Houston Estate Planning and Elder Law Attorney Blog

Community Property’s Impact on Texas Probate

Published on: August 21, 2022 | By Thomas W. McCulloch

If you’re considering your end-of-life plans and want to ensure your family’s safety and comfort, you may already know and understand the need for a last will and testament. Understanding what happens after the will is drafted, however, is crucial to best position your estate for a seamless and hassle-free probate process for your loved ones. This includes understanding the legal classification of your assets.

Probate, or the process of distributing a person’s assets after death, can be a lengthy and complicated process. Through this process, the executor of the estate as named by a will must file an application for probate in the relevant county. Then the court will post notice of that application, opening up the process for contesting a will. Even if there is no contest to the will, a court must still hold a hearing to ensure the validity of the will and appoint the executor. Once the executor is appointed, the process continues—the executor must locate and distribute all assets, notify creditors, and resolve any disputes.

Some assets, however, are not so clearly defined. Even if you have employed a Texas estate planning attorney to minimize the assets that must go through probate, there will likely be assets remaining that must go through this process. These assets may include community property.

Protecting Yourself or Your Loved One from Elder Abuse

Published on: August 21, 2022 | By David W. Miller

health savings accounts in estate planning

Medical emergencies, especially among aging individuals, can result in long-term rehabilitation and financial distress. Planning ahead for these emergencies is crucial, not only to preserve your assets and your independence but also to protect yourself from unscrupulous practices.

According to a recent article, a woman has filed a lawsuit alleging extensive financial fraud and abuse against a long-term elder care and rehabilitation facility. The woman, who lived alone and independently, entered the facility to recover from numerous medical issues after hospitalization. She alleges employees of the care facility repeatedly suggested that she get rid of her assets and live the remainder of her days in the nursing home facility, which she declined and insisted she did not wish to do.

After this refusal, she was placed on a cocktail of medications that put her under a fog, leading to hallucinations and confusion. It was then that she was coerced into signing a durable power of attorney agreement handing over control of all of her financial decisions to an officer of the care facility, whom the woman had never actually met. This officer kept her from seeing her family and eventually sold all of her assets, including her car, and listed her home on the market.

The Costs of Long-Term Care are Rising

Published on: August 17, 2022 | By Thomas W. McCulloch

According to a recent report, long-term care costs are rising. Genworth, a provider of long-term care insurance, surveyed 2017-2018 inflation rates in long-term care categories and discovered that for some categories, costs were rising at up to two to three times the rate of inflation. And with inflation rising even higher in 2022 than it did five years ago, careful planning for you and your loved ones’ futures is all the more critical.

At just a 3% projected inflation rate, Houston-area costs for in-home elder care services could rise to over $8,000 per month by 2041, in just twenty years. A private room in a nursing home facility could be nearly $170,000 annually. Even adult day care or assisted living facilities, which are lower-cost options, could rise to $23,826 and $92,003 annually, respectively. This is without considering that inflation in some of these categories could be higher than an average of 3%. Proper planning with an experienced attorney is crucial to ensure these costs are carefully considered and planned for.

Why are Costs Rising?

Planning for Incapacity in Texas

Published on: August 17, 2022 | By David W. Miller

Many people know that planning for retirement and planning for the allocation of their estate are two inevitable tasks. Planning for incapacity, or the inability to perform various legal and medical functions, however, is just a possibility, not an inevitability. However, having a plan in place in the event you are incapacitated can help protect your assets and your medical wishes just in case the future does not go to plan. An advance directive is a written statement of your wishes regarding your medical treatment and are legally binding documents.

The state of Texas recognizes five common types of advance directives: directive to physicians, family, and surrogates; medical power of attorney; out-of-hospital do not resuscitate; durable power of attorney, and declaration for mental health treatment. An experienced Texas estate planning attorney can help you decide which of these documents best meets your incapacity planning needs.

Directive to Physicians and Family

A directive to physicians, family, or surrogates is also known as a living will. This directive will state your wishes regarding life-sustaining procedures or measures in the event you have a terminal condition and your death becomes imminent.

