Houston Estate Planning and Elder Law Attorney Blog

Done Correctly, Reverse Mortgages Can Be a Positive Solution to Some Houston Homeowners

Published on: May 16, 2016 | By McCulloch & Miller, PLLC

The numbers are still small, but as Boomers age, the reverse mortgage may grow in popularity to maintain a certain quality of life.

Reviled for years for high costs, today the reverse mortgage—sometimes referred to as a Home Equity Conversion Mortgage (HECMs)—is a government-insurance loan that allows qualified seniors to turn illiquid home equity into tax free cash that they can use in a variety of ways. Many older adults in Houston use the reverse mortgage to make it possible to stay in their homes during retirement.

The Fifty-Plus Advocate says in "Top ways to use a reverse mortgage" that when used properly, a reverse mortgage may be the solution to living an independent, fulfilling life. A reverse mortgage lets you retain full control and ownership of your home. You are still obligated to maintain the property and to pay real estate taxes and homeowner's insurance, but you can stay in your home for the rest of your life. You also can sell your home at any time without a penalty, and any profit from the sale after paying off the reverse mortgage belongs to you. In many instances, properties held in a trust or life estates are eligible.

Recent Changes in Estate Planning Laws May be Cause for Review of Your Houston Estate Plan

Published on: May 13, 2016 | By McCulloch & Miller, PLLC

Recent change in tax laws have many people rethinking their estate plans. Also, changes in the normal course of life make it a good idea for persons with estates that range from small to large to review wills, trusts, powers of attorney and beneficiary designations of insurance, IRAs, and other interests to achieve the most beneficial tax advantages.

In the beginning of January 2013, Congress made permanent the ability of a person to acquire his or her deceased spouse’s unused estate tax exemption through portability, and approved the larger estate and gift tax exemption of $5.45 million (for 2016) per person adjusted every year for inflation. For a married couple the exemption is potentially double that amount, or $10.9 million (for 2016). We believe that it is important for you to know that you may have an alternative to simplify your current trust structure without paying any estate tax, and in fact, for your beneficiaries to pay less income tax.

You may have an “AB Trust” or “ABC Trust,” or a Family Trust that creates a Decedent’s Trust (also referred to as a “Bypass Trust”) and a Survivor’s Trust on the death of the first of you or your spouse. The recent legislation makes it useful to examine whether such trusts should be changed to simplify their operation. The trust could be simplified by eliminating the need to create new trusts if one spouse passes away survived by the other. Simplification of a trust would result in several benefits:

Estate Planning and Financial Planning—Two Areas Where Houston Military Families Need Help

Published on: May 12, 2016 | By McCulloch & Miller, PLLC

It is not easy to be a member of a military family. They face many challenges that civilians do not, and—all too often—they do not receive the support in two critical areas that could make a difference.

Risks for Houston military families include accidents during training, battlefield injury and the stress of frequent moves. Service members have a far greater than average chance of becoming disabled or dying prematurely. This makes it especially important for military families to have access to financial and estate planning advice.

The Wall Street Journal article, "How to Serve Military Families," says that in many instances military spouses are young and financially immature. Military families don't settle in one place for very long, so a nonmilitary spouse may have trouble finding a steady job that would provide a second income and a retirement plan. In that situation, if something happens to the service member, and benefits are paid out, they need to be able to access them immediately. It's more likely that young military families will need help getting these estate documents in order and updating their beneficiary designations.

Different Generations, Different Values

Published on: May 11, 2016 | By McCulloch & Miller, PLLC

Houston Millennials have a different perspective about love, money and family.

Boomers have taught their children well. While nearly three quarters of boomers see a gift of money as an expression of love, according to a recent survey, their children don't see things the same way. These different values have a significant impact on how families should discuss and plan for inheritances.

Reuter's recent article, "Equating inheritance with love can cause discord," explains that Millennials hold very different views about receiving gifts. According to the survey, roughly 33% of them feel that a monetary gift is a way for the older generation to exert influence over them.

Establishing a Value for Prince’s Estate at the Heart of Upcoming Battle

Published on: May 10, 2016 | By McCulloch & Miller, PLLC

Once again, the value of image and other intangibles will overshadow any other issue with a celebrity estate that is expected to break earnings records.

The countdown on the estate tax liability for Prince's fortune has already begun, but arriving at the final number will not be easy and certainly will not be resolved without significant legal action.

For those involved with Prince's estate, calculating just how big Uncle Sam's bite may be a real challenge. Some say it's next to impossible and might also fuel a lengthy feud between the government and the estate, as more than half the estate's value could be forfeited in taxes.

