Houston Estate Planning and Elder Law Attorney Blog

Houston Parents Can Structure an Inheritance For Their Children

Published on: August 19, 2014 | By McCulloch & Miller, PLLC

Leaving even a small inheritance to your children requires planning. Regardless the size of your estate, structuring an inheritance properly can avoid problems and help your beneficiaries use your hard-earned assets more wisely.

Last year, AARP included an article in its materials titled, "How to Leave an Inheritance to Your Kids." Among other things, the article provides several tips on how to properly set up your estate plan to leave an inheritance to your children.

One tip is to manage expectations. Talk to your children so they will have a better understanding of your assets and what they may expect as their inheritance from them. Another tip is to treat all of the children equally. This will reduce cause for arguments and hurt feelings. This equal treatment should also include sharing responsibilities when it comes to settling your affairs, not just the division of assets. If, however, you decide to split your assets in some manner other than equal shares, take the time to explain your reasoning.

Breaking Taboos – It’s Time to Talk About Your Houston Estate Plan

Published on: August 18, 2014 | By McCulloch & Miller, PLLC

If there is a boogeyman when it comes to family conversations about inheritance, it is not death. It’s the $40 trillion that financial advisers say their baby boomer clients are going to pass to their children either in an orderly way — or in a chaotic mess. A report by UBS on why families should talk about inheritance confirms the reluctance of people to talk about death and money.

Remarkably, a recent New York Times article, titled "What’s Almost as Certain as Death? Not Talking About the Inheritance," noted that it is easier to have a will (83% do) than it is to discuss the will with your children (only half). It is even more difficult to give them details about those assets (34%).

Regardless their levels of financial wealth, those surveyed were equally deficient when it comes to discussing estate plans with their children. Roughly 55% of people with more than $1 million talk to their children about an inheritance, and 53% of people with fewer than $1 million did. As you might expect, the majority of parents want the transfer of money to their children to go smoothly (84%) without creating bad feelings among siblings (66%).

Think You Don’t Need an Estate Plan Because You Don’t Have Kids? Think Again, Houston!

Published on: August 15, 2014 | By McCulloch & Miller, PLLC

Did you think estate planning would be easier because you don’t have children … or that you don’t really need an estate plan? If so, you couldn’t be more wrong!

The website dailycall.com recently posted an article, titled "Aging and estate planning for singles and couples without children," to help get you thinking about the special challenges people face who do not have adult children to assist them in their aging years.

Here are some of the ideas suggested:

Beneficiary Designations: Do Houston Families Update Key Documents?

Published on: August 14, 2014 | By McCulloch & Miller, PLLC

You may have made a giant estate planning mistake without even knowing it — forgetting to update the names of your beneficiaries for your employer-sponsored retirement plans, IRAs, life insurance policies, mutual funds, bank accounts, brokerage accounts, annuities and 529 college savings plans.

The recent MarketWatch article, titled “Don’t make the No. 1 estate-planning goof,” outlines several reasons for updating your beneficiary designations. Here are a few:

A change of jobs. A job change can mean that you will need to roll over your retirement plan. If this happens, beware! Moving money from your former employer’s retirement plan into your new one or into an IRA could eliminate your beneficiaries’ claims to those assets. You should make sure you have them as beneficiaries on the new account, too.

Houston Twenty-Somethings Can Be Savvy About Estate Planning

Published on: August 13, 2014 | By McCulloch & Miller, PLLC

Now is the time to adopt financial habits that determine a successful retirement,
even if you’re still in your 20s.

(Note: Parents, here is a great article to share with your twenty-something adult children!)

If you are a twenty-something, you have plenty of time to think about investing, right?

Ruling by Supreme Court Changes IRA Safety

Published on: August 12, 2014 | By McCulloch & Miller, PLLC

A ruling by the U.S. Supreme Court holding that assets contained in an inherited individual retirement account (IRA) don’t qualify as retirement funds for the purposes of bankruptcy exemption, has turned the estate planning community on its head.

Prior to a recent US Supreme Court ruling, inherited IRAs were treated as retirement savings and not as current income. It was thought that if you made an heir a beneficiary of your IRA, the money in the IRA would be safe from your heir's creditors after you passed away. Well, those inherited IRAs may now be fair game to creditors.

As Insurance News Net points out, in an article titled “Court Decision Has Implications for Estate Planning,” the full implications of this court ruling are not yet clear. The court's decision leaves open the possibility that a surviving spouse named as the beneficiary of an IRA might still be able to treat it as retirement savings, but the court did not address that issue. For other beneficiaries, however, it is clear that in most states, inherited IRAs will be much easier for creditors to claim in bankruptcy proceedings or otherwise. Such an inheritance will be treated as income, not retirement savings.

