Houston Estate Planning and Elder Law Attorney Blog

Why Business Owners Need a Buy-Sell Agreement in Their Estate Plan

Published on: February 14, 2025 | By David W. Miller

A buy-sell agreement is a legal provision of an estate plan that details how the estate owner’s business will transition to different ownership when he or she dies. Buy-sell agreements are critical for business owners’ estate plans, as they help ensure that a business can continue to thrive even if the unexpected occurs. On today’s blog, we review some of the basics of the buy-sell agreement, as well as why they are so important for estate planners to consider.

What are the Elements of a Buy-Sell Agreement?

Each buy-sell agreement can look different, and the particular elements will depend in large part on the business owner’s goals. It is common, however, for a buy-sell agreement to include a list of triggering events that put the buy-sell agreement into effect. While the owner’s death will certainly qualify as a triggering event, it’s likely that the owner’s incapacitation and/or voluntary departure will also be triggering events.

The agreement will also include information about how to value the business, the specific buy-out procedures, and restrictions on who is legally able to purchase the owner’s shares of the company. These provisions should be as thorough and detailed as possible.

Charitable Giving Through Estate Planning

Published on: February 11, 2025 | By Thomas W. McCulloch

Many of our clients have causes or organizations that matter deeply to them and that they want to financially support. There are many ways to incorporate charitable giving into your estate plan, and the tool you end up choosing to structure your charitable giving will depend on your own goals and finances.

Option 1: Use Your Will or Trust

You always have the option of giving assets to a charity by naming that charity directly in your will. You can also establish a trust to give money – there is a) a charitable lead trust, which allows you to donate during your lifetime while still leaving money for your heirs, and b) a charitable remainer trust, which provides income during your lifetime but gives the leftover assets to a charity at the end of the trust’s term.

Option 2: Leverage Your Retirement Account

Certain retirement accounts are eligible for charitable giving, meaning you can leave the retirement assets to a nonprofit when you die. By gifting the money in your retirement account, you both avoid a major tax penalty in your estate and allow the receiving charity to avoid paying income taxes on your gift.

How to Incorporate Cryptocurrency into Your Texas Estate Plan

Published on: February 9, 2025 | By David W. Miller

Cryptocurrency, compared to other kinds of assets, is relatively new, and the legal landscape around cryptocurrency is still developing. How, then, do individuals with cryptocurrency incorporate the asset into their estate plan? There are several basic considerations that can be helpful to keep in mind when deciding how to make sure your cryptocurrency is well protected in the event of your death.

Ensuring Possible Heirs Have Access to Your Cryptocurrency

The first consideration for your estate plan and its relationship to cryptocurrency is access to the asset itself. If you are passing your cryptocurrency to your children, do they have a private key to access the cryptocurrency? Do they have access to your crypto wallet? Is there a plan to get your heir access if they do not already have it? These details are important to include in your Texas estate plan.

Deciding How to Categorize Your Cryptocurrency in Your Estate Plan

Your cryptocurrency could be viewed either as a tangible asset or an intangible one, depending on how you store it. If you keep your cryptocurrency offline, like in an external hard drive, a probate court would likely consider it to be tangible property. If you keep your cryptocurrency in online storage, a probate court would more likely view this asset as an intangible asset (similar to an investment or retirement account). For the online cryptocurrency, it is crucial to make sure no one besides your intended heirs has access to the password, because if others are able to use the cryptocurrency, this could complicate the transfer of ownership once the original owner dies.

How Divorce Impacts Your Estate Plan in Texas

Published on: February 4, 2025 | By McCulloch & Miller, PLLC

When you go through a divorce, does your estate plan automatically update to remove your ex-spouse? Or are there steps you need to take to make sure everything is in line with your wishes? At McCulloch & Miller, we consistently tell our clients that they should update their estate plans every three to five years, or, in the alternative, after every major life event. A divorce certainly qualifies as a major life event, and it requires each individual to review their estate plan so that they can make any necessary changes post-divorce.

