Estate planning involves putting your affairs in order so as to maximize the benefits that your assets can provide to you during your life and to those you desire to benefit from it after your death. Eight out of ten plans that someone creates using an online form fail when they are needed. We have probated eight do it yourself wills in the last year that had language in them that caused major problems and extra expense for the family.
Estate planning is more than just creating documents. It also involves understanding the big picture and how the legal documents will work in concert with the assets at the time they are needed.
Can you imagine seeing your favorite movie in a theater and the projector breaks causing you to miss the last two scenes? Or, what about reading an amazing book only to find the last two chapters have been ripped out of your copy? This is what it is like for your family when you fail to plan the last chapters of your life. That is what estate planning and asset protection can help you avoid.
Estate planning refers to the preparation of estate documents in the event of incapacitation or death. An unfortunate truth of life is that everyone dies, and we cannot control when that will happen. However, we can put the documents in place to ensure our estate is handled the way we prefer. These documents can govern how bank accounts, retirement accounts, real property, and other assets are controlled. Your estate plan will also include instructions on when/how your estate will be divided to and among your beneficiaries. When you have an estate plan, and update it as needed, the chances of avoiding guardianship, probate, or other problems for your estate and loved ones are far greater.
A complete estate plan typically includes at least a Living Trust, a Will & Last Testament, a Healthcare Power of Attorney, and a Financial Power of Attorney. You worked for what you have. You sacrificed. Put plans in place now to protect what you’ve built.
This is one of the worst ways to plan your estate. If the assets are held jointly and one of the owners dies, the assets go to the surviving owners. The assets do not go to the deceased owner’s children. Also, the asset may be exposed to estate and gift taxes; it does not avoid probate, just delays it until the last owner’s death; it may cause estate, gift and capital gains taxes; it is subject to the creditors of all owners; and it will result in the transfer of the property to the joint owner when one owner dies, even if that was not intended taxes.
We offer to meet with our clients every three years at no charge to review their plans to make sure the plans match the client’s current situation. Conditions, as well as your desires, may change. Estate plans should be reviewed at least every three years but, additionally, any important change in your life demands immediate review.
These changes might include:
- Birth, death, marriage, divorce or disability of you or a beneficiary
- Large increase or decrease in the net worth of you or a beneficiary
- Substantial change in the type of your assets
- Purchase or sale of a business
- Change of residence to another state
- Change in tax law
Power of Attorney is a legal document that grants a trusted person the legal authority to represent you and make decisions on your behalf. There are two basic types of POA’s: Financial and Healthcare.
Financial Powers of Attorney enable you to designate an agent (trusted person sometimes called your “attorney in fact”) to make financial decisions or represent you in financial matters in case you are incapacitated or otherwise unavailable – for example, if you are out of the country. Depending on how you word your POA, your agent can handle many things for you such as managing portfolios, buying or selling property, caring for pets, or running a business. However, care should be taken in the drafting of the document because most institutions such as banks or government agencies will not allow the agent to do something that is not specifically listed in the POA. Also, depending on how the document was prepared, the POA may not be valid unless and until you are shown to be incapacitated.
Financial POA’s are sometimes called “durable powers of attorney.” The word “durable” just means the document is valid even if you are incapacitated. In contrast, a non-durable POA is extinguished if you lose capacity. An example might be if you are leaving the country and you want someone to handle your affairs, you might execute a non-durable POA. It means your agent can act on your behalf while you’re away, but if you become incapacitated, you want their authority to cease. It is important to think about whether you do, or you don’t, want your POA agent to continue to have authority if and when you become incapacitated.
Healthcare Powers of Attorney allow you to name primary and alternative agents to make healthcare decisions for you in the event that you are not able to make the decisions on your own (incapacitation). This document also puts in place important guidelines for your agent to follow in making healthcare decisions for you.
Now, you may be thinking, “if I were in a situation where I was unable to make my own healthcare decisions, my family would be able to agree on a course of action in making those decisions for me.” While some medical facilities may choose to recognize your spouse or children as inherently able to make medical decisions for you, this is actually contrary to Texas law. Under Texas law, the only way someone truly has authority to make medical decisions for your is with a guardianship or a valid healthcare POA. So, to avoid the possibility of your family or loved ones being powerless to help, or, to avoid the possibility of someone you disapprove of making decision for you, best practice is to execute a carefully worded healthcare POA outlining your wishes.
A Healthcare Power of Attorney and a Directive to Physicians are two forms of advanced directives that can provide instructions to your Health Care Provider not to artificially sustain life when there is no hope of recovery. These are “pull the plug” directives so that you will not live on for years in a vegetative state unless that is your desire.
Probate is a court proceeding to transfer title from the decedent’s name to the living beneficiaries. Probate occurs in the state of your legal residence as well as any state where you own real property. The length of time to complete a Probate varies from state to state, but can take six to eighteen months, on average. Probate is frustrating to the heirs and is public record.
If your loved one recently passed away and they had a trust in place, call the estate planning attorneys at Leigh Hilton PLLC to provide trust administration services.
If your loved one died without a will and other estate planning documents in place, you will likely need to go through a court process called probate. If you must probate the estate of a loved one, we can guide you through this sometimes very difficult process and hopefully reduce stress and uncertainty for you and other loved ones who may be involved.