Houston Estate Planning Law Blog
ESTATE PLANNING: IMPORTANT TIPS
It takes careful estate planning to ensure that everything is laid out just right for one’s beneficiaries and heirs. A recent article highlighted a few things that women should keep in mind when estate planning; however, the information applies to all Texas estate planners–regardless of gender.
Taxes are an important part of the process. Transfers to one’s spouse may be free of estate tax, but those to other beneficiaries may not be, even to one’s own children. In addition, one would do well to create a will so that after you pass, your loved ones can benefit from knowing exactly how you wanted your assets distributed.
When a will has been made, an executor must be appointed to take care of one’s assets after passing. This person should be someone trustworthy because they will be handling all of the assets and money left behind. The goal is to provide for distribution of assets in the manner desired while seeking to avoid financial issues and other entanglements for your loved ones.
You may also create a trust to provide peace of mind that the individual you want will receive the desired benefit. It is a way to ensure that children receive money that you want left to them, often by including terms that withhold distribution until they reach a certain age. Moreover, it may make sense to take advantage of tax laws concerning annual gifts of money.
One should also make certain that a joint account remains open with their spouse, so that after their passing, access isn’t a legal battle. When that spouse passes away, you’ll have access to all joint accounts. It is also a good time, after a spouse passes away, to re-evaluate your estate plan. As life changes, your plan may evolve.
Many haven’t given estate planning much thought. However, it is a crucial part of life for women and men alike. With a well thought out estate plan, you can rest assured that your final wishes will be carried out the way that you always wanted and that each heir receives their rightful share of your estate.
Source: San Francisco Chronicle, “10 Estate Planning Tips For Women,” Angie Mohr, July 25, 2012
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SHOULD YOU RETAIN A TRUST PROTECTOR?
When estate planning in Texas, it is important to leave your most trusted advisors in charge of administering your estate. It can never hurt to have more than one set of eyes on something. For this reason, some people are beginning to turn to trust protectors. Protectors are people who work together with the designated trustee to ensure that settlor’s intent is being fulfilled.
Trust protectors turned up on the estate planning scene when wealthy families wanted to establish trusts in foreign countries but felt that additional safety measures to protect their wealth were needed. These families hired trust protectors, who oversaw the administration of their trusts. Now, these protectors are used in the same way, but could have additional responsibilities. For example, they could remove or add trustees, move assts for protection purposes or withhold wealth from beneficiaries if necessary.
It may cost more money to hire a trust protector, but having a second person oversee things may be worth the cost. Normally, estate planning costs are anywhere from 1.5 to 2.5 percent of the estate’s gross value. A trust protector would add approximately .25 to .75 percent to the overall costs of the estate’s administration.
Even so, this cost may be worth it because it can ensure that the trust is handled professionally and efficiently. Trust protectors in Florida can act as a fail-safe for people, ensuring that others are not abusing their authority when it comes to estate administration. Adding a trust protector may help foster a harmonious atmosphere after the estate is divided, which for many families is worth its weight in gold.
Source: MontereyHerald.com, “Trust protectors,” Liza Horvath, July 9, 2012
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ESTATE ADMINISTRATION AND CREDIT CARD DEBT
If one passes, what happens to unpaid credit card debt? As with most debts, credit card companies will usually attempt to get compensation from the cardholder’s estate. Texas residents may benefit from knowing how this process works in estate administration. In most cases, the debt of the cardholder will be paid from their estate. If there is not enough money in the estate to pay the debt, credit card companies may seek to obtain the money from the relatives of the deceased person. On the other hand, this is not the norm.
Typically, if credit card companies are unable to collect on the debt from the cardholder’s estate, they often drop the debt. The reason for this is because relatives are not legally obligated to repay the debt of a deceased person. The exception to this rule is when an account was opened up as a joint account.
What is a joint account? This is when named individuals of the account are responsible for the debt, and the credit card company will be able to collect from either one of the parties. So, if one party dies, the other will become financially responsible for outstanding debt. When the person using the other card is simply an authorized user on the account, they are not responsible for the debt and when the account holder dies, the account must be closed. If the authorized user wishes to use credit, they will have to apply for an account on their own.
If someone passes leaving behind credit card debt, the estate executor must consider this and the potential outcomes. Estate administration will be necessary to review the details of each account before proceeding. While it may be uncomfortable to talk about debt, it is an important consideration for estate planning at all ages, and should be taken seriously.
Source: Boston.com, “What happens to credit card debt when you die?” Cheryl Costa, June 29, 2012
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THE IMPORTANCE OF ESTATE PLANNING
Estate planning is always a sensible strategy. Having the details of your estate clearly defined and documented can save your heirs not only countless hours of work, it also helps your loved ones understand your intentions and carry them out with as little acrimony and emotional distress as possible. One high-profile case currently making its way through probate court illustrates just how heated disputes can become when there is no clear estate planning to guide those left behind.
Many know Thomas Kinkade as one of America’s most celebrated artists. Sources suggest that there is a Kinkade print in one out of every 20 households in Texas and throughout the country. The artist was also a savvy businessman and made millions from his artwork.
When he died suddenly of an accidental overdose of the prescription drug Valium, a battle ensued between his estranged wife and the woman who was his live-in girlfriend at the time of his death.
The issue is over the mansion in which Kinkade and his girlfriend resided at the time of his death, as well as $10 million that would be used to establish a museum dedicated to his paintings. The girlfriend claims that the artist bequeathed her these assets in two handwritten notes that she has in her possession. The wife, who was married to the artist for over 30 years and has four children with him, is seeking full control of the estate, which is valued at $66 million.
Kinkade’s wife asked the court to send the case to be heard by an arbitration panel. The case will continue to work through the probate court for the time being. Although most Texas residents do not have estates to rival that of Thomas Kinkade, many have complicated family structures or specific wishes that can complicate estate administration process. For this reason, it is important to prepare.
Source: San Francisco Chronicle, “Kinkade estate dispute to remain public for now,” July 9, 2012
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