Houston Estate Planning and Elder Law Attorney Blog

Taxes and Estate Planning in Texas: What You Need to Know

Published on: May 14, 2024 | By McCulloch & Miller, PLLC

Each state has slightly different taxes that it imposes when it comes to estate plans. In Texas, we are lucky that our state does not charge an estate tax, an inheritance tax, or a gift tax; even so, there are important things to know about each one. On today’s blog, we cover some of the basics on these three kinds of taxes, so that you can be well prepared if and when you encounter any of them in the future. As always, with additional questions, be sure to contact an experienced Houston estate planning attorney that you can trust.

The Estate Tax

The estate tax is a tax that states can impose on decedents’ estates, making them pay the state a percentage of the total assets before passing money down to their beneficiaries. Luckily, Texas is one of the 38 states that does not have an estate tax, meaning you can bypass this part of probate when thinking through your last will and testament.

The federal government, however, does impost an estate tax, but only for estates that are at least $13.61 million in value. The estate’s value that surpasses the $13.61 million is subject to the federal estate tax, meaning decedents should not have to pay taxes on the entire estate (only the amount above this threshold).

When It’s Time to Update Your Estate Plan

Published on: May 7, 2024 | By Thomas W. McCulloch

It takes initiative and forethought to create an estate plan, and if you have taken the step to draft and finalize your plan, you are on the right track. One of the next important questions then becomes: when should you update the estate plan you’ve created? Today, we review some basic guidelines to help you consider whether or not updating your estate plan is the right move for you.

Time

The first principle to guide your estate plan updates is that once three to five years have passed since drafting the plan, you should think about revisions. It’s possible the legal landscape has changed, or there might be life circumstances affecting your plan that you haven’t considered.

Refreshing your estate plan every three to five years also helps you make sure you are still happy with what you’ve included in your documents, and it keeps you in consistent communication with your beneficiaries. We find that the more our clients are involved in their own estate planning processes, the more they talk with their loved ones about what the plan will be when they pass, and the more their loved ones can be adequately prepared for when that moment comes.

How to Account for Issues of Capacity When Creating an Estate Plan

Published on: April 30, 2024 | By Thomas W. McCulloch

In Texas, to create an estate plan, you must have sufficient mental capacity to understand what is going into the document. If your estate plan is later going through a probate court, and the judge decides that you did not have the proper mental capacity when signing your will, your beneficiaries will have problems getting the assets you left behind. On today’s blog, we review some basic components of capacity; if you have questions about whether a loved one is in the right mindset to draft an estate plan, speak with a Houston estate planning attorney that can help you apply these requirements to your circumstances.

Basic Capacity Requirements

In Texas, to create a will, there are three important requirements to consider. Importantly, you must meet only one of these three requirements: 1) you are at least 18 years old, 2) you are or have been legally married, or 3) you are a member of the U.S. military.

As long as you meet one of the three requirements, you will be able to create a will if you also have the capacity to understand the legal document. For individuals without this mental capacity, called “testamentary capacity” in legal terms, it might be necessary to retain a power of attorney or a legal guardian to help get the will drafted and finalized.

How to Effectively–and Legally–Bypass Probate in Texas

Published on: April 30, 2024 | By David W. Miller

In Texas, there are several basic strategies you can implement to bypass probate. If you have been part of probate proceedings following a loved one’s death, you know that probate can be difficult to navigate and frustrating to deal with when you have other things on your mind. The process can also take time and resources that unnecessarily delay the process of passing assets from the descendent to his or her beneficiaries. Today, we cover some probate avoidance strategies that you can implement to bypass probate with your own assets.

Create a Revocable Living Trust

One basic tool we often recommend to our clients is the revocable living trust. This tool allows you to put assets in a trust, essentially sealing the money from outside influences such as creditors, debtors, and probate. While creating a revocable living trust, the grantor often names him or herself as the trustee, therefore allowing him or herself to maintain control of the assets.

Once the grantor dies, however, control passes to a second trustee, often named in the estate planning documents. The next trustee then distributes assets however the grantor asked for them to be distributed.

Planning for Senior Benefits in Texas: The Basics

Published on: April 23, 2024 | By Thomas W. McCulloch

health savings accounts in estate planning

Aging is inevitable and, unfortunately, aging is also expensive. For many people, getting older means acquiring more medical needs and different life circumstances. Many of our clients, for example, transition to long-term care facilities or nursing homes once they get older. Planning financially for whatever might come your way can be tough, and as experienced elder law attorneys, we cannot underestimate the importance of making sure you are prepared for your elder years.

Medicaid

The state of Texas offers Medicaid for people who are elderly or have disabilities. The insurance covers long-term care services as well as basic health coverage. Individuals who are 65 and have limited financial resources qualify for Medicaid; meanwhile, those who are under 65 and think they might qualify can start gathering their necessary documents to submit when they do turn 65. More details about how to apply for Medicaid can be found here.

Long-Term Care Planning

Importantly, Medicaid covers long-term care, such as the cost of a nursing home, while Medicare does not. For those who do not qualify financially for Medicaid, Medicare will likely be the health insurance available at the age of 65. Given that Medicare does not cover the cost of long-term care, older individuals without Medicaid are left to pay for nursing homes out of pocket.

Estate Planning and Tax Season: What You Need to Know

Published on: April 23, 2024 | By David W. Miller

As we move past tax season, it is an apt time to think about the crossover between estate planning and tax filing. For many individuals, filing taxes can bring up important questions about updating an estate plan. On today’s blog, we review some of the advantages of using tax season as a springboard for revising your estate planning documents. As always, with fact-specific questions, we recommend you contact a Houston estate planning attorney to talk through your personalized goals and priorities.

