every three to five years. Another method to determine the right time for an update is to review your plan at times of major life changes, such as the birth of a child or grandchild, or a divorce.

The Implications of Failing to Update a Texas Estate Plan

Published on: September 14, 2021 | By McCulloch & Miller, PLLC

Individuals often ask Houston estate planning attorneys about some of the worst mistakes that can occur during—or after—the estate planning process. One of these fatal errors is when estate plans are not updated as the person’s situation in life changes. An estate plan—detailing who the person would like to receive their assets after their death—is based on the individual’s relationships at the time the estate plan is drafted. However, throughout the years, relationships and situations change that might precipitate the need to change the plan. Because it can be confusing to know if an estate plan needs updating, below are common questions and answers about this topic.

What Are Some Common Life Changes that May Alter an Estate Plan?

Common examples of life changes that may impact an estate plan include divorce or change in relationship status, the birth of a child, or the death of a loved one. In the case of divorce, there is often a need to change estate plan documents after the divorce is finalized. In many cases, spouses are named as beneficiaries in wills, life insurance, and retirement plans. However, if the beneficiary listed is not changed by an attorney, the ex-spouse will likely receive the listed policy or asset if the person dies.

What to Know About Cryptocurrency, Taxes, and Estate Planning in Houston

Published on: September 9, 2021 | By McCulloch & Miller, PLLC

Information in this article is current as of the date of publication. The policies, regulations, and laws within are subject to change with the IRS, state, or federal legislature.

There’s no denying it: It appears that cryptocurrency is here to stay.

Once confined to hidden corners of the internet, cryptocurrency transactions are now accessible to almost anyone through popular payment platforms like PayPal. Even top financial advisors are now counseling investors who can afford some additional risk in their portfolios to invest in crypto. Indeed, earlier this month, El Salvador became the first nation to recognize Bitcoin as legal tender.

How to Prevent Texas Estate Disputes

Published on: September 7, 2021 | By McCulloch & Miller, PLLC

The time after the loss of a loved one is emotional and stressful. Families are grieving the loss while also dealing with funeral arrangements and estate plans. While careful trust and estate planning can mitigate many common disputes that occur, there are still some pitfalls that cause families to fight over the deceased’s will. Below are some situations that sometimes lead to conflict with estate plans—along with ways to resolve the situations themselves.

Disagreements Among Siblings

While estate plans often provide clear and concise instructions for loved ones, this is not always the case. Parents with multiple children will sometimes include provisions in their will requiring the siblings to make decisions together—rather than detailing the wishes themselves. Although in some respects this may seem like a good idea—having children come together after the loss of a parent—these provisions often lead to discontent and more arguments. Children will fight about the aspects of the will: either about what assets they would like to receive or disagree what they are each entitled to.

How Can Disability Pre-Planning Help Houston Residents?

Published on: September 2, 2021 | By McCulloch & Miller, PLLC

We want to believe that, should we ever become incapacitated, the people we trust to protect us will behave honorably. A recent California court decision shows that, unfortunately, this is not always the case.

Houston residents young and old should heed the court’s warning in this case, which it described as a “textbook” example of a fiduciary relationship gone wrong. The case concerned an elderly woman and her son. The son was his mother’s durable power of attorney. In this role, he had broad rights to manage his mother’s property once she became incapacitated in her advanced age. The mother had a separate conservator of her person and estate.

In Texas, the role of a conservator (or guardian) of a person’s estate is comprehensive. Such a conservator has authority over their ward’s physical care, including the ability to make decisions about their education, residence, medical treatment, and even their daily activities. They also control their ward’s financial decisions, including both long-term and day-to-day management of money, personal property, and real estate. Clearly, conservatorships and guardianships can be ripe for fraud and abuse.