Breaking Taboos – It’s Time to Talk About Your Houston Estate Plan

Published on: August 12, 2014 | By McCulloch & Miller, PLLC

If there is a boogeyman when it comes to family conversations about inheritance, it is not death. It’s the $40 trillion that financial advisers say their baby boomer clients are going to pass to their children either in an orderly way — or in a chaotic mess. A report by UBS on why families should talk about inheritance confirms the reluctance of people to talk about death and money.

Remarkably, a recent New York Times article, titled "What’s Almost as Certain as Death? Not Talking About the Inheritance," noted that it is easier to have a will (83% do) than it is to discuss the will with your children (only half). It is even more difficult to give them details about those assets (34%).

Regardless their levels of financial wealth, those surveyed were equally deficient when it comes to discussing estate plans with their children. Roughly 55% of people with more than $1 million talk to their children about an inheritance, and 53% of people with fewer than $1 million did. As you might expect, the majority of parents want the transfer of money to their children to go smoothly (84%) without creating bad feelings among siblings (66%).

Caution Houston: Estate Planning Gotchas During a Divorce

Published on: August 11, 2014 | By McCulloch & Miller, PLLC

A scenario commonly encountered within estate planning is when an individual dies while negotiating a separation agreement with their spouse, or when in the midst of divorce proceedings. While a divorce order will void specific bequests to a spouse, merely initiating negotiations or proceedings will not.

Married couples typically plan to leave significant portions of their estates to the surviving spouse. If a divorce were to occur, a change would need to be made to the estate plan to remove the ex-spouse. Most of the time, if you do not change your estate plan after getting a divorce, a judge will ordinarily disregard any specific bequests you made to your ex-spouse. The law assumes you would not want your estate to go to a former spouse.

However, as the Wills, Trusts & Estates Prof Blog points out in a recent article titled “When Death Occurs Mid-Divorce,” the same thing is not true if you are in the divorce process but your divorce has not yet been finalized. This is a common problem when a divorce has been filed and one of the parties passes away during the process. When that happens, it can cause issues with a family home that is owned by both parties. If the home is owned as joint tenants, then the property will automatically pass to the survivor. If the divorcing couple owns the home as tenants in common, however, the deceased party’s share of the home will go to his or her heirs.

If You Can Dream It, You Can Do It in Houston…Unless the Trustee Says No

Published on: August 8, 2014 | By McCulloch & Miller, PLLC

Your plan is only as good as the people who implement it. When they aren’t competent, don’t pay attention to details, or decide to pursue their own interests, disaster can ensue. The latest case involves the Walt Disney estate.

"If you can dream it, you can do it." Walt Disney shared great inspiration with the world, and no doubt with his own family. But ever since Disney passed away in 1966, problems with his estate plan have continued to mount.

At issue is a trust he left for his grandchildren. The trust itself is fairly standard in that trust principal was to be distributed to the grandchildren in stages. For one grandchild, everything went according to plan. However, for the other two, problems have arisen.

Samsung Chairman’s Estate Sparks Tax Questions for Houston Families

Published on: August 7, 2014 | By McCulloch & Miller, PLLC

Lee is a legendary figure in South Korea as the man who turned Samsung Electronics into a powerful conglomerate. He is also the country's richest man with an estimated net worth of US$11.4 billion. Under Korean inheritance law, an heir will have to pay 50 percent in tax when inheriting such wealth, indicating an inheritance tax bill of some US$6 billion.

Estate problems are on the horizon for Samsung Chairman Lee Kun Hee's heirs. Lee suffered a major heart attack three months ago and has been in the hospital ever since. It does not appear he will live for much longer. Hee's estate is believed to be worth approximately $12 billion. As China Topixpoints out, in an article titled “Samsung Heirs Could Pay a Massive US $6 Billion Inheritance Tax,” under South Korean law the estate will have to give half of the estate to the government. The family could avoid some of this tax burden by placing the money in a foundation, but that would mean giving up some control of the assets.

It is unclear whether Lee could have avoided this through estate planning before his heart attack. It is possible that South Korea has laws and vehicles that could be used to more effectively keep wealth in the family as opposed to giving it to the government. In the United States, if a wealthy person does nothing, then their family might not be much better off than Lee's. The government will not necessarily take half of the wealth, but a significant portion of the estate will be lost, as much as 40% in some cases.