There are a few reasons that tax season is one of the best times to review your estate plan. First of all, filing taxes gives you a full picture of your assets, debts, and income. The momentum you gain by gathering the necessary documents and imputing financial information allows you to consider whether your estate plan might be outdated.

Secondly, a change in your financial status means that your estate planning documents should also change. If you’ve acquired a new home, for example, you’ll want to add a provision to your will about who you’ve chosen as the beneficiary. If you’ve come into an inheritance, you’ll have to write out a plan for how that money will be distributed to your loved ones. Adding this information into your tax submissions can trigger a reminder to add the information to your estate plan.

Three of the Most Common Mistakes People Make When Creating DIY Wills

Published on: April 17, 2024 | By Thomas W. McCulloch

In Texas, “DIY wills” are not uncommon. A DIY will is a will drafted and finalized entirely by the person planning for his or her death. At our firm, we often say that DIY wills work until they don’t work. While they can end up being a fine option for those wanting to cut costs of hiring an attorney, they also carry inherent risks that can end up causing headaches and excessive fees for loved ones down the road. Today, we review some common mistakes that we see individuals make when they do decide to create a DIY will.

Mistake #1: Planning Only for Death

A common misconception is that wills and estate plans should only include provisions that instruct your loved ones on how to distribute your assets after you die. It is also important, though, to address what happens while you are still alive. For example, do you have a provision about power of attorney? Do your loved ones know how to handle a situation in which you might need to be intubated or resuscitated? Have you adequately addressed how you want to spend the final years of your life (i.e. in a nursing home or long-term care facility), and do you have the funds accessible to do so? These are all important considerations to include when drafting a DIY will.

Mistake #2: Failing to Update the Will

Circumstances change, and if you experience a life change, you will need to update your will accordingly. Wills are therefore not “one and done” documents; instead, if you purchase property, get married or divorced, have a child or grandchild, or acquire significant debt, you should add provisions about these events in the will you have drafted.

What Should You Do if You Don’t Have a Trusted Person to Oversee Your Affairs?

Published on: April 17, 2024 | By David W. Miller

Part of drafting a last will and testament is naming an executor, or a person appointed to carry out the terms of the will. Oftentimes, the author of the will chooses to name a family member or close friend as the executor, leaving his or her estate plans in the hand of a trusted and close individual. Other times, however, it can be just as beneficial to go down a different road and choose a person that you don’t personally know but that you still trust to oversee your affairs.

Appointing a Professional Fiduciary

If you are struggling to think of a trusted person to oversee your affairs, consider appointing a professional fiduciary to serve as the executor to your will (or, in the alternative, as the trustee to your trust or as the agent for your power of attorney). Professionals charge a fee for serving in this capacity, which can either be a fixed hourly rate or a percentage of the total assets in the estate. When you choose a professional fiduciary, this person will take on the same roles and responsibilities that a trusted family member would take on, carrying out the terms of your estate planning documents and making sure everything goes according to plan once you are gone.

Sorting Through Your Options

It can be difficult to figure out which professional fiduciary to trust, if this is the route you choose to take. We recommend that you consider factors such as client reviews, overall cost, and experience in the field when you are looking for someone to serve in this capacity. By conducting an initial consultation with your possible executor, you can begin to form a trusted relationship with that person as you discern whether he or she is the right fit for you.

Guardianship FAQs

Published on: April 7, 2024 | By Thomas W. McCulloch

Sometimes, during an individual’s court proceedings, the court will decide that the litigant needs a guardian to look out for his or her best interest. When this happens, the court makes a finding on the record that the individual at issue is incapacitated, finds a guardian to care for that person, and appoints the guardian formally to establish the legal relationship between the two people. On today’s blog, we cover some frequently asked questions about guardianship in Texas, so you can be aware of what happens when a guardian is involved in state court proceedings.

What Kinds of Guardianship Does the Court Consider?

There are four main types of guardians that the court can appoint: the guardian of the person (full or limited); the guardian of the estate (full or limited); the guardian of the person and estate; and temporary guardianship. Each type is relatively self-explanatory – the guardian will either look out for the person’s personal care and treatment (in a complete or partial capacity) and/or the person’s financial matters (again, in a complete or partial capacity). For temporary guardianship, the court determines that there is an emergency situation necessitating a guardianship, which will remain in place until the court says otherwise.

When is a Litigant “Incapacitated?”

In Texas, the word “incapacitated” refers to either a person under the age of 18 or to, according to the statute, “an adult who, because of a physical or mental condition, is substantially unable to: (A) provide food, clothing, or shelter for himself or herself; (B) care for the person’s own physical health; or (C) manage the person’s own financial affairs.” Courts will not take this analysis lightly and will generally only consider guardianship when absolutely necessary.

When Should You Start Preparing to Apply for Medicaid in Texas?

Published on: April 7, 2024 | By David W. Miller

In Texas, the state provides Medicaid to those considered “low income” that meet certain threshold requirements. To qualify, you must be a low-income resident of Texas in need of heath care, and you must either be: pregnant, responsible for the care of a child, blind, disabled or caring for a person who is disabled, or 65 years or older. If you meet the requirements, you can submit your application, wait for the government to approve it, and eventually receive the state-sponsored benefit.

If you know that you will likely qualify for Medicaid at the age of 65, you can start to prepare for the process of submitting your application. This process will include filing out an online (or phone) form in which you answer questions about your household, your current income, and your assets. The government will be looking at your financial profile to ensure that you meet its requirements to receive Medicaid before it approves your application.

You might need several documents to supplement your application: these documents may include proof of your identity, a social security card, proof of citizenship, and documents proving where you live (many times, these documents end up overlapping with each other). You might also have expenses such as child support or loan payments that you will need to address. You should also be prepared to submit documents regarding your earnings, assets, medical expenses, housing expenses, and any current health insurance plan that you are using.