Houston Estate Planning Law Blog

WHAT COULD THE SUPREME COURT’S DECISION ON GAY RIGHTS MEAN FOR ESTATE TAXES?

It’s hard to turn on the nightly news or flip through the news feed on the internet in Texas without seeing the headlines regarding the recent cases before the Supreme Court regarding gay rights. But regardless of whether you’re for or against the idea, the issues before the Supreme Court this month could have some fairly substantial impacts, especially when it comes to estate planning and estate taxes.

One of the cases before the Supreme Court specifically focuses on estate tax and its effects on homosexual couples. In the case, Edith Windsor explains that when her partner died, she inherited her spouse’s estate, which was estimated to be about $4.1 million. But instead of enjoying the exemption from the same federal estate taxes that heterosexual married couples receive, she was taxed for the estate to the sum of $363,000.

Despite Windsor’s marriage to her spouse, because of the Defense of Marriage Act, the federal government does not recognize the union and therefore does not offer her, and other homosexual couples like them, the same tax breaks that heterosexual couples receive. Windsor’s challenge of DOMA has now reached the Supreme Court where the justices will decide one two major issues. One of which is whether DOMA is unconstitutional, and two is whether future homosexual couples will be able to receive the same benefits surrounding estate planning.

Though not expected until June, the ruling could have a significant impact on not only estate taxes but estate planning as well. With the ability to leave assets to loved ones, the justices’ decision could change how homosexual couples write their wills and distribute their estates in the future. It’s a change that can mean a lot, both good and bad.

Source: Thomson Reuters, “Analysis: Death, taxes and the Supreme Court’s gay marriage case,” Kim Dixon, March 12, 2013

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ONLINE DO-IT-YOURSELF WILLS ARE RISKY FOR ESTATE PLANNING

Many Texas residents have tried to create a will on their own. If you are well versed in estate planning law, you may be able to do this. However, a recent article evaluates online drafting alternatives for estate planning. Despite the many do-it-yourself wills that are available online, professionals say that most people need help in constructing these legal documents.

Sure, a do-it-yourself will can work for individuals or couples with simple, child-free lives. However, most lives are complex enough to require detailed wills. Specifically, domestic partners, couples with more than $1 million in assets and non-citizens are some of the people who probably want to retain an attorney.

Furthermore, an evaluation of online do-it-yourself wills show that they may not be sufficient. For example, LegalZoom is an online legal document factory. Legal professionals reviewed the accuracy of the online site. In one case, attorneys examined an estate plan, which was constructed from the website.

According to reports, the website lacked legal backbone, especially in issues related to guardians. Who will take care of your kids when you pass? Do you have any backups? Furthermore, the will was missing age specifications for trusts. Most parents want their kids to be older when accessing such money. If you and your spouse were to die while your kids were young, LegalZoom would give your children access to trust money right away.

Attorneys found many other technical problems on LegalZoom and similar websites. Ultimately, professionals determined that the $81 spent on the website was not enough for a legally sufficient will. Furthermore, even if an individual were to pay for the Cadillac of wills on LegalZoom, one would ultimately be looking at hundreds of dollars for a mediocre and unstable will.

Therefore, if you are interested in making estate plans, you may want to speak to a legal professional. Unless you have an unusually simple life or are extremely knowledgeable in estate law, it may be difficult to do this on your own.

Source: The Oregonian, “Fill-in-the-blank wills can be a little skimpy,” Brent Hunsberger, March 10, 2012

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ESTATE PLANNING WHILE MAKING RETIREMENT PLANS

When it comes to estate planning, many people in Texas want to leave a legacy for future generations by passing down any assets they may have accrued during life. But what some people don’t realize is that there is a lot of other planning that needs to be made before you pass away.

We’re talking of course about retirement planning and it may be surprising for some people to hear that estate planning and retirement planning tend to coincide more often than people think.

Let’s take for example your financial assets. People who want to leave behind a large sum of money to their inhabitants may have to realize that when they retire, their income may not be as large as they are used to. Keeping this in mind could greatly change when you retire and how much you end of leaving to your beneficiaries in the end.

It’s also important to think about any medical expenses that you may accrue. In a majority of cases, people don’t want to leave their loved ones with a mountain of bills. This not only lessen the amount they will receive from your inheritance but could cause considerable headache to the person in charge of your estate after your passing.