How “the Internet of the Future” Is Impacting Texas Estate Planning

Published on: August 11, 2022 | By Thomas W. McCulloch

How “the Internet of the Future” Is Impacting Texas Estate Planning

For investors considering incorporating cryptocurrency into their estate plans, Web3 may already be an area of interest or curiosity—or apprehension. For others, it may be a concept completely unheard of. In either case, Web3—a decentralized form of data sharing not yet in existence—could be popping up more frequently in estate planning conversations. For now, Web3 is merely speculative, but with the speed of innovation, it’s worth considering how it may impact your estate planning needs now and into the distant future. In the same way the traditional Internet has rapidly evolved, Web3 could be the next big technological advancement to watch.

According to a recent article, Web3 is similar to the Internet we all know and have adopted in that it serves as a way of sharing data and connecting individuals. But different from the traditional Internet, Web3 would run on the blockchain, similar to cryptocurrencies. In the same way crypto assets take the middleman, such as financial intermediaries, out of financial transactions, Web3 could take platforms and companies out of the exchange of data on the World Wide Web, making Web3 truly run by the people. In a time when people are growing distrustful of the large companies such as Amazon, Google, and Facebook that coordinate and dictate our use and access to the Internet, Web3 could democratize data sharing and take the power—and our data—out of the hands of tech giants.

How Will Web3 Impact Estate Planning?

Because Web3 doesn’t yet exist, it is difficult to say how exactly it will impact or change areas with legal implications, like estate planning. If Web3 enables blockchain-based estate plans, personal smart contracts can be executed without a middleman upon a trigger event, such as death of the estate holder. Without a middleman, these contracts would be executed without going through probate court. Although this may be less costly for both the legal system and an estate and its beneficiaries, a good estate planning attorney with experience in new technologies and cryptocurrency assets will be needed to help structure these contracts and determine their tax implications.

What Happens if a Beneficiary to a Will Dies

Published on: August 11, 2022 | By David W. Miller

Estate plans are crucial to protecting loved ones and ensuring peace of mind. Despite thorough planning, unexpected events can happen that may change the disposition of a person’s assets. An experienced Texas estate planning attorney can work with individuals to plan for the unexpected.

What is a Beneficiary under Texas Law?

Broadly, a beneficiary is any individual who gains an advantage or profits from something. In the context of a Texas estate plan, beneficiaries refer to the individual who stands to inherit a decedent’s assets. The creator of an estate (Testator) typically designates these individuals through a will or trust.

Comprehensive estate plans often include primary beneficiaries and contingent beneficiaries. Additionally, beneficiaries do not have to be individuals or categories of individuals, such as grandchildren. The law permits testators to include organizations, such as non-profits, as beneficiaries. Primary beneficiaries are the first individual or organizations to inherit assets under the will. In contrast, contingent beneficiaries are those who are “second in line” to the primary beneficiary. Contingent beneficiaries only inherit assets in cases where the primary beneficiary cannot, for instance, if the primary beneficiary predeceases the Testator.

Importance of Digital Estate Planning in Texas

Published on: July 31, 2022 | By David W. Miller

In light of society’s ongoing reliance on technology, digitization of property, and additional advances in internet technology, the value of digital assets is evolving exponentially. As such, individuals must incorporate digital estate planning into their traditional estate planning process. An experienced Texas attorney can assist clients in ensuring that their estate plan is effective and comprehensive.

Digital Assets

Digital assets, in the context of estate planning, refers to any asset that exists only as a numeric encoding expressed in the binary form. These assets can exist in personal and business settings. For example, personal digital assets may include music, photographs, videos, and emails. In business, digital assets may consist of payroll systems, software, and customer service information.

Additionally, Metadata may contain information about the creation and owner of digital assets. However, it is essential to note that certain items such as computers, cameras, and cell phones do not qualify as digital assets.

Importance of Transferring Digital Assets

Historically, transferring property, assets, and cherished heirlooms has been the main focus of estate planning. However, taking into account the importance of digital assets in people’s everyday lives, transferring digital assets should be a critical aspect of any estate plan. Many unknowingly leave substantial amounts of digital assets unaccounted for after their passing. Failing to account for digital assets can result in losing items, such as photos and emails with sentimental and financial value.

