Estate Planning

Can a Beneficiary Inherit a Gift if They Received it During the Testator’s Lifetime?

Published on: January 10, 2024 | By David W. Miller

Many of our clients are parents or grandparents hoping to set up their heirs for financial success in the long term. One strategy that these clients use is the lifetime gift, which allows individuals to give money while still alive instead of through their estate plans. What are the implications, though, of this lifetime gift for a person’s estate planning documents? In today’s blog, we cover the overlap between these two types of gifts.

What is the Lifetime Gift Limit?

The government permits individuals to give financial gifts of a certain amount to beneficiaries of their choosing without facing tax consequences – this means the individuals can give money away while they are still alive without having to pay the federal gift tax. In 2024, the annual federal gift tax exclusion amount is $18,000 per person and $36,000 for married couple. This kind of gift allows individuals to give money away in increments over the course of their lives, perhaps to their children or their grandchildren.

Does the Lifetime Gift Prohibit Beneficiaries from Inheriting in a Will?

If a son, daughter, or grandchild inherits over the course of the parent or grandparent’s lifetime, he or she can still inherit at the parent or grandparent’s death. Importantly, however, if the estate documents are clear that the lifetime gift was intended to replace the will, trust, or estate document’s provision for a gift, the probate court will likely rule that the beneficiary cannot receive both gifts.

Who Will Inherit Your Digital Footprint in Texas?

Published on: December 27, 2023 | By Thomas W. McCulloch

Who Will Inherit Your Digital Footprint in Texas?

In 2024, the question of a decedent’s digital footprint is more relevant than ever. A digital footprint includes (but is not limited to) a person’s emails, texts, social media accounts, credit card accounts, cell phone data, and photographs – essentially, a digital footprint includes a wide array of personal information. As more questions arise about what will happen to this footprint upon an individual’s death, we look to Texas legislation, which has provided promising signs of progress.

Revised Uniform Fiduciary Access to Digital Access Act

In 2017, Texas enacted an Act, the Revised Uniform Fiduciary Access to Digital Access Act (sometimes referred to as “RUFADAA”), that dictates how an estate’s executor is able to access a decedent’s digital assets. Essentially, as long as the executor has valid legal authority and complies with each account’s terms of service, that executor can access the digital assets in question. There are certain restrictions under the Act – for example, it generally keeps the executor from accessing the decedent’s emails, texts, and social media accounts.

Probate and Incompetence: What Texas Residents Need to Know

Published on: December 19, 2023 | By Thomas W. McCulloch

Ideally, any individual drafting a will would be able to make decisions for him or herself. In reality, however, at times, there are competence issues, meaning that when a person is mentally incompetent or incapacitated, others might challenge that person’s will or estate plans down the line. In today’s blog, we cover the most important things you need to know about probate and incompetence, walking you through some of the steps that a Texas probate court might require in order to prove a decedent’s incompetence.

What is Incompetence?

In Texas, a person is deemed “incompetent” in the legal sense if he or she does not have sufficient mental ability to understand that he or she is making a will. If that person does not understand the will’s possible effects and/or know which people will inherit through the will, he or she might be deemed incompetent.

Courts rely on witnesses to speak about a person’s capacity, and courts generally want to hear about the person’s capacity on the day the will was written. If, for example, a decedent was mentally stable on the day of the will’s execution but mentally unstable from the next day onward, the court will only consider the day when he or she actually made pertinent decisions about the will.

What is a Pour-Over Will in Texas?

Published on: December 19, 2023 | By David W. Miller

As we have discussed on our blog in the past, there are plenty of tools available to Texans working on finding an estate planning strategy that works for them. Different kinds of trusts, wills, and gifts allow decedents to make sure their assets are protected in a way that benefits them and their loved ones. Today, we discuss the pour-over will as one possible tool to use in your estate planning process.

Pour-Over Will, Defined

In Texas, a pour-over will is a type of estate planning document that specifically stipulates that any assets not included in a decedent’s trust should be automatically transferred to the trust when he or she dies. Essentially, if a decedent has elected to organize his or her assets in the form of a trust, and if some assets slip through the cracks during the planning process, the pour-over will ensure that these assets will go directly into the individual’s trust upon death.

Benefits of the Pour-Over Will

A pour-over will represents a clear way to make sure all of your assets are covered in your estate plans. The pour-over will can also give you peace of mind, knowing that even if you fail to include any assets in your trust, you and your heirs are covered. Particularly if and when you have a complicated estate, this peace of mind can be invaluable.

Does Probate Always Require a Lawyer in Texas?

Published on: December 14, 2023 | By McCulloch & Miller, PLLC

At McCulloch & Miller, we understand the dilemma – paying for an attorney can be difficult, but you also don’t want to go through legal battles alone. During the probate process, it can be especially frustrating to navigate all of the procedural hurdles without an attorney. But is an attorney required? Today, we talk about whether attorneys are necessary in Texas probate proceedings.

The short answer to this question is that probate sometimes requires an attorney in Texas. Specifically, most probate courts in Texas do require that an estate’s executor hire a lawyer. The executor is responsible for looking out for not only his or her own interest, but the interests of the estate’s beneficiaries as well. Because of this dual role, most courts stipulate that the executors must retain an attorney during the probate process.

