Houston Estate Planning Law Blog

TEXAS GOVERNOR DRAWS CRITICISM FOR WHAT HE CALLS GOOD ESTATE PLANNING

Proper estate planning requires a lot of forward thinking and financial discipline. However, the payoff for good estate planning is huge. Individuals not only enjoy a better and more comfortable retirement, but they may also be able to leave behind assets to loved ones.

Recently, Texas Governor Rick Perry came under scrutiny for drawing retirement income from his state pension plan, but he defended his decision by simply calling it good estate planning.

Perry receives around $6,500 each month as part of his retirement income from the state. It may come as a surprise to some, but Perry and his campaign staff say it is perfectly legal.

Perry has been governor for the last 11 years, and previously served in other capacities with the state.

The governor’s income was unveiled after financial disclosure forms were released. In addition to the state pension, he also makes $150,000 a year as governor. He also has assets in real estate, trust funds and money market funds.

From the financial disclosure forms, it is clear that Governor Perry has taken the right steps to plan for his future. He has accumulated a sizable fortune for his family. With the right estate planning, he can be assured that his family will be provided for when he is gone.

Even those who aren’t running for public office would do well to begin estate planning. Estate planning isn’t only for the rich, and allows individuals to properly plan where their assets will go when they die. Although it is difficult to think about death, planning for the future is a wise decision.

Source: Star-Telegram, “Perry drawing five-figure retirement pay from Texas,” Maria Recio, Dec. 16, 2011

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FIREFIGHTERS ACCUSED OF FORGING THE WILL OF FORMER STATE OFFICIAL

Taking the time to do estate planning may prevent many problems in the future. In fact, estate planning may be able to reduce instances of duplicate or forged wills. This issue recently popped up in a nearby state that Texas readers may find interesting.

When a Tennessee state representative and former firefighter died in November of 2010, a Memphis firefighter and her two co-workers are alleged to have produced a document that they claim to be the man’s last will and testament. Under the terms of that will, the man’s $100,000 estate was to go to the three women.

One of the women claims to have been the man’s girlfriend, although the man’s family disputes that. They say they don’t know the woman.

The man’s family does believe, however, that the will was forged. This past May, a judge found support for their contention when two handwriting specialists determined that the signature on the will did not belong to the late state representative. Now it appears that the case may finally be brought to a close. The local district attorney in Memphis, Tennessee has indicted the three firefighters on charges of forging the will.

In this case, the family no doubt spent considerable funds and emotional energy in seeking to prove the will was indeed forged. To prevent such problems from occurring in the first place, it is often helpful to have one’s last will and testament filed with a trusted person or in a safety deposit box. To prevent problems of this type, as well as many others, it is also beneficial to undergo the estate planning process with the aid of a professional.

Source: WMCTV, “3 indicted for forging lawmaker’s will,” Kontji Anthony, Dec. 12, 2011

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EDUCATION FUNDING MAY IMPACT ESTATE PLANNING IN TEXAS

Even the relatively young and healthy should consider taking the time to think about estate planning. It is often beneficial to do so because it not only prepares one for the unthinkable, but is also a good financial management tool.

For those Texas residents who are currently working on estate plans, or are thinking about doing so, the present troubles faced by the education system may bear watching as they may lead to changes in property taxes. That, in turn, may impact how you decide to allocate your real estate assets.

Last May, Texas legislators passed a budget that provided $53.8 billion for school funding. Although that seems like a large amount of money, many Texas schools have previously been left underfunded.

While we all want Texas students to have the best educations possible, school funding needs to come from somewhere. At the moment, about 47 percent of all school funding comes from property taxes. These taxes are collected at the local level, meaning that more affluent counties have more money to spend per pupil than less well off areas. To address the problem, a program has been in place for the past ten years that redirects a portion of property taxes from wealthier to poorer counties. As an alternative, some have called for property taxes to be collected at the state level.

It is unknown what will happen to property tax rates in the future and those that are planning an estate need to be aware of the changes. If property is left to heirs, families need to sure that those heirs are capable of paying the necessary taxes. Although estate planning is an essential tool for many families, more thought may need to put into the planning to be sure assets are distributed responsibly.

Source: Bloomberg Businessweek, “Texas School Finance Fix Eludes Perry as Students Do Without Art,” David Mildenberg, Dec. 1, 2011

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PROPOSED CHANGES TO FEDERAL ESTATE TAX

There is a bill pending in Congress that, if passed, could significantly impact estate planning for Texas residents and others.

The bill is sponsored by Rep. Jim McDermott of Washington, and it seeks to roll estate tax rates back to their pre-2001 levels.

Introduced in November, the legislation would raise the estate tax from its current limit of 35 percent to 55 percent and reduce the estate tax threshold from $5 million to $1 million. The levels would be indexed for inflation beginning in 2000, and the proposed law seeks to address the fact that only a small fraction of all estates paid federal estate taxes in 2009.

The bill is heralded as a vehicle for ensuring tax equality for all Americans, but the bill’s passage could significantly impact families engaged in estate planning.

Some welcome the proposed changes and say that in these difficult times, it is reasonable to ask the wealthiest Americans to sacrifice for the greater good.

There are current estate planning opportunities for Texas residents to consider to allow individuals and families to take full advantage of existing laws as they seek asset protection and estate tax minimization so that their heirs and beneficiaries can be provided for in the future.

Individuals and families that are thinking about beginning estate planning or wishing to make changes to their current estate may consider working with an experienced estate attorney who fully understands the laws and procedures. Estate planning can be complicated at times and an attorney can help families plan a solid future for their families.

Source: Accounting Today, “Congressman Proposes Raising the Estate Tax,” Michael Cohn, Nov. 21, 2011

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