Houston Estate Planning and Elder Law Attorney Blog

Why is it Difficult to Pick an Executor?

Published on: April 10, 2019 | By McCulloch & Miller, PLLC

It’s hard because you want to be sure your chosen person understands your wishes, your financial situation and can make good decisions on your behalf. Not everyone can do that.

There is considerable responsibility that comes with being named an executor of an estate, explains MoneySense in the article “Should the sole recipient of an estate be the executor too?” There have been new rules passed in the last year that make the tax reporting even more important. What happens if you realize that the person you originally named may not be up to the task? This is another reason why it’s good to review estate plans every few years. There are several factors to consider when you think about whom you might name.

Consider the person’s age. It’s smart to choose a person who’s younger than you. Although that doesn’t guarantee that they will outlive you, it certainly ups the odds. Ideally, you should try to find a person who is comfortable with the areas of money and tax and doesn’t easily get overwhelmed by paperwork. Since the role of estate executor can be an intense issue that takes a great amount of time, the person you choose ideally will be retired or have the bandwidth to dedicate the substantial time commitment required to do the job properly.

End of Life Measures Get Complicated with Shared Legal Powers

Published on: April 9, 2019 | By McCulloch & Miller, PLLC

The idea that spouses and their stepchildren will share the legal power to make health care decision sounds good in theory, but, in practice, there may be some unexpected side effects.

Simple things get complicated in blended families. The idea that stepchildren and a spouse will work together to make health care decisions when their parent is ill, seems reasonable. However, what happens when the spouse and stepchildren differ on what is best?

A recent article from the Grand Forks Herald, “Joint power of attorney complicated this couple's wishes,” shares the story of what happened to one woman when her elderly husband was injured and then contracted pneumonia in the nursing home. His wife alerted her adult stepchildren, who rarely visit, and they immediately arrived to help out.

What Purpose Does a Revocable Trust Serve In My Estate Plan?

Published on: April 8, 2019 | By McCulloch & Miller, PLLC

The foundation of your estate plan is a will, also known as a last will and testament. Depending upon your situation, your Houston area estate planning attorney may recommend additional documents, including trusts.

The first part of your estate plan is the creation of a will to provide clear instructions of how your property should be distributed after you pass. The will is also used to name a guardian for minor children, if your family is still young. The concept that many people don’t understand, is that without a will, these and other decisions will be made for you according to the laws in Texas. It’s far better to make these decisions for your family yourself.

Some estates are straightforward and simple. If you have a large amount of assets, children from different marriages, or own a business, your estate will draw on different strategies used by the estate planning attorney. Among them may be a revocable trust.

How Should I Plan to Age as a Single “Elder Orphan?”

Published on: April 5, 2019 | By McCulloch & Miller, PLLC

No one plans to be elderly and alone, but if you are single and either have no immediate family members or are not close with your family, you need a game plan, if you need long term care of any kind.

If you are married, or are close with your children, you probably figure that your children or your spouse will take care of you, when you need help with long-term care. As many as 66 percent of people over age 65 do, at some point in their lives. However, what if you are a single and without family, asks WFMZ TV in a recent article, “The single senior life: Elder orphans.”

While you're still healthy, you should make plans, in the event you find yourself in need of the help that is traditionally provided by a family member. There are solutions, but they require planning.

And You Thought a Volatile Market Was a Threat to Your Estate Plan

Published on: April 3, 2019 | By McCulloch & Miller, PLLC

It seems like families need to spend more time discussing estate plans and their finances, especially if they are blended families, to prevent major disruptions.

For the second consecutive year, family conflict was named as the biggest treat to estate planning by estate planning and elder law attorneys and other professionals attending this year’s annual Heckerling Institute on Estate Planning.

The survey, conducted by TD Wealth, found that nearly half (46%) of respondents said that family conflict was the biggest threat to estate planning in 2019, followed by market volatility (24%) and tax reform (14%).

How Can I Use My Life Insurance to Give to Charity?

Published on: April 1, 2019 | By McCulloch & Miller, PLLC

“Financial planning is an ongoing process that examines your goals, situation and finances, in order to determine if and how these goals can be met. It’s not a product-centric process, but often we use financial products like mutual funds, annuities and/or life insurance to achieve goals in the most efficient manner.”