Pour-Over Wills in Texas

Published on: July 30, 2022 | By Thomas W. McCulloch

Under Texas law, individuals (testators) may create a revocable living trust which allows them to use their assets during their lifetime and subsequently securely transfer them to their designated beneficiaries after the testator’s death. These trusts protect the testator if they become mentally incapacitated. With a revocable living trust, the testator’s assets are controlled, owned, and managed by the trust, eliminating the need for a conservatorship proceeding.

Pour-over wills are typically used in conjunction with a revocable living trust. A pour-over will refer to a specific type of will that assists in facilitating the transfer of assets in the event that the testator neglected to transfer all intended assets. Pour-over provisions can integrate the administration of a trust and probate assets.

Benefits of Pour-Over Wills

Carrying out a decedent’s wishes should be of utmost importance, and pour-over wills are another tool to meet this goal. There are many advantages of pour-over wills, including:

Simplicity: These documents allow an executor to efficiently wrap up a decedent’s estate after death.
Totality: A pour-over will address all the assets that a testator could not handle or transfer before death.
Privacy: Pour-over wills are part of a trust and, therefore, do not automatically become public after the testator’s death. They remain more private than will.
A pour-over will is a critical part of estate planning and can create a safety net that brings peace and certainty to an otherwise emotionally daunting process.

How Trustees Can Protect Themselves When Managing a Texas Trust

Published on: July 18, 2022 | By Thomas W. McCulloch

On one hand, being appointed as a trustee for a Houston trust can be something of an honor, as it shows that the grantor of the trust considered you to be a trusted person capable of carrying out the goals of the trust. However, on the other hand, it can also raise concerns, as serving as a trustee is a critical role that can, in some cases, expose a trustee to personal liability in the event they are accused of mismanaging trust assets. Thus, it is imperative that trustees not only understand their duties and how to carry them out but also that they know when they need to outsource certain roles to third-party professionals.

A Trustee’s Duties

Trustees have several duties, most of which are owed to beneficiaries of the trust. Perhaps the most important duty is a trustee’s fiduciary duty to beneficiaries of the trust. A trustee’s fiduciary duty includes the duty to administer the trust in accordance with its terms, preserve and protect the trust assets, and the duty to avoid conflicts of interest.

Administering a Trust in Accordance with Its Terms

Simply put, a trustee must perform their duties in such a way that is consistent with the terms of the trust. For example, if a trust contains an investment policy statement, trustees ensure all investment management decisions comport with the investment policy statement. Thus, even if an investment may be suitable in a trust as a general matter, if the chosen investment disregards the investment policy statement, a trustee may be found in violation of their duties.

Investment Management Pitfalls in Estate Planning

Published on: July 18, 2022 | By David W. Miller

Investment Management Pitfalls in Estate Planning

Trusts offer a wide range of estate planning benefits depending on a trust’s structure and its ultimate goals. Of course, one of the primary purposes of estate planning is the preservation and growth of estate assets through the effective use of trusts. However, from the investment management perspective, trusts are only effective to the extent that they are well managed. Thus, it is imperative that those who are considering the creation of a high-value trust take special care in avoiding the most common investment management pitfalls.

Be Careful About Who You Put in Charge

When a grantor creates a trust, they must also name a trustee to oversee the administration of the trust. While selecting a trustee is almost always one of the most important decisions when creating a trust, the factors you should consider when reviewing potential candidates depend on the type of trust, the value of the assets contained in the trust, and your goals in forming the trust.

For example, many grantors name trusted loved ones to manage a trust. This is a workable solution in many cases. However, just because you have someone in your circle who is willing to serve as a trustee doesn’t necessarily make them a good fit. For example, managing a multi-million-dollar trust is very labor intensive and requires the trustee have significant investment experience. While some grantors may have loved ones who can adequately handle these responsibilities, those for whom an obvious choice doesn’t stand out should at least consider naming a corporate trustee. However, it is important to note that corporate trustees are typically much more conservative in their approach than individual trustees.