Estate Planning

How to Determine Which Type of Trust You Need

Published on: June 30, 2024 | By David W. Miller

How to Determine Which Type of Trust You Need

We speak with our clients time and time again about the value of adding a trust to an estate plan. If you have wondered whether a trust might be the right tool for you, the next step would be to decide which type of trust is right based on your circumstances. Below are several tips for deciding the kind of trust your estate plan needs. As always, with questions about how these options might apply to your estate plan, give us a call at McCulloch & Miller today.

1. Decide who you want to benefit from the trust.

Deciding the trust’s beneficiaries is a great first step. If your intended beneficiary is a nonprofit or cause you care about, a charitable trust could be right for you. If you have a spouse or loved one with special needs, creating a special needs trust would allow that person to receive important medical benefits while maintaining access to funds they need. If you want to pass money down to your children and grandchildren, you could set up a lifetime trust, which would allow your heirs to benefit from liability protection and consistent funds for their entire lives.

2. Think through your financial situation.

A trust can be revocable or irrevocable. If it is revocable, you can change it as time goes on; if it is irrevocable, you cannot change it without the consent of all beneficiaries. While an irrevocable trust is more complex and expensive to set up, it also has the benefit of protecting your assets from creditors, litigation, and estate taxes. If you are subject to any kind of money judgment, the irrevocable trust might be your best option.

Tips for Choosing a Houston Estate Planning Attorney

Published on: June 30, 2024 | By Thomas W. McCulloch

Whether you are in the beginning, middle, or end phase of your estate planning process, it is never too late to consult an estate planning attorney that can help you make sure your documents are in line with Texas’s requirements. While it can be difficult to sort through the various estate planning firms in Houston, there are some key requirements you should look for when making your decision.

Experience and Reputation

You should first and foremost choose a Houston estate planning attorney that has experience in the field and a clear reputation for excellence. Look at a firm’s reviews, find out how long the attorneys at the firm have been practicing, and ask around to see if anyone you know has retained the firm for one of their own matters. By finding an attorney that is both experienced and well regarded, you can set yourself up for success in your own estate planning journey.

Are Online Wills a Good Idea in Texas?

Published on: June 22, 2024 | By Thomas W. McCulloch

In the year 2024, it can be tempting to bypass traditional legal services in favor of getting things done online. Many clients ask us about online wills: are they a good idea? What are the advantages and disadvantages? At McCulloch & Miller, we have an adage: online wills work until they don’t work. Today’s blog will explore this topic a bit more in depth.

Advantages of Online Wills

By using an online tool to create your will, you can avoid many of the costs associated with estate planning. You can generally draft a will pretty quickly online, which leads many individuals to resort to an online will when they are in a pinch and feel as if they might not have much time left.

Disadvantages of Online Wills

The disadvantages of online wills are, in essence, everything else. The online will is a generalized tool that struggles to account for each person’s individualized circumstances. Take an example: say you leave your assets to your son, Bill. What happens if Bill is no longer alive by the time your will takes effect? Do the assets go to Bill’s wife? Do they go to his children? Do they go to someone else altogether? It is important to keep these contingencies in mind, and each person’s set of circumstances is different, requiring different language in his or her will.

Five Frequently Overlooked Estate Planning Items in Texas

Published on: June 22, 2024 | By David W. Miller

When most people think of estate planning documents, they think of naming their monetary assets in a will and distributing those assets to their loved ones. In reality, an estate plan can (and often should) include more than a list of your property and beneficiaries. Today, we discuss five frequently overlooked estate planning items we see as attorneys in Texas.

1. Funeral Arrangements

It is always a good idea to leave behind details for your funeral. For example, what kind of service do you want? Who do you want to participate? Have you made arrangements for a casket or cremation? It can be difficult for loved ones to make these decisions after their family member is gone, and including a list of instructions makes things much easier for heirs to organize and arrange a funeral during what is already a trying time.

2. Valuable or Sentimental Art and Jewelry

Many clients tend to forget about including tangible items such as art or jewelry in their will. In our experience, it helps to be as specific as possible when handling these items. Children and grandchildren can end up in conflict over who gets which pieces, and naming specific beneficiaries for each piece can go a long way.

Who is Going to Take Over Your Business When You’re Gone?

Published on: June 20, 2024 | By Thomas W. McCulloch

If you are a business owner, there is no doubt you have thought about what might happen to your business once you are gone. At McCulloch & Miller, we specialize in planning for the future, and business succession is no different.

Today’s blog covers some basics that could help you think through your business’s long-term ownership, but at the end of the day, the most important takeaway is to plan early and plan often. By ensuring you have put your company’s plan in writing, you can take care of the business that you have worked so hard to build. As always, we recommend contacting a Houston estate planning attorney to talk through the specifics of your plan and make sure it covers all of the necessary and relevant details.

Option One: Internal Sale

One popular option among those who own family business or have children and grandchildren is to hand over the business to a relative. This hand off could be in the form of a sale or a gift. In this scenario, it’s important to talk to an expert about how to minimize the possible tax consequences that you and your loved one could suffer. It’s also important to have open and frequent conversations with the family member you plan on naming as the recipient of the business. If that family member is not open to the transfer, the long-term success of your business will be threatened.

What Do You Need to Include in Your Will in Texas?

Published on: June 15, 2024 | By David W. Miller

Writing a will should not be overly complicated. With the right Houston estate planning attorney helping move things along, many clients find the process to be relatively smooth. There are, however, important things to include in your will that could be detrimental to leave out. Today, we focus on a few of the provisions you should make sure to put into your Texas will. Overall, your will should be an effective tool that allows you to achieve your financial goals and that makes things as easy as possible on your loved ones after you are gone.

