Estate Planning

What is the difference between Estate Planning and a Will?

• A will can be considered the most basic form of estate planning. A will specifies who you want your property to pass to upon your death. However, depending on your personal circumstances, you may need to consider issues like minimizing taxes on the transfer of your property or you may want to make a gift to a child or grandchild while specifying some restrictions or protections until the child is wise enough to manage the gift themselves. An estate plan may also address unforeseen occurrences like an incapacity due to medical conditions.

I don’t really have any property. Why would I need an Estate Plan?

• Everyone in Texas has an Estate Plan – it’s called intestacy. The problem is, the intestacy statute may not direct your property the way you would want. For example, consider Kelly. Her husband Jerry has a child from a previous marriage. Kelly and Jerry also have a child together. If Jerry dies, does Kelly inherit Jerry’s possessions? Nope—at least not entirely.
• Without an Estate Plan, the probate process could take months (or years!) longer. If you die intestate, the court must conduct a search for heirs before any of your property can be distributed—even if no one is contesting the distribution. In the mean time, your wife and children may not have access to your assets for their needs.
• Chances are you have some assets which are meaningful to someone—perhaps your children or grandchildren. My grandmother had a serving plate of a rooster—it was horribly ugly, but it reminded me of her kitchen and her joy of cooking for me, and I wanted to have it as a remembrance. I was lucky no one else in my family wanted it—but I have seen families litigate over seemingly inconsequential things. Remember, your estate plan is not for your benefit—you will be gone—it is for the loved one’s you leave behind.
• If you are incapacitated, a court may appoint a guardian over you and your property. If you have not provided instructions as to who you want (or don’t want!) to serve, the court could choose someone who doesn’t even know you! What’s worse is that the process can be costly and time consuming.

Living Trusts

What is a living trust?

• A living trust is a legal entity used to manage your property during your life. The trust holds title to your property for your benefit during your lifetime. Often both spouses will be named trustees, with successor trustees to assume control upon their death. The benefit of a living trust is it becomes active immediately upon your death or incapacity. No probate process is required for a living trust.

Does a living trust replace a will?

• A living trust works in conjunction with a will as part of an estate plan. A “pour over will” is needed to resolve ownership of any property not already placed in the trust. If a pour over will is not in place, property not in the trust will pass by intestacy.

Estate Taxes

Planning for Incapacity (Guardianships)

Can I name a guardian for myself?

• Yes! In Texas, adults can state make a Declaration of Adult Guardian. The declaration documents the preference for who can or cannot be named guardian in the event of incapacity. The Court must still consider fitness to be a guardian, but absent disqualification, courts will typically honor the declaration. Persons who are excluded by the declaration cannot be considered by the court.

Who can be a guardian?

• Anyone who is not disqualified can be a guardian. A person is disqualified and ineligible to be appointed guardian if he or she is a minor; a person whose conduct is notoriously bad; an incapacitated person; a person who has certain conflicts of interest with the ward (usually if the person owes a debt to the ward); a person who, because of inexperience, lack of education, or other good reason, is incapable of properly and prudently managing and controlling the ward or the ward’s estate; a person found unsuitable by the court; a person specifically disqualified from serving as guardian by the ward prior to his or her incapacity in a properly executed designation of guardian; and a person who is not a resident of Texas and who has not designated an agent in Texas for service of process.

If I don’t name a guardian, who will the court consider?

• If the ward is a minor, the following persons have priority in the following order: parents; the person designated by the last surviving parent of the ward in a properly executed designation of guardian; the nearest ascendant in the direct line of the minor (ascendants are grandparents, great-grandparents, etc.); next of kin; and a non-relative.
• If the ward is an adult, the following persons have priority in the following order: the person designated by the ward prior to his or her incapacity in a properly executed designation of guardian; in some cases, the person designated by the last surviving parent of the ward in a properly executed designation of guardian; the ward’s spouse; next of kin; and a non-relative. If more than one person of the same priority wishes to be guardian, the court chooses the one who is best qualified to serve.