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Houston Estate Planning Law Blog

AUCTION OF SUICIDAL MAN’S ESTATE FINALLY SET IN MOTION

The last two years have been a difficult one for the widow of an elderly Ohio man who killed himself in 2011. Some people here in Texas may remember hearing the story about the man on the news. Just prior to killing himself, he cut the locks to cages on his property, freeing the exotic animals inside. It took two days for local law enforcement to round up the animals, many of which needed to be killed because of the danger they posed to the community.

Much like the police, the man’s widow also had some rounding-up to do when it came to his estate. He had left behind an enormous collection of vehicles–everything from motorcycles to a hovercraft–horse-back riding equipment, and other animals. Though still grieving, she had the enormous task of figuring out what to do with his remaining belongings. According to reports from around the time of his death, the two had become estranged, and she may have been left with little direction as to how he wanted his estate distributed. In the end, she felt that an auction would be best.

It’s taken nearly a year to gather and identify the items going up for bid; but with the help of an auction house owner, the estate is finally ready to be sold. “She’s spent day and night assembling these things. It’s all a part of settling the estate,” explains the auction owner in a recent interview. It’s being seen as another step now to moving on–something many of our readers can relate to having had to go through similar processes with their own deceased love one’s estate.

While some people may specify in their estate plans that their belongings be auctioned, others may want these items to stay in the family or be donated to charitable organizations. It’s no surprise that having clear instructions in your will can make sure that your this happens and that your final wishes are carried out exactly as you wanted.

Source: The Columbus Dispatch, “Zanesville’s exotic animal owners’ estate going on block,” Eric Lyttle, Aug. 4, 2013

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LAW OFFERS LITTLE END-OF-LIFE GUIDANCE FOR MANDELA’S KIN

Millions of people across the nation, including many right here in the state of Texas, have been anxious watching the failing health condition of the former South Africa President Nelson Mandela. This may partially be because, like so many families here in the United States, the complexities of estate planning laws have left Mandela’s kin with little end-of-life guidance.

For those who have not been following the story, Mandela has been reportedly lying on the edge of death for the last few months. While doctors insist that he is in “critical but stable condition,” this confronts his family with the difficult decision of when to take the ailing 94-year-old off of machines. Friends who recently visited him in the hospital say he is awake and smiling but family members know that they will need to come up with an end-of-life plan soon.

In the United States, living wills make situations such as this quite easy and often relinquish the burden of making the difficult pull-the-plug decision to the person who is dying. As we’ve mentioned in past posts, this is part of your estate plan where you dictate your medical wishes and end-of-life instructions to your family. But according to reports, this may be less clear under South African law.

Current laws are vague and unclear about who gets to make the decisions for Mandela if and when he is unable to. This can get especially complicated if he has not designated a proxy in his stead. Situations such as this are not uncommon here in Texas though our state laws do offer more guidance than what the Mandelas may be getting.

Source: The New York Times, “Mandela’s Kin Face Gray Area on End of Life,” Rick Lyman, July 11, 2013

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BONANZA STAR’S SON SELLS MEMORABILIA TO SHARE WITH REST OF WORLD

Lorne Greene, best known for playing Ben Cartwright on the television show Bonanza, is considered to be one of the most iconic people of his era and was privy to have been on what is now considered to be the second-longest-running TV Western. But Greene likely didn’t know how popular he would really become once the show went into syndication the world over, creating an even larger fan base than he probably dreamed. That may not have been his thought when he decided to leave a treasure trove of Bonanza memorabilia behind for his son when he passed away in 1987.

Treasures ranged from commemorative belt buckles to the original branding iron that was used during the beginning sequence to every episode. It’s a collection that Greene’s son now says he wants to share with the world.

A few months ago, Greene’s family contacted Anchor Auctions and Appraisals and explained that they wanted to auction off a portion of Greene’s items. As the son’s assistant explains, Greene had owned a lot of stuff and, in the end, just wanted the public to have access to it. So they got to work putting together a collection of more than 500 artifacts, including 20 from the television show, to be put up for auction. It’s not clear whether the auction, which will be open to overseas investors, was stated in Greene’s will or if the idea was that of his son who knew what about his father’s final wishes of sharing these treasures with the rest of the world. Regardless though, many Texas residents may be getting ideas about their own estates from just such a situation.

