Houston Estate Planning and Elder Law Attorney Blog

Texas Estate Planning as You Reach Retirement

Published on: July 5, 2022 | By Thomas W. McCulloch

While retirement and estate planning are distinct areas that contribute to financial stability, there is significant overlap between these considerations. Texas estate planning typically involves creating a system and plan for transferring the creator’s estate. In comparison, retirement planning refers to establishing retirement income and taking steps to accomplish these goals.

Retirement and estate planning are critical to financial readiness and stability. However, estate planning focuses on protecting the interests of the creator’s loved ones and beneficiaries, whereas retirement planning allows the creator to lead a stress-free life. Estate planning relates to when a person becomes physically or cognitively incapacitated. On the other hand, retirement planning relates to the time when a person exits the workforce because of their age or tenure.

Importance of Retirement Planning

Retirement planning focuses on the financial independence of the creator. Those who retire without a plan often face significant difficulties maintaining their living standards or supporting those they love. An attorney can assist individuals in developing a retirement plan that addresses the various issues that may impact a person’s financial livelihood.

Texas Medicaid Estate Recovery Program (“MERP”)

Published on: July 1, 2022 | By David W. Miller

Medicaid is a state and federal program that provides medical coverage and payment to eligible persons. The Texas Medicaid program strives to improve the health of Texas who might otherwise go without medical care and treatment. To qualify for Texas Medicaid, the individual must be a Texas resident, a U.S. national, citizen, permanent resident, or legal alien who needs insurance assistance/health care and whose financial situation is characterized as low income. Further, the person must also be:

Pregnant, or
Be responsible for someone 18 years old or younger, or

Implications of Selling a Business on a Texas Trust or Estate

Published on: June 26, 2022 | By Thomas W. McCulloch

Implications of Selling a Business on a Texas Trust or Estate

Estate planning requires individuals to take an inventory of and consider what they wish to do with their bank accounts, homes, car, and other personal belongings after they pass. In addition to these contemplations, Texas business owners must undertake strategic decision-making to pass on or dispose of their business interests correctly. Selling a business is a complex endeavor, and many owners focus on the immediate impact of selling their business without considering personal planning or potential beneficiaries.

Understandably, the immediacy of a deal may usurp the owner’s thought of personal planning; however, consulting with an attorney can maximize the owner and their beneficiary’s interests. An attorney can assist business owners in determining their best course of action.

An attorney can help the owner articulate what they need from the sale. Many business owners use the proceeds of a sale to fund their retirement. However, before deciding to sell a business, an attorney can work with a third-party valuation specialist to provide the owner with an accurate market value of their business. This undertaking allows for wealth planning ahead of a formal sale.

Questions to Ask When Creating a Texas Estate Plan

Published on: June 26, 2022 | By David W. Miller

For many, estate planning can be an uncomfortable topic requiring individuals to consider their mortality. While facing the fleeting nature of life can be difficult, estate planning can bring financial and emotional peace to an otherwise daunting topic. Consulting with experienced Texas trusts and estate lawyers can streamline this process and help individuals maintain autonomy over their decisions.

A person’s estate can include their:

Real estate
Securities and stocks
Personal property
Business interests
Cash
Jewelry
Retirement plans
Life insurance benefits

Although some people believe that estate planning is for the wealthy, in reality, almost everyone needs an estate plan. Estate plans are essential for those who:

Want to distribute their estate according to their wishes;
Have assets that may make their beneficiaries responsible for high estate taxes;
Want to plan their distributions; or
Have heirs that may require financial assistance.

Strategies to Reduce Texas Estate Taxes

Published on: June 20, 2022 | By Thomas W. McCulloch

Many worry that their estate will be left with significant taxes when they pass. Fortunately, Texas is one of 38 states that do not have an estate tax. However, residents may still be subject to federal estate tax laws. Other states’ inheritance laws may apply to a Texas resident. Thus, it is advisable that those who live in Texas consult with an experienced trust and estate planning lawyer.

What is an Estate Tax

An estate tax, commonly referred to as the “death tax,” is a tax applied on the estate of a deceased person before their money passes on to their beneficiaries or heirs. In contrast, the government takes an inheritance tax after money or items have been passed on to the deceased’s heirs.

Congress debated many changes to the federal estate and gift tax laws. While most of the proposals would have changed the amount a person could gift during their lifetime, the Build Back Better Act (H.R. 5376) did not present significant modifications to the estate and gift tax exclusion amount.

Federal Estate Tax

Those who pass in Texas will not owe any estate tax to the state. However, these individuals may owe money to the federal government. In 2022, the federal estate tax applies to estates worth $12.06 million. Thus, if an estate surpasses the applicable value, it may be subject to a federal estate tax. Moreover, the federal estate tax is portable for married couples. In other words, if the couple takes the appropriate legal steps, they will not have to pay a tax on up to $24.12 million when both spouses pass. However, it is critical that couples consult with an attorney to ensure that they do not waive their rights to these benefits.

Transferring Savings Bonds in Texas

Published on: June 20, 2022 | By David W. Miller

Savings bonds are low-risk, long-term investments that have the unique ability to serve as a gift to a loved one. In essence, these bonds are loans to the U.S. government. Purchasers often acquire these bonds as part of an investment, future gift, or retirement plan. However, there are many caveats to transferring savings bonds in Texas, and as such, it is advisable to consult with an experienced estate planning attorney to avoid legal hurdles.

Types of Savings Bonds

The two primary bonds are Series EE and Series I.

Series EE: these are low-risk savings bonds that earn a fixed interest rate until maturity at 30 years or when the owner cashes them. The treasury bond no longer issues these bonds in paper form, and purchasers must buy them electronically.
Series I: these are low-risk inflation-protected savings products that earn interest.

