Estate Planning

End of Year Estate Planning Checklist for Texans

Published on: December 6, 2021 | By McCulloch & Miller, PLLC

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.

What Happens When Someone Dies with Unpaid Debts in Texas?

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

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.

Texas Estate Planning Around 2022 Tax Exemptions

Published on: November 23, 2021 | By McCulloch & Miller, PLLC

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.

Estate Planning for First Responders in Houston

Published on: November 18, 2021 | By McCulloch & Miller, PLLC

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.

Important Conversations to Have with Aging Parents During the Holidays

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

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.

Is It Time to Update Your Houston Estate Plan?

Published on: November 12, 2021 | By McCulloch & Miller, PLLC

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.

Moving to Texas? How to Revise Your Estate Plan

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

There are many stresses that come along with moving: saying goodbye to friends and family, figuring out the logistics of the move, and settling into a new environment. However, many people do not think about amending their will or estate plan when moving to a new state. While this may not seem critical, many estate planning laws vary, depending on the state of residence. Below are common questions and explanations that individuals have about estate planning when they are relocating to Texas.

Why Do I Need to Change My Estate Plan?

When moving to a new state, it is important to amend a will and other estate planning documents. However, many people—despite hearing this advice—are confused about why this is necessary. Although a person’s will is still generally valid after moving, there tend to be state-specific laws and regulations that may impact the estate plan.

Texas Estate Planning Issues to Remember Before 2022

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

2021 is nearly over, with a new year around the corner. While this is generally a time of celebrating holidays and preparing for the new year, there are some estate planning considerations that should be taken into account before 2021 is over. Although this may not seem like a top priority, there are timing considerations because of proposed legislation that may impact estate plans by 2022. Below are some common items that should be reviewed and discussed with an estate planning attorney by the new year.

Estate and Gift Tax Exemption

While Texas does not have a state estate and gift tax, there is a federal tax. The estate tax is a tax levied on a person’s estate plan and is based on the amount of assets a person is giving to others in their estate plan once they have passed. Currently, estates under $11.7 million are not taxed; however, this amount is set to roll back to a lower level soon. While the current plan is to lower the exemption amount to $5 million in 2026, there are discussions in Congress about speeding up this rollback to the beginning of 2022.

Laws can be quickly passed through Congress, so it is difficult to predict whether this effort to lower the estate tax exemption by 2022 will be successful or not. Because of this, individuals should speak with an estate planning attorney who will advise them on whether their estate is likely to be impacted by this federal tax change—and changes they can make to their estate plan if they are impacted.

What Are Essential Estate Planning Documents for Texans?

Published on: October 19, 2021 | By McCulloch & Miller, PLLC

There is a common misconception amongst lower- and middle-class families that estate planning is only for the wealthy. They assume if they do not have many assets—if any—to give to loved ones, there is no point in having a will in place. However, this is not the case. Everyone should draft an estate plan, regardless of their financial or family situation. There are multiple documents that should be included in an estate plan in order to remove a family’s stress in navigating life after a person’s death.

A Last Will and Testament

A last will and testament, or a will, is the most important estate planning document a person can have. A will explains how assets should be handled after a person passes away. The will should also state who should be given the assets—these individuals are called beneficiaries. If all assets are not being left to the same person, the document should clearly state who is receiving what assets and property. Additionally, the will should name an individual to administer the estate; this person is called the executor of the will. If the drafter of the will has any minor children, it is also important to name a guardian for their children. This limits the potential for disputes, where family is fighting over who is the legal guardian of the child.

4 Steps for Writing Your Will in Houston

Published on: October 15, 2021 | By McCulloch & Miller, PLLC

Whether you are young or old, married or unmarried, parenting or childfree, you need a will. A will is a basic courtesy to the loved ones left behind after someone’s passing. Even for people with minimal assets, a will is an appropriate Houston estate planning tool to ensure that any final wishes will be honored and to ease the burden on family and friends of making final arrangements.

Moreover, in Texas, when someone dies without a will, the state decides who gets the deceased individual’s assets, with zero regard to what may be obvious personal preferences. The operation of this law has led to countless unfortunate outcomes, such as estranged spouses getting the entirety of an estate that should have gone to the deceased spouse’s children.

For these reasons, it is important to write and then maintain an updated will from the time one enters adulthood. Fortunately, writing a will need not be a complicated nor burdensome process. For many people, a basic will drafted online or with a lawyer at an affordable rate will suffice.