Houston Estate Planning Law Blog

HOW CAN A LIVING TRUST HELP YOU AND YOUR ESTATE?

Most people in Texas who are currently looking into estate planning are more than likely informed when it comes to wills and what should be included in these important legal documents. But what they may not know about is the use of a living trust is a way of distributing assets to beneficiaries without all the probate associated with wills.

Let’s take a look at a couple trusts that can help you disperse your assets in accordance with your exact wishes. First, we’ll start with living trusts. These types of trusts become effective during your lifetime and can be revoked at anytime. Living trusts are a good choice for people who want to distribute their assets to beneficiaries without losing a majority of it to taxes and probate fees.

There may come a time when you may want to establish a trust but want to make sure you have complete control over what happens to the assets in the trust. Unlike living trusts which are managed by a trustee, a revocable trust allows a grantor the ability to have complete control over the trust, even making changes to it if necessary. They also have the ability to be revoked in the case that you no longer want to give assets to the intended beneficiaries. It’s important to note however that money placed in a revocable trust is subject to estate taxes and the assets within the trust can be reached by creditors.

In some states, the use of trusts can be far more efficient than wills not only because they avoid probate, but because they can be set up in such a manner that the grantor can control the assets in the exact manner in which they choose. Also, in many states, probated wills become public record. This can especially be a problem for people who want to make sure that the specifics of their assets stays private.

Because there are so many different types of trusts, it will be important to speak with a skilled attorney before making any definite decisions about your assets.

Source: The New Jersey On-Line, “Biz Brain: The benefits of a living trust,” Karin Price Mueller from The Star-Ledger, Feb. 18, 2013

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HOW TO USE ESTATE PLANNING TO HELP A CHILD WITH A MEDICAL HISTORY

Planning for your own death is never an easy task to undertake; but when you have an ailing child, this process can be so much more difficult to bear. Any parent in Texas would want to see their child taken care of after they have passed. This is especially true for parents who have a child with a medical history or perhaps is completely disabled. Thinking about this during the estate planning process could make a huge difference when it comes to taking care of your children after you’re gone.

Most estate planning experts will agree that the best way to ensure that a beneficiary receives the maximum amount given to them is through the use of a trust. Especially in the case of children with medical histories, parents will want to make sure they are getting the necessary funds to pay medical expenses.

Experts warn however, that certain provisions will need to be present in a trust to make sure that the money in the trust is not sought after by creditors in the event the beneficiary falls into financial distress.

For people whose children may already be disabled and receiving Social Security Disability benefits or Supplemental Security Income, they would be well advised to speak to an estate planning expert on ways of making sure that the assets in the trust do not impact the amount of money received through these benefits.

It’s important to point out, of course, that it’s not just parents of ailing children who should think about the specifics of their estate, but the mass population as well. Remember, you can leave your assets to whomever you wish, not just your children;, but it’s important to make sure that the right stipulations are being applied to each share of your assets in order to maximize the amount received by the beneficiary.

Source: The MetroWest Daily News, “Examining estate planning options,” Christine Keane, Oct. 20, 2012

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HOW GOING PAPERLESS IS CHANGING ESTATE PLANNING FOR THE FUTURE

We’re moving away from a paper driven society. Now, this may not be a new statement, but it’s surprising to find out how many people take this information for granted and an increasingly digital society would raise a few concerns than it is. Case in point: what happens to your digital assets after you pass?

Estate planning has seen this question come up time and time again in the past few years as more and more people are beginning to realize that a majority of their information and assets could be lost to cyber space if they were suddenly to kick the proverbial bucket tomorrow.

So what are experts suggesting people do as far as planning when it comes to their digital assets?

Although a majority of your digital assets may only hold personal or sentimental value-like family photos or the recording of your daughter’s first ballet recital-some of your more valuable assets, such as bank account and other financial assets, may be stored digitally. Automatic bill pay, though convenient now, could pose a problem down the road when it comes to dividing your assets to beneficiaries.

To avoid a lot of problems in the future, many experts suggest writing down any usernames and passwords and including them in your will; that way, in the event of your passing, your loved ones can have access to the same information that you were privy to in life. Be sure to also discuss with your estate planning attorney what can and cannot be included in your will when it comes to your digital assets. Though some states may have small laws that cover digital assets, others may not.

As our society pushes further away from the use of paper, we open ourselves up to a plethora of issues. And without the legal system on par with our advances, this can often times leave us wondering what we’re able to pass on to future generations or not.

