Houston Estate Planning and Elder Law Attorney Blog

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.

Texas Estate Planning and Cryptocurrency

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

Texas Estate Planning and Cryptocurrency

Crypto assets such as non-fungible tokens (“NFTs”), utility tokens, security tokens, digital wallets, and cryptocurrency funds are digital assets that implement public ledgers over the internet to establish ownership. While these assets can hold significant wealth, it also presents unique Texas estate planning challenges. It is critical to consider these digital assets while establishing an estate plan. An experienced Texas estate planning attorney can help individuals meet the needs of the growing number of digital assets.

Protecting Crypto Assets

Accessing cryptocurrency requires the owner to use a private key, a series of alphanumeric numbers stored in a digital wallet or cold storage. A digital wallet is a financial transaction application that runs on a mobile device and stores payment information. Cold storage refers to a physical device that keeps cryptocurrency offline. Many of these devices look similar to a USB drive. Anyone with the private key or password can purchase, dispose of, and use digital money. As such, these currencies are highly susceptible to fraud and theft.

Incorporating Cryptocurrency into an Estate Plan

Individuals should inform their family or fiduciaries of the crypto assets’ existence, where to find the assets, and what to do with them. Some options to accomplish this are sharing private keys with a fiduciary, using a hardware wallet, or using a digital-asset custodian service. Those in the custody of digital assets should also consider incorporating a digital legacy into an estate plan. A digital legacy can ensure that the appropriate parties can access the assets.

Advantages of a Revocable Trust in Texas

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

In Texas, a revocable living trust, also known as a trust, is a legal entity designed to control one’s assets. Trusts are created when one person, referred to as the trustor, settlor, or grantor transfers a property interest to a trustee to be held for a beneficiary. Trusts creator during the trustor’s lifetime are intervivos or living trusts. Revocable trusts refer to situations where the trustor retains the right to dissolve the trust. On the other hand, irrevocable trusts refer to situations where the trustor does not maintain the power to change or dissolve the trust. In most cases, a revocable trust becomes irrevocable when the trustor passes away. Both revocable and irrevocable trusts provide certain benefits, and it is important for anyone considering a trust to consult with an experienced estate planning attorney to ensure they select the appropriate product based on their family’s needs.

Benefits of a Revocable Living Trust

The most significant benefit of a living trust is that the assets in the trust can pass to the beneficiaries without probate. The Texas probate process is more straightforward than many other states; however, a revocable trust is advisable in certain situations. For example, a revocable trust is recommended for those who:

Want privacy during the estate settlement process;
Own property outside of the state;
Have blended family, business interests, or estate taxes; and
Anticipate that someone will contest their estate plan.

Establishing a revocable trust can enhance privacy, avoid probate court, and prevent hefty tax implications. Further, revocable trusts can protect inherited property and assets in the event of a divorce.

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.