Step 1: Name an Estate Executor

First and foremost, you should name an executor of your estate. This person should be someone you trust who is familiar with your will and estate planning documents. The executor will be responsible for carrying out the will once you are gone; therefore, choose your estate executor wisely. Many individuals choose an adult child, a sibling, or a trusted friend as their executor. When in doubt, speak with your estate planning attorney about who might be the right executor for your estate plan.

Step 2: Provide for Your Assets

The parts of your will that leave assets to beneficiaries should be as specific as possible. This section of the will should also be thorough; every significant asset you own should be included. Writing your will is also an appropriate time to think through any individual items you might want to give to your loved ones. For example, do you have valuable artwork or sentimental heirlooms? If so, your will might be a good way to name heirs to inherit these items.

What Happens if You Leave Items Out of a Texas Will?

Published on: June 7, 2024 | By Thomas W. McCulloch

As a general rule, it is best to be as thorough as possible when drafting your estate plan. Your plan should include any significant assets you own, and it should be as specific as possible. There are times, however, when decedents unintentionally leave items out of their wills. Today, we cover what might happen when your loved ones discover you have left something important out of your will in the state of Texas.

The Residuary Clause

If you leave items out of your will, your assets can still be well protected if your will includes a residuary clause. The residuary clause is a “catch all” provision at the end of the will that covers any additional property or assets that your will did not specifically name. Your clause could, for example, state that any property not mentioned in the will should go to your children, to your spouse, to your parents, or to a loved one. The clause should intentionally be phrased to encompass a broad range of assets, i.e. all of the assets included in your estate, except those mentioned in the will.

Rules of Intestacy

Without this residuary clause, the remainder of your estate will be subject to intestacy laws in Texas. Intestacy laws are the rules of the state, and they provide a specific order of inheritance for your assets. The probate court is responsible for figuring out which parts of your will are “up for grabs” and are therefore subject to intestacy. Through intestacy, your assets could end up with a relative that you did not intend to benefit from inheritance.

Five Estate Planning Tips in Texas

Published on: May 31, 2024 | By David W. Miller

Estate planning doesn’t have to be overly complicated. While it’s important to make sure your plan is thorough, accurate, and thoughtful, you should also be able to draw up your documents without too much stress. To aid in that process, today we offer five tips that you can use to help guide your estate planning journey in Texas.

Tip 1: Start Early

Some people think that estate plans are only for older adults or for those with a lot of money. In reality, it’s never too early to start your estate plan. Without a plan in place, rules of “intestacy” (i.e. the state’s order of priority for distributing your money) will apply. Even if you don’t have significant assets to your name, creating an estate plan can help you ensure that your money goes exactly where you want it to go when you pass.

Tip 2: Plan for Potential Incapacity

Life is full of the unexpected, and we recommend that you include a provision in your estate plan to cover what will happen if you become incapacitated. For example, do you name a power of attorney? Does your power of attorney cover medical decisions, financial decisions, or both? By naming a trusted person that can take over for you if needed, you can be prepared for whatever lies ahead.

Probate Avoidance Techniques in Texas

Published on: May 31, 2024 | By Thomas W. McCulloch

Probate is the process through which a court determines the validity of a person’s last will and testament. Once the court determines that a decedent’s will is valid and enforceable, the court approves the process of passing the person’s assets to his or her chosen beneficiaries. Probate can take anywhere from several months to a year (or, in some cases, it can take longer). Probate can also end up costing families significant resources, chipping away at the estate that the decedent left behind.

There is, however, good news: with the right strategies in place, you and your loved ones can avoid probate altogether. Today’s blog covers a few basic probate avoidance techniques in Texas. To find out if these strategies might work for you, contact a Houston estate planning attorney you trust.

Trusts

The first, and perhaps most commonly used, probate avoidance technique is the formation of a trust. By definition, a trust is a legal arrangement where a person gives an appointed trustee the right to hold assets on his or her behalf. The creator of the trust, or the trustor, communicates to the trustee how the money should be used. Trusts can shield assets from outside influences like debtors, creditors, and probate.

Estate Planning Gifting Strategies in Texas

Published on: May 22, 2024 | By David W. Miller

Many of our clients come to us with questions about how to effectively pass on assets from one generation to the next. When done well, giving money to children and grandchildren can have benefits not only for the beneficiaries but also for the person gifting the money. On today’s blog, we cover some fundamental strategies that can help you figure out how to gift money without suffering unnecessary tax penalties. As always, these recommendations are general tactics, and we recommend speaking with an experienced Houston estate planning attorney to find out how to apply these strategies to your individual circumstances.

Annual Exclusion Gifts

Under 2024 federal regulations, each individual is able to give a beneficiary up to $18,000 in tax-free gifts. For couples, this amount increases to $36,000. If you have three children, then, you could give each child $18,000 as an individual or you could give each child $36,000 with your spouse. If you instead choose to leave this money in your estate for when you pass, the money could be subject to a hefty estate tax, and by giving it away annually, you allow yourself to avoid the possibility of suffering these taxes.

Educational Gifts

As another gifting tool, you could pay for a child or grandchild’s education in part or in full. If you pay an educational institution directly, it both benefits your loved one and allows you to bypass any tax penalties. This strategy once again allows you to tangibly pass wealth onto the next generation without suffering a hefty estate tax later on.