Automatic Revocation in Texas

In Texas, unlike in some other states, a divorce automatically removes your ex-spouse as a beneficiary in your estate plan. This means that if you had your spouse as an inheritor of your assets, your accounts, your life insurance policy, or your real estate, that person will no longer have any rights to your assets when you die. If you do want your ex-spouse to continue to be a beneficiary to your estate, you will need to explicitly state that in your will after your divorce.

It is therefore necessary, after a divorce, to name a new person or group of people who will inherit from your estate. You might also need to change your power of attorney from your ex-spouse to another person. These amendments are important; because Texas is an automatic revocation state (meaning your ex-spouse is automatically removed from your estate plan when you divorce), it is up to you to fill in the gap that is left behind.

Estate Planning with Minor Beneficiaries in Texas

Published on: January 30, 2025 | By Thomas W. McCulloch

It is natural to want to set your children up for success after you are gone. How does naming children as beneficiaries to an estate plan work? How does the process look different if the children are minors? These are important questions to consider. On today’s blog, we explain how to effectively and legally name minors as beneficiaries to an estate. As always, though, if you have questions about how this topic applies to your specific circumstances, contact a Houston estate planning attorney you can trust.

Naming Minors as Beneficiaries

The first consideration to keep in mind is that under the law in Texas, minors are unable to own property or receive assets. If a decedent names a minor in his or her will, then, the court will require the minor to have a guardian to take control of the inherited assets. The guardian will continue to have control of the assets until the minor turns 18. Having the court appoint a guardian for a minor can take considerable time, and we recommend trying to avoid court intervention in this way if at all possible.

Establishing a Trust

To avoid the court-appointed guardian process, which can require considerable time and money, it is more efficient to leave behind assets in a trust. If a minor inherits assets from a trust, the trustee distributes funds according to the instructions the decedent laid out. These instructions can be as tailored and specific as you want them to be, and they can allow your minor child to continue to benefit from your estate in a responsible, efficient way.

Understanding Pet Trusts

Published on: January 30, 2025 | By Thomas W. McCulloch

For many of our clients and their loved ones, pets are a part of the family. It therefore makes sense to include a provision in these clients’ wills or estate plans to make sure their pets are well-protected. One mechanism that pet owners can insert into their estate plans to protect their furry friends is the pet trust.

What is a Pet Trust?

A pet trust is a legal tool that provides for the care of a pet in the event of the owner’s death or incapacitation. The pet trust typically names a person that will care for the pet if the owner can no longer do so. The trust also typically has funds in it that are used for the pet’s care once the new owner steps in.

What Are Some Important Considerations of a Pet Trust?

There are several things each pet owners should consider when forming a pet trust. First of all, naming a beneficiary is crucial, and you should be sure that you communicate with your beneficiary before putting their name in your estate planning documents. If the beneficiary learns that he or she is caring for your pet only at the time of your death, this could come as an unwelcome surprise.

Estate Planning Considerations for Texas Farmers and Ranchers

Published on: January 21, 2025 | By David W. Miller

If you own a farm or a ranch, it is important that you are thinking through best practices for including that property in your estate plan. Life is full of the unexpected, and you never know when you might need a solid plan in place for what will happen to your land after you are gone. What are the basic considerations for farm and ranch estate planning in Texas? Today’s blog answers that very question.

Giving the Land to One Heir

The first consideration with farm and ranch estate planning is who you might want to inherit your land. If you have one heir that is involved in the farming or ranching process, this can be an easy question to answer: you can include in your estate plan that the entirety of your farm or ranch goes to your farming-focused heir.

Giving the Land to Multiple Heirs

If you have multiple heirs that you might want to inherit your land, the decision can be a bit more nuanced. You could either choose one heir to inherit the land in its totality, or you could physically divide the land between your heirs. Another option available to you is to allow each heir to inherit parts of the land that align with their lifestyles. You could, for example, give the land itself to a farming-focused heir, while you give the gas and mineral rights to a non-farming heir. This strategy works well if your heirs get along and will work effectively together. Lastly, you could set up a structured purchase plan, which would require one or more heirs to purchase the land from another heir over a long period of time.

