Estate Planning

When Do You Need a Letter of Testamentary?

Published on: October 17, 2023 | By David W. Miller

On our last blog, we began discussing letters of testamentary. These letters are documents produced by a probate court that allow an executor to prove that he or she has the authority to administer a decedent’s estate. To take it a step further, today we discuss when you might need a letter of testamentary, so that you can have a better understanding of the context in which these letters come into play.

The letter of testamentary is important for the executor of an estate. An estate’s executor is the person who is responsible for carrying out a deceased person’s last will and testament. Sometimes, when the executor starts to organize, disburse, or use the funds in a decedent’s estate, he or she needs the letter of testamentary to prove that he or she has the authority to withdraw money from certain accounts or use the money for certain purposes.

For example, an executor might need a letter of testamentary to access a decedent’s bank account, pay off the decedent’s debts, or distribute the decedent’s assets to his or her loved ones. There are also very practical circumstances in which a letter of testamentary could come into play – for example, the executor might need the letter when paying for funeral expenses or when making sure that the decedent’s loved ones receive proceeds from the individual’s life insurance.

What is a Letter of Testamentary in Texas?

Published on: October 13, 2023 | By Thomas W. McCulloch

The probate process can be complicated. Often, our clients come to us overwhelmed by how many steps can be involved and how many hurdles they have to jump through. One such hurdle can be a letter of testamentary, which is sometimes produced during probate proceedings. Today’s blog will cover the basics of letters of testamentary, but to make sure you properly address the procedural requirements in your own probate case, the best thing you can do for yourself is to speak with a Texas estate planning attorney who knows the ins and outs of the process.

Who Provides the Letter of Testamentary?

Oftentimes, a probate court will provide an estate executor with a letter of testamentary. This letter is a document that the executor can take to a bank, a financial institution, a creditor, or any other party that needs to release funds belonging to the decedent. Oftentimes, financial institutions will only release a decedent’s funds if the executor shows up with this official letter of testamentary, proving that the probate court has authorized the distribution of funds.

Letters of testamentary, in short, give the executor the authority that he or she needs in order to fulfill the job of the executor. If a decedent says in his will, for example, that all of the money in his bank account will go to his children, the letter of testamentary gives the executor the power to retrieve the money from the bank (so that the children can then receive the funds).

Why Hire a Texas Estate Planning Attorney?

Published on: October 13, 2023 | By David W. Miller

In Texas, attorneys are not required by the court for estate planning purposes; however, navigating the process without an attorney can end up costing more time and resources given the many steps that are involved in estate planning. If you are debating whether or not to hire an estate planning attorney for your Texas estate, there are several reasons to consider calling a trusted firm to offer you advice.

Navigating Procedural Hurdles

In Texas, a decedent’s estate plan must generally go through probate. This means that a probate court must decide that the decedent’s will or estate plan is valid before the heirs are entitled to receive the decedent’s assets. The more complex a person’s estate, the more time-intensive this process can be.

Probate court can be a difficult forum to navigate. Filing your documents at the right time, in the correct jurisdictional court, and with the right information is a complicated process. Because it is so easy to miss a step when appearing before a probate court, it is helpful to have an attorney who can ensure everything goes smoothly the first time around.

Estate Planning for Blended Families Living in Houston

Published on: September 23, 2023 | By Thomas W. McCulloch

In today’s blog, we offer estate planning tips and strategies for blended families in Houston, with the goal of ensuring that all members of the family are considered. For many of our clients in non-traditional families, there can be important questions about how to make sure nothing goes awry upon one individual’s death. There are important strategies to keep in mind, and ultimately, speaking with an estate planning attorney is the best thing you can to in this situation to make sure your needs are covered.

What is a Blended Family?

A blended family is one that consists of a couple and their children from previous relationships. If you and your spouse have both children and stepchildren, you might have different goals for what you will leave behind for each set of children, which can be difficult to navigate if you have been accustomed to more straightforward methods of estate planning in the past.

What Should Blended Families Keep in Mind During Estate Planning?

For those who die without a will in Texas, their assets will generally go to their spouse. For those who have children from a previous marriage, however, things can look different. If a decedent in a blended family owns property with his or her spouse, part of the property will be left to the surviving spouse, and the other half will go to the children from the decedent’s prior marriage.

Should I Put My Children in Charge of Everything as I Age?

Published on: September 22, 2023 | By David W. Miller

Should I Put My Children in Charge of Everything as I Age?

As parents grow older, it is natural for families to experience a shift as children begin taking on more of a caretaking role. This shift can be a delicate process, and we have many clients come to us, asking whether it is wise to put their children in charge of their finances, estate, and affairs as they age. Today, we talk through some of the intricacies of this approach, recognizing that a different strategy will likely work for every family.

Power of Attorney

One way in which many parents give their children more responsibility is by making them “power of attorney,” authorizing their children to make decisions on their behalf. In Texas, a power of attorney can only act on behalf of an individual when explicitly authorized to do so.

Financially speaking, a power of attorney can manage a person’s business dealings if the individual wants someone else to take care of these dealings for them. In contrast, a medical power of attorney only becomes effective when an individual becomes incapacitated, allowing the power of attorney to make medical decisions in the individual’s best interest. Texas also offers the option of appointing a “limited power of attorney,” which allows individuals to appoint a power of attorney for one particular action, like purchasing a vehicle or handling tax-related matters.