Why It’s Important for Houston’s Young Couples to Consider Estate Planning

Published on: May 9, 2016 | By McCulloch & Miller, PLLC

Many young couples choose to hold off on estate planning because they feel they are too young to worry about estate planning and death. Maybe it’s because they think they don’t have enough assets to begin an estate plan or they just don’t want to think about death and what may happen to their minor children. However, having minor children is reason enough to being the estate planning process. And being young and healthy is not a “get out of jail free” card when it comes to death, as Houston accidents happen all the time.

If you have minor children, you should consider initiating the estate planning process immediately. While it’s not the easiest topic to discuss, it’s one of the most important things you can do for your family. The estate planning process is not too difficult, and it helps to be prepared before you start. The process is much easier when you know what is expected of you:

Name a trusted individual to be the executor of your estate.

Don’t Wait for a Rainy Day to Get Organized, Especially Not in Houston

Published on: May 6, 2016 | By McCulloch & Miller, PLLC

Yes, you have an organizational style. It may be chaos, or it may be hyper-organized. Either way it is still a style. Moving from paper to digital feels more organized, but it also requires management.

There are a number of different ways to approach any problem, including getting financial documents in order. Some people pile papers in a stack, promising to get to them some rainy day that doesn't seem to arrive. Others are calendar driven, filing and shredding at the end of every quarter. Still others hoard documents, shoving them in overstuffed filing cabinets. Millennials keep nothing on paper, operating under the expectation that any needed documents will be easily downloaded when they are needed.

Morningstar's article "How to Organize Your Financial Documents" acknowledges that it's getting easier to go with option three and rely exclusively on digital resources to manage and track your financial accounts and pay bills. Financial services will remind us that paperless is the green way to go. Assuming you take some commonsense actions to protect against financial fraud, it can also be very safe. However, before you go the minimalist route, put some basic infrastructure in place with these steps.

Don’t Dive into Texas Medicaid Without a Full Understanding

Published on: May 5, 2016 | By McCulloch & Miller, PLLC

People think that Medicaid will solve all financial problems if they or a spouse will need expensive medical care late in life. It's not that simple.

Concerns about outliving assets or having all their wealth spent on nursing home care has led many Houstonians in different economic brackets to take steps to qualify for Medicaid as part of their estate planning. But Medicaid was not designed to be the first source for health care costs.

Remember that your income and assets have to be at a very low level to qualify for Medicaid. This program isn't a right or an entitlement—even if your tax dollars paid for it. Medicaid provides assistance for ongoing living needs and services provided by home care or, in advanced cases, at a nursing facility.

Financial Tactic for Houston Alzheimer’s Patients: A Trusteed IRA

Published on: May 4, 2016 | By McCulloch & Miller, PLLC

Houston families with an Alzheimer's patient must address the issue of financial planning as well as care and treatment. A number of planning tools should be discussed once a diagnosis has been made.

Any family faced with helping a loved one who has been diagnosed with Alzheimer's disease has a number of challenges ahead. In The Wall Street Journal's "Voices: Consider Trusteed IRAs for Clients With Alzheimer's," the article suggests that frank discussions must begin to address a number of concerns for the present and the future. Issues include care and treatment, wishes for care when the person can no longer speak for themselves, determining who will manage finances, estate planning and how a spouse will be supported during the loved one's illness—however long it may last.

Many of those with an Alzheimer's diagnosis really are concerned with not becoming a financial or practical burden on their family. Loved ones can encourage them to see an elder law attorney to help them organize and designate their assets early, so that they will ensure appropriate distribution before they're not able to manage their money directly.

Financial To-Do List: The Master Directory and File Clean Out

Published on: May 3, 2016 | By McCulloch & Miller, PLLC

Anyone who has cleaned out someone else's filing system knows that we all keep way more paperwork than needed. Spare your loved ones and get started now on cleaning up and creating a directory.

Some people won't set foot into a supermarket without a shopping list. They are the people who are more likely to sift through documents, clean out files and follow the steps in Morningstar's article "How to Create a Master Directory." This directory would be a huge timesaver for you and your heirs, who will be more grateful than you would imagine to be spared hours of wading through unneeded paper files.

This type of document—be it a PDF, an Excel file, a Word document, or even a handwritten record—can be your inventory of financial accounts and contact info. If you keep it up-to-date, this can be an invaluable tool for your loved ones in the event you are unable to manage your assets for yourself. Here are the steps.