Houston Estate Planning and Elder Law Attorney Blog

10 Common Power of Attorney Questions

Published on: October 24, 2022 | By Thomas W. McCulloch

There are many types of powers of attorney (POA), and each covers different areas and has different purposes. Read on for answers to common questions about POA.

Can I Use a POA After the Principal Dies?

No. The person who gives the power of attorney is called the principal, and the person given the power is often called the agent. A valid power of attorney expires after the death of the principal, so the agent cannot act under the POA after the principal’s death.

If I am an Agent of a POA, Can I Stop the Principal from Giving Money Away?

Only financial—or durable—POAs allows the agent to make financial decisions for the principal. In this case, agents can be given the power to make gifting or donating decisions for the principal. But the agent also owes a fiduciary duty to the principal to act in the principal’s best interests. If stopping the principal from gifting or donating is contrary to the principal’s best interests, it may be possible for the principal or a third party to revoke the POA.

What Can I Do As a POA?

Medical POAs are authorized to make medical and treatment decisions for the principal. Financial or durable POA are authorized to make a wide range of financial decisions, including buying or selling property or assets, applying for benefits, managing a business, investing, or filing lawsuits on the principal’s behalf.

IRS Announces Increased Estate-Tax Exclusion for 2023

Published on: October 24, 2022 | By David W. Miller

Thanks to newly announced policies from the IRS, 2023 is shaping up to be a big year for estate planning. With several new opportunities for ultra-wealthy individuals to protect their assets, it is more important than ever to plan ahead and think about goals for the upcoming year. By planning, you can protect yourself from being double taxed and from facing penalties for failing to pay the required amounts.

In its recent press release, the IRS announced that it will implement several new policies that will allow ultra-wealthy individuals to protect more of their assets from taxes. The reason for the shift, according to tax law experts, is to account for annual adjustments in inflation. The reality, however, is that individuals that have been sitting with lower-value portfolios in 2022 can use the policies to their advantage and can begin developing more aggressive strategies heading into 2023.

One of the new policies will increase how much individuals can transfer to their heirs each year without being subject to federal taxes: in 2022, Americans could transfer $12.06 million, but next year the number will jump to $12.92 million. The IRS will also increase the limit on tax-free gifts next year, giving each individual a threshold of $17,000 per recipient instead of the current limit of $16,000.

Planning for Retirement with a Special Needs Child

Published on: October 12, 2022 | By Thomas W. McCulloch

Planning for retirement can already seem intimidating: it can be seen as time-consuming, stressful, and expensive. For parents of special needs children or adults within their care, retirement planning may seem impossible.

Retirement planning usually involves analyzing income, expected income, and assets and planning those inflows against expected outflows, or expenses, from retirement to the end of life. But parents of children with special needs may need to ensure their children are cared for even beyond their lives, necessitating a multi-generational time horizon in planning. In addition, one or both parents may make career and lifestyle changes to care for their children themselves, which can impact the cash coming in to fund retirement. If a caretaker passes on, extra expenses or decreased income to the surviving parent may result from hiring full-time care or taking on those roles. Finally, costs can be higher for special needs children and may increase as these children become adults. Insurance premiums, and the costs of health and medical care, caretaking, special programs, rehabilitation and therapy, and adaptive or assistive equipment may all need to be factored into the equation.

A skilled estate planning attorney can make this daunting process more navigable. One tool estate planning attorneys can use is to help their clients set up special needs trusts to protect their children’s government benefits while also giving them a stream of additional income.

Special Needs Trusts

Special needs trusts work like any other trust: a grantor establishes a trust to help the beneficiary receive property and assets and names a trustee to administer the trust. Special needs trusts allow an individual to receive funds without impacting their income eligibility for much-needed special needs benefits from the government, such as Medicaid or Social Security. These programs help fund direct medical and living expenses. Special needs trusts, in contrast, cannot be used for living expenses or anything covered by government programs, but can be used for supplemental expenses such as job training or tuition or non-essential costs like furniture, personal services, or hobbies.

Estate Planning for High-Net-Worth Individuals

Published on: October 12, 2022 | By David W. Miller

Many of the same tools used in ordinary estate planning apply to high-net-worth individuals. Estate planners of all income and asset levels should consider utilizing a last will and testament, guardianship designations, trusts, life insurance policies, planning for incapacity, and various powers of attorney documents. In addition, the complexity and sheer volume of high-net-worth individuals’ assets necessitate further consideration. High-net-worth clients may consider gifting to reduce tax implications on their estates. Charitable donations can also generate a tax benefit for the estate. Tax planning in general should be carefully considered by high-net-worth individuals, as substantial rates can diminish the amount left to your beneficiaries.

A skilled team of estate planning attorneys can help navigate these strategies and formulate a plan tailored to you and your family’s needs and special circumstances. A good attorney will help you minimize your tax exposure with their up-to-date knowledge of ever-changing tax laws.

Who is Considered High Net Worth?

Net worth, or a simple calculation of your household’s debt minus your household’s liquid assets such as cash, cryptocurrency, and other investments, can help determine your estate planning strategy. Forbes has classified high-net-worth individuals or households as holding liquid assets between $1 million and $5 million. Between $5 million and $30 million is considered very high net worth. Finally, assets in excess of $30 million fall in to the ultra-high-net-worth category.

Should I Have an Estate Plan?

Published on: October 6, 2022 | By McCulloch & Miller, PLLC

The short answer: Yes. Nearly everyone needs an estate plan, regardless of income level or family structure. Even for young people without substantial assets or children, medical and financial powers of attorney, among other estate planning tools, can help protect your wishes in the event of incapacitation or emergency. For the long answer, see below for five reasons you should have an estate plan.