As Forbes explains in the article “2 Ways To Combine Charitable Giving And Life Insurance,” one of the core products for protecting wealth is life insurance. As you age, your need for life insurance may lessen, but sometimes it will increase. If you have a life insurance policy that you no longer need, one option might be to donate the policy to a charity. There are several ways that life insurance policies can be gifted or used for charitable purposes.

Gift Your Existing Policy. You can simply give away an existing policy, if you no longer need the policy for estate liquidity or estate taxes. You could gift the policy outright to your favorite charity or use a Donor Advised Fund (DAF). If you give the policy to a charity outright, you can change ownership of the policy and pretty much be done with it. You might get a charitable income tax deduction for the value of the policy at the time of the gift (it’s measured by the sum of the interpolated terminal reserve plus unearned premiums rather than the death benefit amount).

Iowa Senator Sponsors Elder Abuse Prevention and Prosecution Act

Published on: March 27, 2019 | By McCulloch & Miller, PLLC

“Iowa Senator Charles Grassley is among those in Congress calling for a crackdown on elder abuse crimes in the country.”

The witnesses of loved ones affected by elder abuse incidents testified at a recent Senate Finance Committee hearing in Washington.

Those witnesses included Pat Blank, longtime Iowa Public Radio host, and past winner of the Iowa Broadcast News Association's Jack Shelley Award. Blank's mother, Virginia Olthoff, died in an Iowa nursing home in February 2018, because of alleged neglect.

Make the Most of Life Insurance

Published on: March 25, 2019 | By McCulloch & Miller, PLLC

Life insurance is the bedrock of many people’s financial plan. There are more nuances to life insurance, than just buying a policy and paying premiums.

It’s not the most fascinating topic, unless you’re in the business, but understanding the basics about life insurance can have big implications for you and your family, according to a recent article, “4 questions to ask to maximize your life insurance benefits” from WTOP. Here’s what you need to know about life insurance:

Changed Circumstances. The amount of life insurance you need, is unique to each person’s financial and family circumstances. Remember that life insurance death benefits are used for more than just replacing immediate income from the family breadwinners. They can also pay off the mortgage and other debts, cover college tuition, create a retirement nest egg for a surviving spouse, fund a business transfer, or be an important estate planning tool. With life insurance, you can protect your family against a premature death with a solid safety net. In the event of divorce with future child and spousal support obligations due to you, you’d want your divorce settlement agreement to say that your ex-spouse, as payor, maintains a sufficient life insurance policy naming you, as the recipient-beneficiary, to cover all future commitments. You also need to be notified by the insurance company of any policy changes or lapses because you may be depending on this money in the future, should something happen to your ex-spouse. Stay-at-home spouses and caregivers also need life insurance, because replacing their duties could incur many unexpected costs for the survivor.

Decisions About Taking Pension Pay-Out Still Challenging

Published on: March 22, 2019 | By McCulloch & Miller, PLLC

There was a time when most people had three sources of income in retirement. One was their savings, the second was Social Security and the third was their pension from work. Today, very few workers enjoy the security of a pension, and retirement income is dependent on each person’s ability to save, plus Social Security.

For those remaining workers who have pensions, at some point a decision must be made whether to take their pensions over time or to receive the accrued value as a lump sum. A pension can be a stable stream of income in retirement, or it could be a lump sum that is invested. There are pros and cons to both.

Investopedia’s recent article, “Pension Planning: Lump Sum Versus Monthly Payments,” says that the pension provider takes the risk of both sub-par market returns and the possibility that the retiree will live longer than expected. The article raises several thoughts to consider, when making the decision:

Tax Traps Can Ruin IRA Status

Published on: March 20, 2019 | By McCulloch & Miller, PLLC

You may know that there are tax traps when IRA withdrawals or rollovers are done incorrectly. However, did you know that an investment portfolio could contain a tax trap that could ruin your IRA status?

The most frequently occurring IRA tax trap comes from tax bills through the Unrelated Business Taxable Income (UBTI). Sources of business income from stocks, bonds and funds like interest income, capital gains and dividends are exempt from UBTI and a related tax, the Related Business Income Tax.

Fox Business’s recent article, “Your IRA and taxes: Don't get a surprise tax bill” explains that IRAs that operate a business, have certain types of rental income, or receive income through certain partnerships will be taxed, when the total UBTI exceeds $1,000. This is to prevent tax-exempt entities from gaining an unfair advantage on regularly taxed business entities.