FAQs

Estate Planning

Your estate planning is your asset distribution (will or trust) and your incapacity documents.

No, in fact, even those who live modestly can’t avoid the necessity of estate planning and creating a will.

Parents do so much to make sure their children are safe, but they rarely plan for the idea that they won’t always be there.

One compelling reason to do planning is to be able to nominate a guardian for your children in the event of your death or incapacity. If there is no designation naming the guardians of the person and the estate for the children, the court will determine who serves in these roles. Although the designation is a suggestion to the court, it’s imperative that you make your preference known when the court makes its decision.

Another reason is that minors cannot inherit property. If planning is not done to appoint someone to manage any property to be inherited, A court-administered guardianship will have to be opened. Guardianship proceedings are complicated, expensive, and emotional. What about the life insurance policy you left to your young child? Life insurance companies will not cut checks to a minor nor will they pay out the policy to the child’s other parent without a guardianship proceeding.

And finally, if you die intestate without a will state laws dictate how your property will be distributed. Most people assume their spouse will inherit the entire estate, even if no will exists. Blended families, however, have become common. And in Texas, if either spouse has other children, the estate could be distributed to the surviving spouse and among all of the deceased spouse’s children.

Wills

Most people know what a will is. A will is a legal document used to distribute your property after your death and appoint a person who will manage the distribution. While the complexity of a will varies based on circumstances, for a will to be valid in Texas, it must meet basic requirements.

It means you die without a will.

If you die intestate (without a valid will), the Texas statutes will determine how your property will be divided. In other words your property will be distributed in a manner set by the Texas statutes, which may conflict with the way you would chosen to have your assets distributed.

If you’re over 18, have kids, or own a bank account, car or any property – you need a will.

Once you turn 18, you need to have your own estate plan because your parents can no longer act on your behalf without proper legal documentation.

A will (or a declaration of guardian) allows you to nominate someone to care for your mind children. if you fail to appoint a guardian and you (and your spouse) pass away or become incapacitated, the court will make the final decision about who raises your kids but you should make your preferences known. Additionally, minors cannot legally inherit money. A will allows you to appoint a trustee or custodian to manage their money. Without a trustee or custodian, a guardian must be appointed to manage their finances. Yes, even if the other parent is around. The guardian then must petition the court to use the funds for the child’s support. Yes, even if the guardian is the other parent.

Wills are not for just the rich. Almost everyone over 18 has some assets. Bank accounts and cars are assets. Estate planning covers more than what would happen to your assets on your death, but also covers incapacity planning. You may have a small estate now, but that does not mean it won’t grow. Having an estate plan keeps the state from deciding what happens to your estate, allows you to control how it is distributed, and reduces the emotional chaos left to your family when they have to figure out what you would have wanted to wind up your affairs.

The will must identify the testator. The testator is you. The person who has made a will.

  • The will must be written with “testamentary intent.” You have testamentary intent when you have executed a will with the intent of expressing your wishes for the disposition of your property on your death.
  • The testator must be of “sound mind.” You are of sound mind when you have testamentary capacity. And you have testamentary capacity when you have sufficient mental ability:
    • to understand the business in which you are engaged (the act of making a will);  to understand the effect of making a will;
    • to know your next of kin, the individual or individuals to whom you wish to leave your property, and the individual or individuals dependent upon you for support;
    • to understand the general nature and extent of your property; and
    • to collect in your mind the elements above and to hold them long enough to perceive at least their obvious relation to each other, and to be able to form a reasonable judgment.

In Texas, your will must be executed with the requisite testamentary formalities.

  1. The will must be signed by the testator or by another person at his direction and in his presence;
  2. the will must be attested by two or more credible witnesses over fourteen years of age; and
  3. the witnesses must sign in the presence of the testator.

If a will does not meet the requirements set forth by law for execution, it will be declared invalid, meaning that your estate could be distributed according to a statutory formula rather than the way you would have preferred.

There are no hard and fast rules about how often you should review your estate plan, but certain life changes, such as a change in your marital status, an addition to your family, a change in the value of your assets, a move to another state, changes in the tax code, and the simple passage of time may trigger a need to update your plan.

A holographic will is a one that is written entirely in your own handwriting. It needs to only be signed by you or by another person at your discretion and in your presence. There is no requirement that it be signed by any witnesses.

If the holographic will is not self-proved, then someone needs to be able to testify that the handwriting is that of the deceased. Self-proved means that it was attested to in front of witnesses and a notary less likely to be contested.

A Declaration of Guardian is used when an individual wants to nominate one or more persons to be the individual’s guardian of the person and/or guardian of the estate. In this document, the individual may also disqualify one or more persons from serving either role.

A Designation of Guardian is used for a surviving parent of a minor child to nominate someone to be the guardian of the person and/or guardian of the estate for their child(ren) in the event of the parent’s death or incapacity.

You should appoint a person you trust and who is willing and capable to serve. Being an executor is not a simple, one and done task. The individual should be someone who you trust to handle your assets and the responsibility of administering your estate. It is also imperative that you name at least one alternate executor in case your executor is unwilling or unable to serve.

