Houston Estate Planning Law Blog

MAKING SURE ALL YOUR DUCKS ARE IN A ROW BEFORE YOU CROAK

The title may sound insensitive, but the sentiment is something real estate planners can’t emphasize enough: make sure everything is prepared before you die.

But it’s not just property division and wills they’re talking about either, it’s the little things that people tend not to forget about like, who have I named as the beneficiary on my insurance policies and my retirement accounts?

Few people know that the named beneficiaries supersede those designated in wills. That’s why many lawyers point out that it’s a good idea to make sure that the names matchup between both sets of documents. By making the necessary changes now to your personal insurance plans, annuities and other financial accounts, you can make sure that assets are distributed according to your wishes. This is especially true in cases of sudden death; making the changes now will ensure that there is little to no confusion down the road.

It’s a good thing to keep in mind that you may place primary and secondary beneficiaries on estates, trusts, retirement accounts, life insurance policies, and transfer of death accounts. Beneficiaries, as we have mentioned previously to the readers of our blog, can be individuals or organizations. They also do not have to specifically be family members either; they can be friends, trusts, charities or even institutions.

One good way of making sure that your assets are being distributed to the right beneficiaries before you die is to keep copies of your beneficiary designation forms. Don’t have any copies of your forms? Simply request copies from your account providers or complete a new beneficiary designation form. By ensuring that everything is in order before you pass away, you’re saving a lot of headaches for your beneficiaries down the road.

Source: Fox Business, “Protecting Your Assets Even After You’re Gone,” Rick Parmanand, Oct. 26, 2012

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DECEASED BUSINESSMAN LEAVES MILLIONS TO HOMETOWN IN WILL

People often times say: don’t forget the little guy. It’s a saying that many Texas entrepreneurs keep in mind because when they finally strike it rich, they want to make sure to show their appreciation to all the people who helped them get to the top.

Often time people show their appreciation while they are living, but others, such as one Indiana businessman, chose instead to show his appreciation for his entire hometown by leaving millions of dollars in his will.

He had always told members of his hometown’s community foundation that he had put them in his will though he never disclosed the size of his gift. It seemed it wasn’t just his will that he was secretive about but his income as well.

“I knew he was taking care of himself and not borrowing from me, but I had no idea he was that successful,” his 94-year-old mother said. Her son, who owned a successful movie production company in Los Angeles, never fully disclosed his job or how much money he had amassed over the years.

After suddenly passing away last October from a heart attack, his family wanted to make sure that the entrepreneur made good on his promise to his hometown. Initially, the amount promised to the city was somewhere around $125 million; but after selling off some real estate, that figure has now grown to an estimated $150 million.

Community foundation staff were left speechless because of the generous gift, pointing out that this donation more than triples the foundation’s holdings. The foundation’s president summed it up by saying that the scale of impact that this gift will have on the community is historic; it will have remarkable effects.

Source:

New York Daily News, “Businessman leaves $125M to help hometown,” Christine Roberts, Aug. 29, 2012

Associated Press, “Businessman’s gift to Indiana hometown grows to $150M,” Oct. 10, 2012

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HOW APPOINTING POWER OF ATTORNEY CAN HELP WHEN YOU’RE INCAPACITATED

No family, in Texas or in any other state, wants to make the difficult decision of whether to take their child off of life support in order to end a terminally ill child’s suffering. But in situations where the child is of legal age, it is even more difficult when the child makes the decision that they want to be taken off of life support despite the parent’s opposition.

But this is exactly what happened to a family in Queens when their daughter requested the removal of life support. Her parents cringed at the thought and her father even petitioned in court to have himself appointed as her legal guardian. She later changed her mind, but it is cases like this that gets people thinking: what options do I have in similar circumstances?

Many estate planning attorneys will tell you that, even if you’re not sick now, it’s a good idea to have a plan in place just in case the worst should happen. Many lawyers will suggest appointing someone as your power of attorney. The designation of this person allows them to make medical decisions on your behalf should you become incapacitated. Sometimes, lawyers may also suggest a living will which describes your wishes when it comes to medical decisions in the event you are unable to state them otherwise.

Parents may also designate guardianship to someone else in the event that the parents of a disabled, ill or incapacitated child both die. Whether choosing guardianship or power of attorney, many experts will say that establishing powers of attorney can help family members in the future make difficult decisions they might not want to make on their own.

Source: NY Daily News, “Brain-cancer patient’s father drops court bid to be named guardian,” Erica Pearson, Oct. 9, 2012

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DECEASED FARMER LEAVES MILLIONS TO HELP A LOCAL LIBRARY AND CHARITIES

When it comes time to write your will, many people in Texas and across the United States, come across the difficult task of dividing their property and assets among family and friends. But what if you want to bequeath money to an organization or perhaps a business?

People have left money in their wills to people and organizations of their choice for decades, and one California farmer wanted to be no different. So when it came time to write his will, he set aside $2.8 million to be given to the Camarillo Public Library. Upon his death, librarian workers were shocked to hear that such a generous donation had been left for them.

According to the will, the multimillion-dollar bequest was intended for the expansion of the library’s collection of business books, digital media and other materials. “One of the keys to success of the business library is to perform outreach to the community,” a city librarian said. Librarian workers say this money will help them to reach more people in the community than they could before.

But the library wasn’t the only grateful organization who received a generous donation upon the farmer’s death in 2005. He also left $11 million to charities and public agencies such as the American Red Cross, the Camarillo Health Care District, the Salvation Army, as well as a children’s home.

Leaving money to family members and friends after you pass is the general way of doing things, but for those that want to help their community as well, allocating money to a business or organization in your will may be another option.

Source: The Ventura County Star, “Camarillo library plans to expand business collection with $2.8 million bequest,” Jennifer Letzer, Sept. 17, 2012

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CHANGE IN EXEMPTION RATE COULD MEAN LESS MONEY FOR HEIRS

Starting January 1 the federal tax exemption on estates and gifts is set to roll back from $5.21 million to $1 million which could present a problem for heirs if people don’t take advantage of the exemption now rather than at the time of their death.

Many people have argued that estate attorneys and other financial professionals have sounded the alarm before when estate and gift taxes were up for review, but experts are saying this time the alarm should be duly noted. Experts warn that in today’s political and economic climate Congress is less likely to keep the exemption rate as high as it is for very much longer.

One reason some experts are suggesting that people claim their estates now is that if an individual waits too long to begin the process, there is a good chance that they won’t be able to complete the paperwork before the year’s end. In some circumstances, not filing paperwork before the deadline may increase the amount of tax that they pay on their estate thus reducing the amount they give to their heirs.

Because estate planning involves a number of interlocking parts that all require some degree of time and attention, timing is crucial in most cases. Giving sizable gifts under the current limits in order to reduce estate size may avoid a potential tax hit at a person’s time of death. Estate planning attorneys point out that this will only be possible if people give ample time for the planning process, pointing out that it is difficult to finish the process in any time less than a month.

A managing director of one of the nation’s largest accounting firms summed it up by saying, “My guess is that these are the best rules you’re going to get in your lifetime.”

Source: The Wall Street Journal, “No playing chicken with estate tax deadline,” Charles Passy, Oct. 2, 2012

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