Making your intentions clear and in writing is probably the single most important piece of information that a person can hold onto when going into estate and retirement planning processes. If you don’t make your wishes known, the state could make many of the decisions for you which may make things harder on your loved ones in the process.

Whether you’re just beginning your career or a few years from retirement, it’s always a good idea to think about how your estate plans will affect your retirement, not to mention how your plans could be changed the other way around.

Source: CBS Money Watch, “Retirement planning: Get non-financial help,” Steve Vernon, March 6, 2013

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REAL-LIFE INDIANA JONES: MAN USES TREASURE HUNT IN ESTATE PLANNING

For some, the situation may sound too good to be true but for thrill seekers around the world, one man’s announcement regarding a real-life buried treasure is other people’s excuses to live out their lifelong dream of becoming Indiana Jones.

Forrest Fenn, an 82-year-old New Mexico man has been collecting valuable items for most of his life, but when he was diagnosed with cancer in 1988 he decided that it wasn’t about the life that a person lives that is important, it’s the mileage you accrue. “There is a wonderful and mysterious world out there to be discovered,” he’s explained to numerous reporters around the country.

It took 12 years of collecting, but after gathering an estimated $1million worth of artifacts, precious metals and rare gems, the old adventurer was ready to send someone else on a journey of their own. “I have had so much fun over the last 70 years collecting things, I wanted to give others the same opportunity,” he says.

About three years ago, Fenn packed up the treasure into a chest and buried it in the mountains just north of his Santa Fe home. Now all people have to do is extract nine clues from a poem he wrote, locate the spot where the chest was buried and the million dollar treasure is theirs.

Although this may seem like an extreme way of distributing your estate before you pass away, some would point out that this form of estate planning requires little to no paperwork and could allow people with large estates to avoid estate taxes at the time of their deaths. Even though becoming a real-life Indiana Jones may seem exciting, for the rest of us here in Texas, it’s still a good idea to speak with an estate planning attorney before burying our assets in the mountains for someone else to find.

Source: Metro News, “Forrest Fenn and the Raiders of the Stashed Gold: Real-life Indiana Jones stages treasure hunt,” Ross McGuinness, Mar. 8, 2013

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‘THE DESCENDANTS’ AND THE REALITY OF HEALTHCARE PROXIES

Many people in Texas remember the 2011 George Clooney film ‘The Descendants’ in which a husband and father of two girls must make the difficult decision of following his wife’s medical wishes or keeping her on life support. But as much as we’d like to think that this scenario was a construct of Hollywood, situations like this happen every day in hospitals across the nation.

In most cases, a patient has already discussed their medical wishes with their family and friends, even authorizing a medical proxy in the event that they are no longer capable of making decisions for themselves. But it’s often times surprising to know how many people do not either designate someone as their proxy or tell their proxy about their wishes before the unthinkable happens.

Let’s take, for example, the story of an elderly Massachusetts couple. As the wife’s lung disease worsened, she was having considerably more trouble breathing on her own. But as she told her nurse, she had taken numerous trips to the hospital and been placed on ventilators in the past; these were situations she never wanted to be in again.

Though she had explained this to her hospice nurse on multiple occasions, it was a conversation she had failed to have with her husband who she had recently designated as her healthcare proxy. Although he was considered her healthcare power of attorney on paper and responsible for making important medical decisions, because she hadn’t discussed this with him he unknowingly had her placed on a ventilator after she suddenly couldn’t catch her breath one day. It wasn’t until after speaking with the nurse that the wife’s intentions were discovered.

Although it’s a difficult conversation to have with your loved ones, planning for situations like this ahead of time-preferably before the onset of an illness-can ensure that all of your wishes are being carried out to your exact specifications. Doctors and hospitals rely on the instructions given to them by patients in order to give the exact care that a patient wants to receive; if that person is unable to make those decisions for themselves, doctors look to family members. Making medical decisions for someone else can be incredibly stressful and -as George Clooney’s character demonstrated -difficult to make as well without proper guidance.

Source: The Boston Globe, “Doctors have a duty to encourage patients to discuss end-of-life wishes,” Kiran Gupta, Feb. 20, 2013

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