Everything Might Not Go Directly to Your Spouse (or It Might)

You may assume that everything may go to your spouse in the absence of a will. Intestate succession laws vary by state and may not be consistent. And you may have assets that have been joint titled to someone other than your spouse, leaving that asset’s disposal up to the surviving owner. You may have also named beneficiaries to accounts and forgotten to update them. Naming beneficiaries can clear up confusion, but an attorney can help review all of your accounts and make sure they are consistent with a clearly detailed estate plan.

Have a Plan in Place in Case of an Emergency

In addition to deciding where you want to leave your assets, an estate plan can also help you in the event you become incapacitated or unable to make financial or medical decisions. An estate planning attorney can help you craft powers of attorney, which authorize a person you choose to act on your behalf. There are several types of powers of attorney, including financial and medical. And you can draft medical directives that dictate the types of medical treatment you would like to receive if you cannot make decisions while ill.

Planning for Unequal Inheritances

Published on: October 6, 2022 | By David W. Miller

In an ideal world, parents remain connected to all of their children and feel confident and comfortable equally dividing their assets among them. Unfortunately, real life is not always ideal—relationships can become strained, or parents may have other compelling reasons for giving their children varying amounts in their wills. A skilled estate planning attorney can help navigate creative solutions and prepare for any challenges or contests in the event of unequal inheritances.

Consider that Every Family is Different

If you are a parent considering an estate plan that results in unequal inheritances for each of your children, you may be experiencing feelings of guilt, frustration, or even resentment. Understanding that these feelings are common but that you are doing your best to bring about an equitable and fair solution can help you see more clearly to best communicate your needs and effectuate your end-of-life plans. Family and personal differences may mean that fair does not mean equal. An estate planning attorney can help come up with ways to make sure everyone is taken care of based on their unique family needs.

Explore Creative Solutions

If, for example, a family has two high-income adult children with steady jobs and families of their own and one who has struggled to hold steady employment, parents may feel at a loss for what to do. They may fear that the third heir would mismanage the money and end up worse off.

What Happens if You Die Without a Will in Texas?

Published on: September 30, 2022 | By McCulloch & Miller, PLLC

In a perfect world, every individual would have a clearly defined estate plan and a will before they pass on. Unfortunately, life circumstances and the unexpected can get in the way of perfect planning. In Texas, state intestate succession laws define the way your assets will go to your closest family members in the event you pass without a last will and testament.

Intestate Succession in Texas

Texas law defines the order of succession for various possible circumstances. The first few circumstances are relatively simple. If you die with living children but no spouse, your children inherit everything. If you die with a spouse but no children, your spouse inherits everything. Likewise, if you die with parents but no siblings and no spouse or children, your parents inherit everything, and the same goes for if you have siblings but no living parents, spouse, or children.

The Texas Probate Process Explained

Published on: September 30, 2022 | By David W. Miller

When a person passes on, many of their assets will have to go through probate. Understanding probate, or the process through which a court legally recognizes the death of a person and facilitates the distribution of their assets and the payment of their debts, is crucial to smart estate planning. A skilled estate planning attorney can help walk through this often complicated process.

How to Start the Texas Probate Process

Assuming an individual dies with a will, the executor in the will must file for probate. Generally in Texas, an executor has four years from the date of death to file, though the time frames vary in different local courts. If not, the estate will go through intestate succession, where close family members will receive assets according to predefined rules set out by the state. Simple estates can be probated within 6 months, but contested wills or complicated scenarios can take multiple years.

First, an application for probate is filed. Then, a notice of the probate application will be posted at the courthouse to alert anyone who may contest the will. If no contests are received in approximately two weeks, a hearing will begin. During this hearing, the decedent’s death will be recognized and a judge will validate the will and appoint an administrator or identify the executor.

What Are Conservatorships in Texas and Why You Should Avoid Them

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

Conservatorships have been thrust into the public spotlight in recent years because of one high-profile legal battle involving pop star Britney Spears. While many people may now understand the broad strokes of the legal mechanism because of this highly watched and followed case, it can be a complex tool best explained by a knowledgeable estate planning attorney. One thing the public understands well, though, is that conservatorships and guardianships can provide an easy route for fraud and abuse.

Conservatorship Basics

In Texas, a conservatorship is also called a guardianship. A court can appoint a conservator or guardian to make decisions on behalf of an individual. The person under guardianship is then deprived of making many everyday decisions on their own behalf.

To come under a conservatorship, a court must determine a person cannot make legal, financial, or medical decisions on their own behalf. This can encompass a wide range of possibilities, from mental health issues to dementia or intellectual or physical disabilities. Aging individuals can also come under conservatorship.

5 Reasons Beneficiary Designations Don’t Work Well for Estate Planning

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

It’s no question that estate planning can seem daunting. Beyond your last will and testament, there are a bevy of other documents that may seem unnecessary, duplicative, or just plain overwhelming. You may think making beneficiary designations, or forms that allow you to transfer assets directly to individuals without dealing with your will and the probate process, simplifies the entire endeavor. Unfortunately, there are a number of pitfalls that can happen when individuals simply settle for beneficiary designations without utilizing other estate planning tools with an experienced attorney.

1.) Your Beneficiary May Pass Away

Although this may seem obvious, many people do not consider that their beneficiary may pass away. With multiple assets, you may forget to change your designation in the event of your beneficiary’s death, leaving your asset stranded. You may be incapacitated in some way, which could render you unable to update your designations. Without proper mechanisms in place, you would be left without an avenue for passing on your assets.

2.) Your Beneficiary May Not Follow Your Wishes

You may name a beneficiary with the idea that they equitably share the asset or account you’ve left to them with other individuals, such as among siblings or children. Unfortunately, this may not always be the case. Proper planning can ensure your wishes are carried out exactly as you specify, without leaving it up to chance.