Both of these bonds can finance education, supplement retirement income, and serve as gifts to loved ones. In addition to these bonds, owners may have other bonds that are no longer available and have likely matured.

Texas Estate Planning and Online Accounts

Published on: June 10, 2022 | By Thomas W. McCulloch

With more people than ever with personal information online, Texans may have questions about how to incorporate this information into their estate plan. Can another person take over their accounts after they pass away? Even if someone provides their account information to another, can they legally access the accounts? As people have different preferences over how their social media, email, and financial accounts are handled, the below information can be useful for Texans navigating the estate planning process. Planning ahead and updating this access and estate plans regularly can make life easier for loved ones after they pass away.

Revised Uniform Fiduciary Access to Digital Assets Act

Texas, along with other states, provides access to online accounts to a person’s legal representative if they meet one of two conditions, per the Revised Uniform Fiduciary Access to Digital Assets Act. First, the deceased must have activated a setting within their online account that allows disclosure of the account upon their death, or the deceased’s will must explicitly allow their representative to access their online accounts. Without either of these conditions, the representative cannot access the online accounts, even if they have been given the login information.

To meet the first condition—activating a setting within the online account—many social media platforms will allow individuals to name a “legacy contact,” which provides them with access to the account if the account holder passes away. However, it is better to include this information in an estate plan and be explicit about what accounts—be it social media, financial accounts or others—the estate’s legal representative can access.

Risks of Handwritten (Holographic) Wills

Published on: June 10, 2022 | By David W. Miller

There are two primary types of wills under Texas law: 1) holographic and 2) non-holographic wills. Non-holographic wills are typed, witnesses, and attested wills. In contrast, holographic wills refer to entirely handwritten wills. In Texas, holographic wills are only enforceable when the entire document is written in the testator’s handwriting. While holographic wills might be valid and legally enforceable, more often than not, they result in Texas estate and probate disputes.

A notable example of the dangers of holographic wills involves the popular music group The Monkees. Michael Nesmith, a group member, left a lengthy will leaving his entire estate to his mother’s foundation. However, there were issues with the will’s legality because it was handwritten.

Holographic Will Formation in Texas

Handwritten will appeal to many people who believe that their situations are simple enough that they do not need the assistance of an attorney. However, making a holographic will in Texas requires strict adherence to complex estate laws.

Valid Texas holographic wills require the testator to clearly indicate all items in the will, the recipients of the items, and who should serve as an “independent executor.” In addition, the testator should take steps to ensure that the independent executor knows that the will is valid.

Generational Approaches to Texas Retirement Planning

Published on: May 31, 2022 | By Thomas W. McCulloch

Like with music, pop culture, and politics, members of different generations tend to approach issues differently than others. Generations also approach retirement differently—both in how they are planning for retirement, along with their expectations about retiring. Some generations are more optimistic about retiring at an earlier age, while simultaneously changing their retirement strategy based on economic and technical changes—like incorporating cryptocurrency into their investments. With over 60 million people currently planning for retirement as active 401(k) participants, it is important to discuss these differing strategies, how people feel about retirement planning, and how estate planning attorneys can provide additional advice to make people feel more secure.

Expectations About Retirement Age

Studies have shown a difference in opinion on when individuals in each generation expect they will be able to retire. Younger generations, like Gen Z, expect to retire at an earlier age than other generations. For example, the median age that Gen Z believes they will stop working at is 57 years old; however, Generation X—individuals between the ages of 42 and 57—do not expect to retire until they are 64 years old.
Despite this information, only 57 percent of all Gen Z members believe they will retire at some point—indicating a significant difference in opinion among people in this generation—whereas 62 percent of millennials believe they will retire at some point.

Retirement Plans Differing by Generation

While most individuals in all generations are planning for retirement, they are doing so in different ways. For example, Generation X and baby boomers plan to rely upon Social Security benefits, 401(k) and pension plans to support themselves. While members of younger generations do not assume that Social Security and Medicare will be available for them by the time they expect to retire, as many officials predict that Social Security benefits will be depleted by 2030. Because of this, millennials and Gen Z plan to rely more on their 401(k) savings as their major source of retirement income. However, younger generations also plan on relying on financial technology within their investment portfolio, like cryptocurrency. Many members of this generation believe that cryptocurrency will give them the highest return on investment, despite its current lack of regulation and potential volatility.

Cryptocurrency and Texas Estate Planning

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

With the rise of cryptocurrency, many Texans are curious about how cryptocurrency can be implemented into various aspects of their lives—be it estate planning, investing, or other methods—along with its potential stability in the future. However, other individuals do not know the basics about cryptocurrency, including what it is or why they should potentially engage in this virtual currency. Because of this, below are explanations about the underlying nature of cryptocurrency, its potential in the future, and current government recommendations for how it should be implemented in estate planning and investing.

What is Cryptocurrency?

Cryptocurrency is a digital currency exchanged through a computer network. This computer network is often a blockchain that transmits the currency. Unlike many other currencies, it is decentralized, meaning there is not a primary government or bank used to maintain it. While one of the most infamous cryptocurrencies is Bitcoin, there are currently over 9,000 other cryptocurrencies in the marketplace.

Should Cryptocurrency be Included in My Estate Plan?

Since cryptocurrency is an asset that individuals may have, it should be included within a person’s estate plan. The individual writing the will—the grantor—should detail who should receive any cryptocurrency assets that remain after they have passed away. Cryptocurrency would then be treated like other assets in the will and provided to the designated beneficiary. As cryptocurrency is only online, it is also important for the grantor to detail how someone can actually access these records, making it easier for the estate executor to fulfill his duties and transfer the assets to the beneficiary.