Estate Planning

Should You Name a Guardian for Your Child in Texas?

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

For individuals with minor children, thinking about who would care for them if the parents died unexpectedly may be difficult but necessary. This designation can be made as part of a Houston estate plan, which appoints a person to serve as the legal guardian of a child—only in case of their parents’ untimely passing. Parents without a will should prioritize drafting one, as this documents the individual’s wishes and intents.

When deciding who to name as guardian—or whether to change the designation—there are several aspects to consider:

Factor #1: Location

Will the Senate Estate Tax Bill Impact My Estate Plan?

Published on: April 8, 2021 | By McCulloch & Miller, PLLC

With the recent election and inauguration of the 117th United States Congress, new bills are being introduced that impact all aspects of a person’s life. According to a recent news source, one such bill is Senator Bernie Sanders’ proposed estate and gift tax reform legislation. For individuals with an estate plan in place, the introduction of new legislation gives cause for concern that it may impact their estate plan. The bill will reduce the estate tax exemption to $3,500,000 and increase the estate tax rate from a flat rate to a progressive one. Because the nuances of such a law can be confusing, below are some common questions and answers about the new estate tax bill.

What Does the Bill Propose?

The bill seeks to reduce the estate tax exemption from $11,700,00 to $3,500,000. This means if an estate is valued at over $11,700,000 currently, the heirs of the estate will need to pay a tax. If the proposal is enacted, the heirs of an estate valued at over $3,500,00 will have to pay the tax. Additionally, if the bill passes, anyone who received more than $1,000,000 in gifts from a loved one as a part of their estate plan will have to pay a tax too. The proposed exemption limits are per person; therefore, for married couples, the total exemption limit would be $7,000,000. After 2022, the exemption will continue to rise with inflation.

What Is a Texas Transfer on Death Deed?

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

Texans who own their home often have thoughts about what they would like to happen to the property after their passing. While there are multiple ways to transfer property after a person has died, one of the easiest is called a Transfer on Death Deed (TODD). A Transfer on Death Deed names the individual—or individuals—who will receive the house after the owner’s death. Although Houston Transfer on Death Deeds are not exceedingly complicated, below are common questions and answers about this particular deed process.

What Is a Transfer on Death Deed?

A Transfer on Death Deed allows an individual to create a document that leaves real estate property to a loved one after they have passed away. The property will automatically go to the heir named in the document without the need for probate court proceedings. The TODD process is extremely simple: the owner must sign the deed, get the signature notarized, and file the deed with the county clerk’s office before their death. Within the deed, the following information should be included: the name of the owner of the property, the person, or people, receiving the property, and a statement that the property will be transferred upon the owner’s death. As many people can be named as heirs as the owner wishes.

What Is a Texas Physician Order for Life-Sustaining Treatment?

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

Thinking about end-of-life treatment is often stressful and overwhelming. However, planning ahead can often be the difference between having a medical professional follow your wishes and risking the alternative. A way to keep control over medical care is by filling out a Physician Order for Life-Sustaining Treatment (POLST) form. A POLST form provides important medical decisions for emergency medical personnel to follow. The order can be applied at any place of treatment and includes decisions like whether or not to administer cardiopulmonary resuscitation (CPR). Below are common explanations about POLST forms and their necessity for those engaging in the Houston estate planning process.

What is a POLST Form?

A POLST form is a physician order set that travels with a patient from one place of treatment to another. The form discusses the patient’s preferred method of treatment, specifically regarding CPR status, intensity, and use of additional methods like antibiotics. The individual fills out the form and it is signed by a physician. When the patient is transferred to another location—or is discharged—the form literally goes with them.

What to Do When a Loved One Has More Than One Will in Texas

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

While Houston estate planning may seem complicated, completing this process pays off in the long run. For individuals who start multiple wills throughout their lifetime—or have started a few drafts of wills but never completed one—a probate court battle will likely ensue after their passing. Family members may argue over which will is valid, especially if the details of the will benefit them more than another version of the will. This, unfortunately, can lead to bitterness and feuding family dynamics that are hard to overcome. Because of this, individuals should draft a comprehensive estate plan—and contact a Houston experienced estate planning attorney if they wish to make changes at a later time.

In the estate battle of legendary singer Aretha Franklin, her sons are disputing how her estate should be run—and which handwritten document is actually her will. According to a recent report, at the time of the singer’s death, her family assumed that she did not have a will. However, over the past two years, a few handwritten documents have emerged—which may represent two or three different wills—along with a few documents entitled “The Will of Aretha Franklin” that are stamped “draft” and do not include the singer’s signature. While a court has not yet decided which of these documents—if any—constitutes Franklin’s will, this will likely be a lengthy and expensive court battle.

Validity of Multiple or Holographic Wills

The Dangers of Handwritten Wills and the Importance of Diligent Preparation in Texas Estate Plan

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

Because people craft Houston estate plans during different parts of their life, their situation may change, prompting them to change a portion of the will. Whether this is due to a divorce or the birth of a child, Texans often make changes to their estate plan. However, when this is done in hasty or improper ways, like writing a new will on a napkin, courts will often not recognize these improper revisions. Because of this—and to reduce expensive court battles—individuals need to diligently prepare and take the proper steps to change their estate plan.