When a person dies and probate is necessary, a court will appoint a personal representative to manage the decedent’s affairs. The personal representative is called an Executor or Administrator depending on whether he or she has been named in a will.

If there is a valid will, and the will names a person who is to execute the will and administer the estate, this person is called an Executor.

However, when no one is named in the will or there isn’t a will, but probate is necessary, the court will appoint someone. That person is called an Administrator.

Yes, it is possible to have more than one person serve the role of executor or administrator. The individuals would be co-executors or co-administrators. However, while possible, having co-executors or co-administrators is rarely a good choice. The individuals must be able to work together to administer the estate. This creates the risk that they will be paralyzed by disagreement, or unavailability, and the administration will be inefficient, prolonged and not be taken care of.

Incapacity & Power of Attorney

Advanced directive (“living will”) or a power of attorney.

You are legally “incapacitated” when your doctor certifies you are unable to make your own health care decisions. This happens typically when you have an irreversible medical condition that can be treated but not cured (ie. a coma or Alzheimer’s & dementia) or a terminal condition requiring life support.

A “living will” is a type of “advanced directive.” It allows you to document your wishes regarding life support in the event you are diagnosed with a terminal or irreversible condition.

Generally, advance directives are legal documents that allow you to convey your decisions about end-of-life care ahead of time. A type of advance directive is The Directive to Physicians and Family or Surrogates is also known as a “living will.” It allows you to document your wishes regarding life support in the event you are diagnosed with a terminal or irreversible condition.

The Directive to Physician isn’t effective until you cannot make medical decisions on your own.  An irreversible condition is one that may be treated but is never cured. However, you may be kept alive with life support. A terminal condition is also an incurable condition, but even with life support, you are expected to die within six months.

Your Medical Power of Attorney agent or a legal guardian may decide whether to terminate life-sustaining treatment if you do not have a living will.  However, if there is no agent or a legal guardian then the following family members, in the following order and in conjunction with the physician may decide: a) your spouse, b) reasonably available adult children, c) your parents, or d) nearest living relative.

A Power of Attorney is a legal document that gives someone else the legal power to act on your behalf.  The person appointed in the power of attorney is called the agent.

If you become incapacitated and need someone to manage property or financial matters on your behalf, you appoint an agent with a “Durable” Power of Attorney.  Under a Durable Power of Attorney, you grant, limit, or withhold from your agent authority over certain business, financial, or legal transactions.

A Durable Power of Attorney may be…

  1. effective immediately when signed and would continue to be in effect if you become incapacitated meaning that it is “durable” or
  2. it can “spring” into effect upon your disability or incapacity.

If you become incapacitated and do not have a Durable Power of Attorney, Texas laws do not identify alternatives. A guardianship court proceeding may be necessary to allow someone to manage your financial affairs.

A medical power of attorney appoints a trusted individual as your agent to make health care decisions on your behalf if you are incapacitated. Your agent does not have the authority to act under a Medical Power of Attorney until your doctor certifies you are unable to make your own health care decisions.

If you do not execute a Medical Power of Attorney, according to Texas law, the following people, by order of priority, have the authority to make medical decisions for you: a) your spouse, b) your adult child who has the waiver and consent of all other qualified adult children, c) the majority of your children, d) your parents or e) an individual clearly identified to act on your behalf before you became incapacitated, your nearest living relative, or a member of the clergy.

Under a Medical Power of Attorney, the decisions your agent could make would be for health care, treatment, service, or a procedure related to your physical or mental health.

An incapacitated person may require a guardian if a person is unable to manage all of some daily affairs due to age, disability, injury, or disease. There are two types of guardianships: guardian of the person and guardian of the estate. A guardian of the person has control over the person’s personal matters. A guardian of the estate has control over the person’s property and finances. The Declaration of Guardian In The Event of A Later Capacity of Need of Guardian allows you to designate a person to serve as a guardian for the person or estate, or both, or identify any person you do not wish to serve as your guardian.

The Declaration of Guardian is a safeguard. By appointing someone as a guardian, should an issue arise with your Power of Attorney documents, e.g. the authority of your agents is challenged or an agent is no longer available, you may be able to avoid the necessity of a lengthy and expensive guardianship court proceeding.

The Health Insurance Portability and Accountability Act (HIPAA) is a federal law that requires health care providers to protect the privacy of your personal health information and limit its use and disclosure.  Sharing your health information, with some exceptions, could result in fines for these health care providers.

Procedurally, your Medical Power of Attorney does not give your agent the authority to act on your behalf and get access to your health information until a doctor has certified you’re incapacitated. If you want someone to have access to your information before such time or under any other circumstances, you would need to have a HIPAA release. A HIPAA release would permit someone access to your medical information to assist in making informed decisions before a Medical Power of Attorney becomes effective.

An out-of-hospital Do Not Resuscitate (DNR) Order, in contrast to a living will, instructs EMS and other health care professionals acting in an out-of-hospital setting to not conduct lifesaving efforts should you stop breathing or your heart stops and to permit a natural death.

