Houston Estate Planning Law Blog


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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One look at the Dom Pedro aquamarine and the only thing you’re able to articulate is, “Wow.” At a height of 14 inches and weighing over 10,000 carats, the obelisk-shaped gem is considered to be almost as rare as the Hope Diamond.

When Jeffrey Post, the curator of gems and minerals at the Smithsonian Museum, looks into the clear, Caribbean blue sparkle of the gem he sees more than a rare artifact; he sees a museum exhibit that would never had happened had it not been for the generous donation from a budding gem enthusiast and her husband this month.

The story begins in the 1980’s when a prospector saw the aquamarine wedged in an outcropping of rock. When pried loose, the gem stretched more than three feet long and weighed almost 100 pounds but it was not destined to stay this size.

After accidentally being dropped and broken into three pieces, the portion that would eventually become the Dom Pedro was sold to a third-generation broker. He then brought the gem to a skilled gem cutter who crafted the precious stone into the piece of artwork it is today.

Three years later, the owners of the gemstone wanted to sell. They first made an offer to the Smithsonian, asking for seven to 10 million dollars. Jeffrey Post was there when the offer was made and remembers laughing. “It doesn’t work like that. The Smithsonian collects via donations. We can’t just go to Congress and ask for $10 million for a gem,” he said.

It was money the museum didn’t have, but it was money a gem enthusiast and her husband did have so after buying and showing the gem at various exhibits around the world, they finally decided to donate it to the Smithsonian.

“We didn’t buy it for ourselves,” the gem enthusiast said. Now, besides reducing their estate tax for the future, the couple has shared a rarity with the world that could have remained unnoticed if not for their generous donation.

Source: The Washington Post, “The Dom Pedro aquamarine’s long and winding path to the Smithsonian,” Brian Vastag, Dec. 2, 2012


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For a little over a month now, the nation has been watching in trepidation as the fiscal cliff looms ever closer, but for some people here in Texas, and perhaps other states, they could be wondering what the concern is really all about.

During George W. Bush’s presidency, we watched as estate tax rates dropped to a mere 35 percent as the amount of money allowed for gift tax exemptions rose to a staggering $5.12 million. But come January 1 that could all change if Congress can’t come to a consensus over what the new limits will be in 2013.

If Congress doesn’t reach a decision, gift tax exemptions will roll back to $1 million while the estate tax rate will rise to 55 percent. And although this has relatively no affect on the average American, those who have accumulated large enough estates are becoming increasingly worried that their estate planning measures may need to be considerably altered so as to shelter their estates from future changes.

Many financial experts point out that it’s not too late to change your estate plans; in fact, if you are among the few whose estate exceeds $1 million, you are highly encouraged to do so before the start of the New Year. By restructuring your estates into trusts, insurance and other techniques, you may be able to prevent your beneficiaries from seeing a considerable loss in their inheritance when it comes time to collect. Some have even suggested that giving assets as gifts now instead of at the time of your death could greatly reduce the amount of gift tax that is paid out this year, which could provide more asset protection in the long run.

Some critics have argued that there is the likelihood that Congress will not allow the fiscal cliff to occur, pointing out that if any of them were even remotely successful in their business careers then they would find themselves in the $1 million to $5.12 million range. But even if these critics are wrong, it’s always better to plan for the worst and hope for the best in situations such as this.

Source: The Bradenton Herald, “Fiscal cliff causes estate planning conundrum,” Tom Breiter, Dec. 11, 2012


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When most people in Texas think about a Q-tip they think of the small stick with white fluff attached to both ends that can be used to clean their ears. If you talk to an estate planner however, you’ll get a completely different answer.

So what is a QTIP and what is their function? Like most acronyms, QTIP stands for qualified terminable interest property, which is actually a trust established for a beneficiary. But it has a twofold purpose. One, it aims to leave part of your estate to someone other than your spouse; and two, it is often times used to guarantee inheritance to children from a previous marriage.

As many estate planning attorneys will tell you, QTIP trusts are generally used in second or third marriages when a person wants to guarantee that money goes to children from previous marriages instead of their current spouse in the event that they pass away. It is important to point out that you do not necessarily have to be divorced in order to establish a trust for your children. In fact, many estate planners suggest doing so regardless, as it gives clear directions as to how you want your assets to be divided after you pass.

It is important to remember that a QTIP trust is actually part of the will and not a separate document. Also, a person does not put any assets into a QTIP fund while they are alive. This is because funds are not distributed until after the trustor has already passed therefore it is possible for more money to be given to a beneficiary in the end.

Married couples may use a trust fund as a way of reducing their estate taxes as well which can actually save them money in the long run. Any questions you may have regarding trusts may be directed towards an estate planner who can help figure out which trust tool is right for your situation.

Source: The New York Times, “Yours, Hers, and the Kids’: Estate Planning After Remarrying,” Charles DeLuente, Oct. 19, 2012


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