As we’ve stated in past posts, providing a detailed description of what you want to happen to your belongings and monetary assets after you pass is an important part of any estate plan. It not only ensures that the people you designate get what you want them to get, but makes sure that your final wishes are carried out exactly how you wanted.

Source: The Los Angeles Times, “Son of ‘Bonanza star’ Lorne Greene to auction off memorabilia,” John M. Glionna, June 27, 2013

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THINGS TO CONSIDER WITH YOUR LIFE INSURANCE POLICY

In a world of uncertainty, we try our best to inform our blog readers about important estate planning events before it’s too late. One issue we run across from time to time is life insurance policies. Incredibly important, these documents can often carry with them incredible burdens, especially if they aren’t prepared correctly and maintained properly. Hopefully this week’s blog post can clear up some confusion and get our readers on the right track again.

The first thing to consider when establishing a life insurance policy is who to name as a beneficiary. While most people only name a primary beneficiary, it’s often a good idea to list others just in case your primary predeceases you or dies at the same time as you. It’s also important to communicate your intentions with your beneficiaries. Letting them know who the policy is through and the general specifics about the policy before your passing can make sure they’re not blindsided by the process in the future.

It’s important to consider who you’re naming as a beneficiary as well. Consider for a second that you choose your minor child as your beneficiary. Some states will not allow that insurance policy to be paid out until the child is a certain age. On top of that, a guardian might be required which can end up adding additional costs to the process.

Consider too that Texas is a community-property state. This means that regardless of designation on the policy, if your spouse does not waive their right to the money, the policy could be paid out to them instead of the intended recipient.

Not having specific wording in your policy and not maintaining it properly can also cause headaches down the road. But considering these things and clearing them up with a skilled estate planning attorney before hand can help your loved ones from experiencing future frustrations down the road.

Source: Fox Business, “Naming Life Insurance Beneficiaries: 10 Ways to Screw up,” Barbara Marquand, May 22, 2013

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ESTATE PLANNING FOR THE 8 STAGES OF LIFE

Readers of our blog know that we stress the importance of starting your estate plans early and updating them as often as possible.  That’s because, no matter what stage of life you’re at, you’ll want to have the stability and financial cushioning most aspects of estate planning can offer.

But knowing what to do and in what stage of life can often times be a tricky thing.  So, to clear up a little of the confusion for our readers this week, we wanted to go over the commonly considered ‘8 stages of life’ and the specific estate planning measures that should be taken in each one.

Let’s start with the first stage which is your young and single years.  While most of your assets were taken care of when you were younger, after 18 financial responsibility sort of gets thrust upon you.  Assigning power of attorney and putting together a living will are probably the two most important things you can do at this time.

Grouping stages two through four cover the time between pre-marital relationship and ‘just married.’  During this time it will be important to change power of attorney to your spouse if desired and make sure that they are also included in your living will. This will also be the time to discuss combining assets, health insurance coverage, and getting a mortgage for your first home.

Stage five brings you into parenthood with a little one on the way.  It’s at this stage that you’ll want to not only start saving for your child’s future but thinking about guardianships in the event you and your spouse pass enexpectedly.

Because divorce is a very real possibility after gauging the most recent U.S. statistics, we’re including stage six which is divorce.  This is the stage in life where you may want to remove your ex-spouse from your financial accounts and will need to go through the sometimes painful process of dividing your assets.

In the last two stages is where you may want to invest in long-term care insurance and transferring power of attorney over to your children.  Most experts suggest that this be done before your health begins to fail so as to avoid incurring large medical costs that can eat away your retirement funds.

As you can see, estate planning often requires changes over time; but with a heads up you can make sure that you’re on top of the ball the entire way.