Probate for Small Business Owners: What You Need to Know

Published on: January 21, 2025 | By David W. Miller

Do you own a small business? Have you accounted for that business in your estate plan? If you have, this is a good first step in protecting your business in the long-term future. After you die, your small business might be subject to the probate process. As part of the estate planning process, it is important to understand what probate entails so that you can adequately protect the business that you have worked so hard to build.

What are the Pitfalls of Probate?

Importantly, probate can take several months from start to end. Therefore, if you leave your small business to go through probate, the business will likely suffer. While the probate process is pending, the business’s assets will likely freeze. In addition, it can be unclear who is supposed to take the reins of the business during this transitional time, and this can in turn cause irreparable harm to the business itself.

How Does a Small Business Owner Avoid Probate Altogether?

It is best, then, to try and avoid probate altogether with your small business. There are several key strategies that can help you achieve this goal:

Write a business succession plan: by taking the time to lay out a plan for your business in the event of your death, you can ensure a smooth transition after you are gone. A successful business succession plan requires buy-in from the person taking over your business, and it requires details about what that persons’ responsibilities will be.
Create a living trust: you can use a living trust to ensure continuity after you are gone. The trust helps your business avoid probate altogether, while simultaneously protecting the business’s assets from outside creditors.
Enter into a buy-sell agreement: you can also draft an agreement that, once properly executed, becomes legally binding and ensures the transfer of the owner’s business interest in the case of the owner’s death.

These are just a few ways that you can make sure your small business avoids probate when you are gone. Because life is full of the unexpected, we cannot emphasize enough how important it is to develop a thorough plan for your small business in case something unanticipated were to happen. By taking these important steps now, you can make sure your business succeeds in the long run.

How to Handle Undisclosed Debts During Probate Administration

Published on: January 14, 2025 | By David W. Miller

If you are the executor in charge of overseeing the probate process for a loved one’s estate, there are certain duties you must keep in mind. One of these duties is sorting through the decedent’s debts. While these debts can certainly elongate the probate process, there are nonetheless important to navigate with care and attention. If you fail to pay an executor’s debts during probate, there could be serious consequences down the line, and it could also prolong the probate process even more than is already necessary. On today’s blog, we cover how to handle undisclosed debts during probate.

The Executor’s Responsibility

As executor, it is your responsibility to sort through the decedent’s assets and take account of what that person left behind. You should conduct a thorough review of bank account statements, properties, life insurance policies, investments, and anything else that the decedent owned. Importantly, too, you must review the decedent’s debts in order to understand what that person owed and how many creditors might be seeking payment from the estate.

Known v. Unknown Debts

Some of these debts will be obvious, in that the decedent will have left notice of the debts and the creditor will be a known entity. You have a responsibility to inform these creditors of your loved one’s death and settle up what the decedent still owes. Other times, however, you might not be aware that a debt or judgment exists. After conducting a thorough review of the decedent’s estate, you have a duty to publish a notification in a local newspaper to let unknown creditors know about the death of your loved one. This way, if a creditor finds out that the person owing them money passed, they can take the necessary steps to identify themselves and then receive the payments they need.

Avoiding Probate Disputes Over Collectibles and Heirlooms

Published on: January 14, 2025 | By Thomas W. McCulloch

So many factors go into a person’s estate plan, including a thoughtful inventory of the planner’s assets and a careful decision about how to divide those assets up. At our firm, we sometimes encounter difficult probate disputes over a decedent’s collectibles and heirlooms. On today’s blog, we cover some basic tools you can implement to avoid probate disputes over priceless items.

Create a Detailed Estate Plan

Because a family’s collectibles and heirlooms can often include an emotional value as opposed to just a monetary value, it is best to include detailed instructions about how you want those items to be distributed. Your estate plan should go beyond a typical list of monetary assets and debts. You should write a thorough list of items that you know your heirs might want to inherit, and you should include instructions for exactly who gets which item.

Communicate with Your Loved Ones

It will work out for everyone’s benefit if your loved ones know what to expect when you pass. We always recommend communicating early and often about your collectibles and heirlooms so that your heirs can have a clear understanding of how the items will be passed down. This way, you can also grasp which heirs feel a specific tie to which specific items, and you can keep this in mind when you develop your estate plan.