Trusts

A trust is a means through which you can manage and dispose of your assets when you die. A trust, however, is better defined as a relationship. It is created when one party (a settlor) transfers property to another party (the trustee) who manages and distributes the property for the benefit of another named party (the beneficiary).

A trust can created during the life of the settlor (a standalone trust) or at the settler’s death, either under a will or an independent trust instrument (a testamentary trust).

Irrevocable – an irrevocable trust cannot be amended or revoked by the settlor under any circumstances plus the settlor no longer has any authority to withdraw the property that he or she has contributed.

Revocable – a revocable trust can be amended or revoked by the settlor at any time, and the settlor may simply revert back to owning the trust assets in his or her own name, any assets held in a revocable trust continue to be treated as if they are still owned by the settlor outright

Each subject to different concerns for income, gift, and estate taxes.

  • To address property distribution among members of blended families
  • To designate a third party to make investment, management, and distribution decisions for beneficiaries under a certain age, for beneficiaries with spending or creditor issues, for beneficiaries with capacity issues, and for beneficiaries with negatively influential spouses or marital issues
  • To centralize management of real property (such as a vacation house, farm or ranch, and minerals or property outside of Texas)
  • To designate the beneficiary of any assets that may remain after the initial beneficiary’s death
  • To provide for ongoing charitable gifts
  • To preserve a lineal distribution of assets
  • To give someone full authority to manage your assets in the event of incapacity

Funding means placing assets into the trust.

A testamentary trust is a trust created in a Will.  It does not become effective until the death of the person creating it. Unlike a trust that you create and fund during your life, such as a revocable trust or an irrevocable trust which would be separate, standalone documents, a testamentary trust does not hold any assets until after you die.

A trust must be properly maintained for the rest of your life. It requires initial detailed work and ongoing management. You must remember that you have a living trust and that all of your assets should be owned by the trust. If you purchase property, you must purchase it in the name of the trust. If you inherit property, you must transfer it to the trust. When you open a bank account, you must make sure the trust is the official owner of the account. Keeping up with this detail is a necessity because the benefits of a trust apply only to the assets actually in the trust.

Probate

Probate is the process in which a court legally recognizes a person’s death and oversees the payment of a deceased person’s debts and the distribution of that person’ assets. 



The decedent’s estate is valued, beneficiaries are determined, an executor is put in charge of the estate, distribution is declared, the decedent’s debts are paid and the estate is legally transferred to the beneficiaries.

Probate has gotten a bad reputation. Mainly, however, because in some states it can be a long and expensive process. Also, it has gotten a bad reputation because people have had bad experiences with courts and family members. As a result, many people try to avoid it at all costs.

The truth is in Texas, probate is typically nothing to be feared. Texas has one of the most simplified probate processes in the nation and with proper planning, a person can help their family avoid a lot of surprises and complications.

Most courts in Texas require a person who expects to be a personal administrator be represented by a lawyer in a probate matter. This is because a personal administrator not only represents himself but also the interests of beneficiaries and creditors. And in Texas, only a licensed attorney can represent the interests of others. Therefore, preparing and filing pleadings in a probate matter without the assistance of counsel could constitute the unauthorized practice of law. There are a few limited circumstances when a personal representative can probate a Will without hiring an attorney.

No. Non-probate assets in Texas can be transferred to the beneficiary without probate. Types of non-probate assets:

  • Property that is held as joint tenancy with right of survivorship
  • Community property held also with right of survivorship
  • Bank accounts that are payable on death
  • Funds from life insurance policies
  • Survivor benefits that come from an annuity

If the deceased had a will, usually the person named as Executor files an application for probate. If there is no will, typically an heir will make an application to determine the heirs and the court will appoint an additional attorney to determine the heirs.

Generally, four (4) years from the date of death. There are some exceptions (i.e., will not found until after four (4) years), but if the will is probated after four (4) years, it may only be probated as a muniment of title under Texas law. If the will is not probated, property could pass by the laws of intestacy instead of the will.

If there are no debts or other need for an executor, the court can issue an order so that the will is determined valid and property can be distributed directly to the beneficiary or beneficiaries. Probate as a muniment of title is unique to Texas.

Typically, if assets such as stocks, bonds, investment accounts are in an individual account of the deceased (with no beneficiary designation), the financial institution (or title company if real estate is owned by the deceased) will require Letters Testamentary to show that the court has authorized the Executor to act on behalf of the estate to gather and transfer the assets. The Executor would also have the authority to deal with taxing authorities and to reimburse for those advanced funeral expenses, last illness expenses, etc. If there is no valid will and heirs can agree, an Administrator can be appointed and Letters of Administration can be granted so that the Administrator can act on behalf of the estate.

It depends on the deceased’s estate and several questions need to be discussed – Will the will be contested? Are there creditor claims that will be contested? How long will it take to be in control of assets or collect assets belonging to the estate? However, generally if these are not issues, the process often takes less than six (6) months.

A probate administration can be either dependent or independent.

Dependent is the default administration, managing and administering the estate is dependent on court supervision and the personal representative is required to post bond.

Under an independent administration, the management and administration of the estate is free from court supervision after validation and appointment of executor or administrator.