WHAT YOU SHOULD KNOW ABOUT ESTATE PLANNING IN TEXAS
I have written the following to give you a brief explanation of the estate planning process in Texas. Additionally, below is a link that will take you to our basic will form. Simply read the following and feel free to contact us with any questions or comments. I look forward to hearing from you.
WHAT IS ESTATE PLANNING?
Estate planning is the process of executing the appropriate legal documents for the efficient disposition of your estate upon death, taking into consideration such factors as the financial sophistication of your intended beneficiaries and the tax consequences of your gifts.
WHAT IS A WILL?
A “will” is a legal document that allows you to direct the distribution of your property upon death in an economical and efficient manner. Gifts under a will may pass either directly or in trust to a beneficiary selected by you.
The most important reason for having a will is to streamline the probate process and to simplify the winding up of your financial affairs. The State Bar of Texas and the American Bar Association recommend that every adult person have a valid will.
WHAT IS A TRUST?
A “trust” is a legal entity in which legal title and management of the property are vested in a trustee who administers the property for designated beneficiaries.
Property may be given in trust while the donor is alive. A trust may also be part of a will, so that the trust takes effect on the death of the donor. Testamentary trusts can reduce inheritance tax liability and insure prudent management of the assets you intend to leave to your beneficiaries.
If you decide to provide for a trust in your will, you will designate a trustee who will manage the trust for your beneficiaries.
If you are married, you may wish to designate your spouse as the sole trustee or a co-trustee.
WHAT IS PROBATE?
“Probate” is a legal term that refers to the process of administering the estate of a decedent, including submitting the decedent's will to the probate court and distributing the property according to the terms of the will.
A will must be admitted to probate by court order as a prerequisite to the transfer of property to the beneficiaries. The will probate may be either contested or uncontested.
WHAT IS AN INDEPENDENT EXECUTOR?
An “independent executor” is the person designated in your will to administer your estate, in accordance with your intent, with a minimum of court supervision and expense. An independent executor serves without posting a bond, files the will for probate, attends a hearing, takes an oath, obtains letters testamentary and files an inventory.
If the testator of a will is married, the testator often designates his or her spouse as the independent executor. However, if the estate is substantial or burdensome to manage, the testator may wish to designate a management company as the independent executor. Alternatively, the testator could appoint a co-independent executor to assist the spouse.
WHAT IS A GUARDIAN
If you have minor children, you may want to name an additional guardian other than your spouse for their care and support in the event of your death. A guardian may be designated either in your will or in a separate written instrument.
We recommend reviewing your estate plans periodically. You should review your plans with your attorney whenever your family circumstances change, such as by marriage, divorce or the birth of a child.
While you may wish to store your original estate planning documents in a safe deposit box, keep copies in a convenient location and provide copies to the persons you have designated as executors, trustees and guardians. We will also keep copies in our offices of any of the documents that we prepare for you.
If you move to a different state or country, you should have your will and other estate planning documents reviewed by an attorney licensed in that jurisdiction to determine if they will accomplish your intentions.
WHY IS ESTATE PLANNING NECESSARY
If you die intestate, that is, without a valid will, the rules of intestacy dictate how your property will be distributed. In Texas, your intestate estate may be encumbered with legal expenses and lengthy delays in probate court before any of the property can be legally transferred to your heirs.
Intestacy can create hardships for your family and can significantly increase the cost of closing out your financial affairs. A court-appointed estate administrator must post bond and obtain court approval for every step taken in handling your intestate estate. Funds on deposit in financial institutions may be unavailable to your survivors until your estate has been administered.
This expensive legal tangle will reduce the amount of property you can leave to your heirs. In addition, your estate may be heavily taxed.
If your children are under the age of 18, a guardianship may be required in order to administer property that the children inherited from you. For instance, if your surviving spouse needs to sell your family home, a guardianship proceeding is a prerequisite to the sale since your children will own the home together with your spouse.
In the event both parents die without designating a guardian for their minor children, the probate court may appoint a stranger or a social services agency as their custodian.
If your children are over the age of 18 but still inexperienced in handling money, they are at risk of dissipating their inheritance in the absence of a trust agreement for their benefit.
If you do not execute a will before your death, you give up your right to plan for your family's future. Your estate will be significantly reduced by legal expenses and taxes, and your heirs may suffer financial embarrassment during a lengthy intestate administration.
If you have any questions about planning your estate, please call us.