The most common situation in which an attorney is not needed for probate is when the decedent’s will is probated as a muniment of title. We have discussed muniments of title previously on our blog, but for a short overview, muniment of title is essentially a shortened probate process that is available when the estate has (1) no unsecured debts and (2) only real property and cash accounts. If the estate qualifies for muniment of title, the executor can move forward without hiring a lawyer at all.

How is an Inheritance Affected by Divorce in Texas?

Published on: December 14, 2023 | By Thomas W. McCulloch

When a couple gets divorced, there are financial matters that need to be dealt with – in the absence of a settlement agreement, the family court must divide up the couple’s property in a way that is fair to both parties. Sometimes, this division can be tricky, especially if the marriage has been long and each person’s funds are comingled with the other person’s funds. Ultimately, the court focuses largely on marital v. non-marital property when making this calculus during a couple’s divorce.

Marital v. Non-Marital Property

In dividing a couple’s assets, the court looks at which property is marital, or community, property, and which property is non-marital, or individual, property. Each person’s income earned during the marriage, for example, is considered marital property. Importantly, the court will only divide up property that is marital.

Typically, an inheritance or gift is non-marital property. This means that if you have inherited money from your loved ones and you find yourself in the midst of a divorce, that gift will still likely be yours and yours alone. Of course, there are complicating factors to consider.

Can You Sell Property During Probate in Texas?

Published on: December 11, 2023 | By Thomas W. McCulloch

Clients sometimes ask us about how they can go about selling property during probate proceedings – is it even possible? What does it entail? In short, the answer is yes: you can sell property during probate. As always, however, the long answer is a bit more complicated, as it involves several important steps that are not to be missed.

If a piece of property is tied up in probate, and the descendent had a valid will, there will be an executor of the estate that would be responsible for selling the house. This executor must first get the consent of all of the will’s beneficiaries – without this consent, he or she cannot move forward with the sale.

Once the house is for sale, the executor, real estate agent, or any other interested party must keep in mind several important requirements:

The executor must a) file notice of the sale with the court and b) mail the notice to all heirs under the will.
The home cannot sell for less than 90% of the home’s appraised value. This, of course, means that the home will need to be appraised prior to the sale.
The buyer is required to put down a deposit of at least 10% if his or her offer is accepted.
The executor must provide at least 15 days for anyone (heirs, claimants, etc.) to challenge the sale.

If the sale does not abide by the terms above, the probate court can decide that the sale is invalid. If it does meet the requirements, the court will likely approve the sale through a hearing, which takes place approximately a month after the sale.

What Should You Bring When You Meet with Your Estate Planning Attorney?

Published on: December 2, 2023 | By Thomas W. McCulloch

If you are preparing for an initial meeting with an estate planning attorney, you are taking a great first step that will help protect your loved ones down the road. If it is your first meeting, though, you might have questions about what the meeting will entail or what you should do to prepare. On today’s blog, we walk you through what you should bring when you meet with an estate planning attorney, so that you can be as prepared as possible and get the most out of your time together.

Financial Documents

The first and most important set of documents to bring is your set of financial documents. These include mortgage documents, car titles, tax returns, and rental agreements. While you don’t have to necessarily bring bank account statements, you should have a good idea of where those accounts stand so that you can provide that information to the attorney. Many firms, including McCulloch & Miller, will send you a family document checklist that you can use to begin organizing these financial documents before you come in for your meeting.

Non-Financial Documents

This second category of documents is also important. If you have papers relating to a divorce, a marriage, an adoption, or a custody case, these can be critical for the estate planning attorney to keep in mind. Additionally, if you have done any type of estate planning in the past, bringing those documents will be helpful for your estate planning attorney to see.

What is an Application to Determine Heirship in Texas?

Published on: November 30, 2023 | By David W. Miller

At times, navigating probate is a relatively straightforward process. Other times, though, the process can be messy – especially when it is unclear who an individual’s heirs are and who should receive the individual’s property. In today’s blog post, we discuss one way to navigate this issue – namely, by filing an application to determine heirship.

Importantly, an application to determine heirship always involves the probate court, and it always involves a hearing before the court. The purpose of the hearing is to determine who, exactly, should receive a decedent’s property. The hearing can take place either when a decedent’s estate has not been administered (as long as there is some property in Texas) or when property in Texas was left out of a decedent’s will.

What Happens During the Hearing?

When this kind of hearing takes place, the court begins by figuring out if the property at issue is separate property, meaning the decedent was the sole owner, or community property, meaning there were others involved. Once it has made this determination, the court looks at the Texas Estates Code to determine who should inherit the property.

Are Adopted Children Entitled to Inherit Under a Texas Will?

Published on: November 22, 2023 | By Thomas W. McCulloch

For parents that have adopted children, it is important to understand how the law understands adopted children to be part of their families. In the estate planning process, our clients that have adopted children often want to make sure that their kids are well taken care of after their passing. Today, we cover whether adopted children are able to inherit once their parents die.

Under the law in Texas (specifically, Texas Estates Code Section 201.054), adopted children are considered the children of their adopted parents. Therefore, even if a child is adopted, that child inherits as if he or she were the biological child of his or her parents. This comports with adoption laws nationwide, which generally consider an adoptive child to have the exact same rights and privileges as a biological child.

Importantly, this section applies to children adopted through formal procedures; thus, if you have “informally” adopted a child, or if you consider a child to be like your adopted child, this section will not apply to you. The State of Texas must recognize the familial relationship in order for this provision to treat you and your adopted children as though you are biologically related. Understanding this is crucial to avoid one of the more common estate planning mistake among adoptive families.