Source: Bankrate.com, “8 life stages of estate planning,” G.M. Filisko

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HAVE YOU CHOSEN AN ESTATE ADMINISTRATOR?

Do you have a person selected to oversee the administration of your estate? For Texas residents involved in the estate planning process, choosing a trusted person to manage the distribution of one’s estate is extremely important. When considering a person most qualified for estate administration, many people choose their children. While many children get along and grow up to be responsible and trusted adults, sadly, this is not the case for everyone.

Children can still be designated to do the job, but discussing your choice with the other siblings may be the most sensible route to take. Estate division can often cause sibling rivalry. In addition, people entrusted to estate administration may be legally entitled to a stipend for their work. This may lead to one child receiving more money than the other children received, potentially causing strife in their relationship.

While many people do select children to oversee their final wishes, there are sometimes issues that prevent one from doing so. In that case, other trusted friends or relatives can be assigned the duty, even if they do not reside in the same state. Anyone else assigned to the duty may also be eligible to receive a commission for their work from the person’s estate.

Texas residents know that different situations exist that make it difficult for a person to place a family member in charge of their estate administration. However, choosing a trusted person is a critical step to ensure one’s last wishes are fully adhered to and the estate is taken care of.

Source: Winston-Salem Journal, “Choosing administrators key when planning your estate,” Mike Wells, Aug. 5, 2012

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AMERICANS SPEND, DONATE OR LOSE HALF OF THEIR INHERITANCES

If you received a hefty inheritance, what would you do with the money or assets? Would you opt for a new home? Would you buy a fancy car? Or, would you save your gift? According to a new study, the saving option is not practiced by many Texas residents and other individuals in our nation. Given the current economic state of America, sources say that this news is surprising.

Researchers from Ohio State University have found that adults who receive an inheritance save approximately half of what they obtain. The study suggests that individuals spend, donate or lose the remainder of the bequest.

The study examined 7,500 people who participated in the National Longitudinal Survey of Youth. The research began in 1979. It shows that Americans are expected to transfer nearly $4 trillion to their heirs over the next decade. Those concerned about the country’s low savings rate hope that this expected inheritance is used logically and efficiently by those who receive it.

Hopefully, informing the public about this issue will motivate people to restrain their spending and use inheritance money for their children’s college payments or future retirement.

Ultimately, what you do with your bequests is your own choice. You can invest it, donate it or spend it. Nevertheless, with an economy that has been struggling for quite some time, maybe it is time to consider saving your inheritance. Regardless of what you choose to do, there is one thing that you should absolutely not do–lose it all.

Source: EmpowHer, “Americans only save half of their inheritances,” Bailey Mosier, March 20, 2012

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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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ESTATE PLANNING IMPORTANT REGARDLESS OF FINANCIAL SITUATION

Some truths about estate planning in this country challenge many commonly held beliefs, a primary one being that it should only be a top consideration for those with significant assets. In fact, in a recent article written by a certified public accountant, the importance of estate planning for those in Texas and across the country with less financial means is addressed.

The CPA says estate planning is arguably more important for those will less money because they often only have one person supporting the family and do not have “deep financial resources.” Other common misconceptions include the thought that existing estate plans should only be reviewed every three to five years, only the elderly should be concerned with estate planning, and that book or CD “do-it-yourself” versions are as effective as professional services.

More than 120 million Americans don’t have an up-to-date estate plan. An estate plan includes more than just a will. The current federal estate tax laws give every American a $5 million net asset exclusion, but this doesn’t mean that if one’s net worth is less than that amount, that estate planning can be ignored. For one thing, this law expires at the end of 2012 and it is unknown what any subsequent law will entail. In addition, a proper estate plan is needed to ensure that debts are paid and assets distributed per the wishes of the estate holder following his or her death.

Finally, there are several factors that need to be taken into consideration when preparing an estate plan. These include marital status, children or stepchildren, as well as current and expected future income and ownership of any assets.

Source: Coloradoan, “Estate planning is unique to individual, not just for wealthy,” Oct. 28, 2011

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