After the passing of renowned journalist Larry King, the battle over his estate shows the necessity of modifying an estate plan correctly and not creating a handwritten will to replace it last-minute. According to a recent news report, because King and his wife were living apart—and a divorce pending—one of his children sought to become a special administrator of his father’s estate, although King’s will named his wife as the executor. Additionally, the son points to a handwritten will dated two months after King filed for divorce in 2019, which states he wanted all of his assets to be divided equally amongst his five children, and this should replace all previous writings. However, this will be a lengthy legal battle, as California, where King resided, has very specific requirements for a handwritten will to be deemed valid.

What Makes a Handwritten Will Valid?

The Benefits of Having a Professional Trustee for a Texas Estate Plan

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

One major component of the Houston estate planning process is picking a trustee to manage the estate after they have passed away. While it may seem like a simple solution to name a family member, it is not always in the best interest of the person—or their loved ones—to do so. Professional trustees have inherent benefits because their experience ensures the estate plan is properly handled. However, because people do not know what a professional trustee is—and what they actually do—below are answers to common questions about professional trustees and if they are right for a person’s specific estate plan.

What Tasks Must a Trustee Perform?

While it is easy to say that trustees are responsible for managing an estate plan after a person passes away, this does not actually explain a trustee’s responsibilities. A trustee’s responsibilities include safeguarding and distributing assets, filing and paying taxes, resolving beneficiary disputes, and paying any estate expenses. These tasks can often be extremely overwhelming and complicated, especially if a person has never served as a trustee before. Instead, a professional trustee can take care of all of the administrative and technical work, allowing the family members to grieve and not add additional stress to their plate.

Why Joint Tenancy Is Not a Substitution for Creating a Houston Estate Plan

Published on: March 8, 2021 | By McCulloch & Miller, PLLC

Because estate planning is often perceived as a complicated process, Texans assume there are other options that are an acceptable substitute for an estate plan. One such example of this is joint tenancy. Joint tenancy is a legal arrangement in which two or more people own a property together with equal rights. However, joint tenancy on its own has major drawbacks that are often unexpected. Below are answers to common questions about the necessity of a Houston estate plan, and why a joint tenancy is not sufficient.

How Does Joint Tenancy Work?

Joint tenancy is property ownership between two or more parties. The parties come together to make a legally binding agreement through a deed, and the deed then will name the two owners as the joint tenants. While joint tenancy is most often utilized by couples—both married and unmarried—it can also be used by relatives, friends, or even just business associates. Because both parties have a claim to the property, they also share the benefits and downsides—be it mortgage payments, property taxes, or profits after sale. Besides a deed, joint tenancy can also apply to personal and business banking accounts, business assets like real estate, investment properties, and vehicles.

Leaving Stock Through a Texas Estate Plan

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

When people are listing the property and items they will give to loved ones during the Houston estate planning process, stocks and other securities often do not come to mind. A stock is a fractional share representing ownership of a small portion of a corporation. Stocks can be gifted as part of an estate plan and benefit the inheritor if they appreciate in value. Although stocks may seem complicated overall—and the process of gifting them even more so—estate planning attorneys can help to simplify the process. Below are common questions that individuals have about gifting stock and its inherent benefits.

How Do I Leave Someone Shares of Stock After My Death?

For individuals who want to leave loved ones their stock after their passing, they will incorporate this gift into their estate plan. Beyond including this as a part of a person’s will, there is another document that Texans should include in their estate plan. It is called a Transfer on Death Document. This document allows assets—like stocks—to be given to beneficiaries after the person’s death without having to go to court. A person creating a Transfer on Death designation names the beneficiary—the person receiving the stock—as well as which stock the beneficiary will receive and how many shares they will get, if the person is bequeathing the stock to more than one person.

How to Use Life Insurance as a Part of a Houston Estate Plan

Published on: February 26, 2021 | By McCulloch & Miller, PLLC

People know the inherent benefits of having life insurance. They also know the need to have an estate plan in place. However, not many individuals know that life insurance can be utilized within an estate plan to benefit a person’s loved ones after their passing. For families in Houston, this can maximize their wealth to take care of the people they love most—even after their death. For many, the preferred method to use a life insurance policy in an estate plan is to establish an irrevocable trust, which can allow the benefit to be transferred to loved ones after the person’s death without tax implications. By creating a life insurance trust, individuals transfer ownership of the life insurance policy to the trust.

Building an irrevocable trust may seem like a complicated process, but with the help of an estate planning attorney, the trust can be created with ease. The first step is to establish the trust, where the life insurance policyholder names another party to serve as the trustee. The trustee uses the assets in the trust to pay life insurance premiums. After the creation of the trust, the trust itself “owns” the life insurance policy until the person’s death. It is important to note that the trust is irrevocable, meaning the individual cannot change the terms of the trust after it has been established.

While this option may seem strange for many, there are inherent benefits to doing so. For one, turning the life insurance policy into an irrevocable trust has a tax advantage. The proceeds that beneficiaries receive from this trust are generally excluded from the beneficiary’s gross income. Since the trust technically “owns” the life insurance policy, it is not an asset that would be taxed like normal inheritance would be. Beyond the tax advantages, a life insurance trust provides a guaranteed source of income for loved ones. As long as a beneficiary—a loved one or close friend who the individual wants to receive the funds—is named on the policy, the benefit proceeds are directly paid out to the beneficiary without going through the probate court process. This speeds up the process so the heirs can use the funds to pay for immediate costs, like estate taxes or funeral expenses—if necessary.