Source: Investing Daily, “Securing Your Digital Assets,” Bob Carlson, Jan. 15, 2013

Questions about estate planning and wills? Check out our firm site for answers to these questions and more.

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HOW IS TURMOIL IN DC AFFECTING THE ESTATE TAX IN TEXAS?

Since the recession, and probably sometime before it became more than just a few-year-slump, Texas legislators have been considering the very real possibility that the federal government may not be able to give them the necessary funds in order to balance their hefty budget.

So far, funds provided by the federal government account for more than a third of the state’s budget; but what if that money dried up? How would Texas legislators be able to subsidize an approximated $64.7 billion loss?

According to a bill introduced this month by Rep. James White, R-Hillister, the answer may be to bring back the state’s estate tax. Although calculations suggest that by re-instating the tax, the state would collect between $62 million and $317 million over the course of 2013, an increase in estate taxes could mean a significant decrease in the amount of money some people intend for their beneficiaries.

Though many Texans agree that weaning themselves off of federal funding could save them a large headache if there is another financial crisis from Washington D.C. in the future, they also point out that in the majority of cases that would be affected by the tax hike, the estates being given to beneficiaries would be going to people may be suffering financially. The additional money that would be spared because of an absent estate tax could mean a bigger difference than it would to the state government.

Although other state legislators are praising Rep. James White, R-Hillister for his efforts to protect Texas financially in the event of Federal financial turmoil, some people in the community urge representatives to reconsider the impact this will have on people and their beneficiaries.

Source: The Dallas Morning News, “Rep. James White files ‘Texas Self-Sufficiency’ bill to analyze reliance on federal funds,” Claire Cardona, Jan. 22, 2013

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THINGS TO THINK ABOUT WHEN PLANNING YOUR WILL

Although this may seem like old news to many people here in Texas, it’s surprising to see how many people do not plan for their estate until it’s almost too late. Some of us feel the morbidity of it all-writing a will while you’re still in your prime-but others haven’t begun writing their wills because they simply don’t know where to start.

Most people usually start seriously considering a will when either someone close to them passes or they are told that they have a serious medical condition that could greatly reduce their time here on earth. No matter what gets you to start thinking about estate planning, sometimes people get so worried about ensuing arguments over their estate decisions that they put off making a plan to avoid the headache.

For those who find themselves in this situation, some estate planning exerts will advise you to calm your anxieties by simply thinking about one simple thing: give to those who you hold dear. Once you set aside the daunting idea of separating your belongings and financial assets equally amongst your beneficiaries, you allow yourself the freedom to show how much you cared about someone through the act of giving.

A majority of people, when planning their wills, focus most of their efforts on dividing their estate, often times completely forgetting about including their medical wishes as well. They’re another important part of any will that not only help ensure that your burial wishes are followed but help give directions to family members on how to follow through with your wishes.

Source: The New York Times, “In Writing Her Will, It’s the Little Things That Matter,” Laura Holson, Nov. 13, 2012

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THE RICH, THE FAMOUS, THE UNPLANNED ESTATES

We’d like to think that when it comes to dying, because it’s an inevitable fact and we know it’s coming, that planning for it should be easy. But when death is sudden, often times even the people we think would be most prepared for their parting end up being the ones without a plan.

This is especially true for estate planning, and as history has shown us, sometimes not planning for the inevitable can make serious problems when you’re gone. Take these notable singers for example:

When Sonny Bono suddenly passed away, his third wife was left to manage an estate with no will, no trust, and no direction. It wasn’t until she had secured permission from a probate judge that she was able to exercise authority over the estimated $1.7 million estate.

Singer James Brown had the opposite problem when he passed away. He had a will and wishes he wanted carried out, but because he had failed to update his beneficiaries to include a special trust to benefit poor and needy children, and because he hadn’t discussed this with any of his surviving family members, his money ended up going to legal teams instead.

Although a majority of our readers may not be celebrities, it’s important to remember that it’s not just the rich and famous that should be getting their estate in order before they pass. Legal disputes can happen to anyone, no matter how large or small their estate may be. It may be as simple as who gets their grandmother’s favorite porcelain doll to as complicated as millions of dollars in assets; either way, it’s a headache you can save your family if you remember to plan ahead.

Source: Wealth Management, “Lessons of the Rich and Famous … in Death,” Jim Moniz, Dec. 24, 2012

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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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