Why Now Is a Good Time to Start Thinking About Estate Planning

Published on: September 15, 2023 | By David W. Miller

At McCulloch & Miller, we often speak with clients who struggle to find the motivation to begin their estate planning processes. Once we make clear to these clients just how important estate planning can be in Texas, their interest grows in getting started as soon as possible. With so much on the line, we try to emphasize to our clients that estate planning does not have to be difficult but that it is still an extremely important process that deserves their full attention.

What Is Estate Planning?

Importantly, estate planning is not only the process of creating a will. Estate planning allows you to protect your property and ensure that your assets are distributed exactly as you want them to be distributed in the event of your death. Estate planning can include drafting wills, establishing trusts, naming beneficiaries, and designating a power of attorney in case of incapacitation. Estate planning can also help you figure out how to save money on taxes, which benefits you in the present as well as your loved ones in the future.

What Happens Without an Estate Plan?

In Texas, when a person dies, his or her loved ones must go through the probate process so that a court can determine how to divide up his or her assets. Without estate planning documents on hand, this process can be costly, drawn out, and draining. The lack of a solid estate plan can also lead to high levels of tension among family members while the court tries to determine how to divide the decedent’s money and property.

The importance of Understanding All Tax Implications When Estate Planning

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

One of the most frustrating aspects of estate planning can be having to pay out a percentage of assets to the government or to others who have a claim on your estate. In Texas, tax implications depend on the estate strategy that you choose. Today, we review some of the tax implications of estate planning with an eye toward minimizing tax liability.

What is an Estate Tax?

Texas is one of 38 states that does not require residents to pay an estate tax. In states without this benefit, an individual’s estate will have to pay a certain percentage of their assets to the state government upon that person’s death. This is good news: by living in Texas, you already avoid a tax that residents of some other states will have to pay.

Texans do, however, still pay a federal estate tax. This kind of tax can be generally broken up into three different taxes: the estate tax, the gift tax, and the generation-skipping transfer tax.

What is a “Laughing Heir”?

Published on: September 8, 2023 | By David W. Miller

Finding out you are the beneficiary in a decedent’s will can be a small dose of good news in the midst of experiencing grief and in the process of adjusting to life without your loved one. Sometimes, though, a decedent’s beneficiaries are not negatively affected by the death of the person that leaves assets to their name. In this case, the law calls this particular kind of beneficiary a “laughing heir.”

A laughing heir is a beneficiary who was distantly related to the decedent and likely has very little reason to be saddened by that person’s death. If a decedent leaves behind no spouse, children, siblings, or parents, for example, he or she might have chosen to give their assets to a relative that he or she did not know very well.

If the decedent died without a will or estate plan, the probate court might divide his or her assets using the law of intestacy – this essentially means that the decedent’s closest living relatives will inherit his or her assets. When the closest living relatives are distant relatives, those relatives might be considered laughing heirs.

Protecting Estate Assets from a Child with Poor Money Management Skills

Published on: August 31, 2023 | By David W. Miller

As you go about your estate planning process, you will necessarily think about who you want to be the beneficiary or beneficiaries of your assets. If you are leaving behind money for your children, you have worked hard to earn that money and keep it safe for future generations in your family. If you have a child with poor money management skills, then you might be worried that the money will be spent frivolously. In this blog post, we go over a few ways you can protect estate assets from heirs who might be at risk for depleting assets you leave behind.

Option One: Spendthrift Provisions

One solution to the problem of untrustworthy beneficiaries is creating a trust with a “spendthrift provision.” This kind of provision essentially puts limits on how a beneficiary can use the money he or she inherits in a trust. For example, you can explicitly state that you only want a beneficiary to benefit from a trust if he or she is gainfully employed. You can write that the money is only to be used for specific purposes, such as rent, utilities, or car payments. You can also give restricted deposits so that the beneficiary does not receive too much money from a given payment.

Setting up spendthrift provisions requires specificity in order to eliminate the risk that the provision can be interpreted in ways that are different from how you intended. Contacting a qualified attorney to help create your spendthrift provision is always a good idea.

Ways of Resolving Estate Disputes in Texas

Published on: August 20, 2023 | By David W. Miller

Unfortunately, when a loved one leaves behind friends and family members, he or she also leaves behind the possibility that there will be disagreements about how to distribute his or her assets. Even when a decedent writes a will or other detailed estate plan, beneficiaries can often disagree about how to interpret the documents or how the money and property should be dispersed. On today’s blog, we talk about ways of resolving estate disputes, which tend to come up when beneficiaries don’t all agree about how to effectuate a loved one’s will.

If you and other possible beneficiaries of a will have found yourselves disagreeing about how to interpret a loved one’s will, the first thing you can do is try to resolve the dispute outside of court. You could, for example, hire a mediator that could hold sessions for the group and try to get everyone to a place where they agree. Sometimes, individuals that wish to contest the contents or interpretation of a will can be persuaded not to pursue their claims simply through the mediation process.

If the group is still at an impasse, any individual that wants to challenge a will can file a lawsuit with the probate court. Any challenges must be filed within two years of the will being admitted to the probate court. Importantly, only those with something called “standing” are legally able to challenge a will; essentially, this means that a party contesting a will must be either the decedent’s spouse, family member, or creditor. Those without any real grounds to file the lawsuit will generally not be heard by the probate court.