Estate Planning — a Gift to Your Loved Ones
Your Last Gift
Your last gift to your loved ones could be your written expression of plans for your estate upon death. Regrettably, it is a gift which is often put off for another day or dismissed entirely. Here are just a few areas where a Texas estate planning attorney may assist you in reaching your goals:
The basic legal document which expresses your desires for the disposition of your property upon death. If you fail to prepare a Will, the Texas legislature has composed one for you and it clearly describes who shall inherit your property. Now in most cases, the statutory "Will" framework distributes your property to those persons most people would normally want to inherit their estate, but do your family dynamics and circumstances fit within this structure? A Will may also grant to your designated personal representative the authority to deal with your estate completely independent of judicial supervision. This independent authority can save thousands of dollars in attorney's fees.
In many circumstances, the Will may be the best choice for giving and administering your property upon death, but it is not the only option. Depending on your unique circumstances, you may find the best option for you is the. . .
Revocable Living Trust
The revocable (this means you can change your mind and revoke it, or terminate it) living (this means you create it now, and not upon your death) trust (a legal entity which owns, holds, and manages property) is a trust which you create to manage and hold your possessions and property (from nick-knacks to cash to stock to homes to ranches to oil and gas interests, etc.) during your lifetime and which also describes how your possessions and property held by the trust will be distributed upon your death. You may be the creator (grantor), administrator (trustee), and beneficiary of the trust. Or you may appoint trusted family members, friends, or financial institutions to serve in the administrator (trustee) capacity. You may use your possessions and property as you see fit. But the trust is ignored for taxation purposes. If you become disabled, and if you have transferred all of your possessions and property into the trust so that the trust holds legal title, and if you become disabled, your successor administrator (trustee) may step in and manage your assets until you overcome your disability. And if you die, your successor administrator (trustee) will have the authority to distribute your assets to those persons who you have identified in the trust as your beneficiaries upon death.
While the revocable living trust may avoid probate (only if all of your assets have been properly transferred into the trust; but if you forget to place an asset into the trust which should be owned by the trust, a probate proceeding may be required for that asset - a costly mistake), probate in Texas for a properly drafted Will is not necessarily expensive. And you should also factor in the cost to prepare a Will versus the cost to prepare and fund (that is, transfer all of your possessions and property into the trust), a revocable living trust. Although estate planning attorneys in Houston vary widely in the fees they charge for these services, you should expect to pay three to four times the cost for a basic Will, for a revocable living trust. So, attorneys usually earn significantly more money preparing a revocable living trust today, than preparing a basic Will today. And if you find that you don't like dealing with the trust, you will more than likely need to engage an estate planning attorney to unwind the trust if it is your desire to "revoke" it. Depending on your unique circumstances, you may find the best option for you is the . . .
Durable Power of Attorney
Some feel that the durable power of attorney is the most powerful document an attorney can prepare. In it you will authorize someone to literally make all of your business and property decisions for you. Your trusted family member or friend (your personal representative) may have the authority to immediately act on your behalf and make binding decisions affecting virtually all of your possessions and property.
Your personal representative may sell your property, buy new property, invest your property, write checks on your financial accounts, and if it is also your specific desire, even create trusts and give your property away to reduce the size of your estate. But unlike a revocable living trust, the personal representative never owns or holds title to your possessions and property - but the personal representative has the legal right to exercise almost unlimited power over things you own.
But generally speaking, this unlimited power must be exercised for your benefit and not to your detriment (except if you specifically vest in your personal representative the authority to create trusts and to give your property away to reduce the size of your estate). In addition to a durable power of attorney, you should also have a . . .
Medical power of attorney or, health care power of attorney.
Commonly known by the names of "medical power of attorney," or "health care power of attorney," this critically important document permits you to designate in advance who you authorize to make health care decisions for you, if you cannot make those decisions for yourself. You need one, it's that simple. Don't leave a Houston estate planning lawyer's office without asking for one in your estate planning documents. But whether or not you should request and execute a Texas statutory directive to physicians and family or surrogates is up for debate . . .
The Texas living will, or the directive to physicians and family or surrogates.
Many Texas estate planning lawyers will not advise their clients to execute this statutory document because it is difficult to understand and interpret this document approved by Texas legislators (hopefully it will be "repaired" by them in a new legislative session). And if a significant number of Texas estate planning lawyers can't understand it, they can't recommend that their clients sign them. If you have not signed a directive to physicians and family or surrogates, but if you have executed a medical power of attorney or a health care power of attorney, your designated personal representative is authorized to make end of life decisions for you. Make sure you carefully select the person or persons who will make health care and end of life decisions for you - and you should express your desires to them so that they can openly and honestly advocate your last wishes to your health care provider. If you have a child or children who are younger than eighteen years of age, you should also have a . . .
The surviving parent of a child will be the guardian of the child. But if you are single, or if both parents die or are unable to care for the child, who will become the guardian of the child? And who will become the guardian over that child's property and possessions? Ultimately, a probate court judge will make that determination. But you may express now who your choice would be, and the probate court judge will place great probative weight upon the parental judgment in this matter set forth in a guardianship declaration.
For those who may have been divorced and prefer that their ex-spouse not become the physical guardian of the child, a guardianship declaration will not overcome the rights of a surviving parent. But if there are troubling concerns in this area, you should consult a family law lawyer to determine if there is anything you should do now to avoid this outcome.
Wisely choose a personal representative, executor, trustee, or guardian
Your choice of personal representative, executor, trustee, guardian, and any other person (or institution) who is to have a custodial or administrative responsibility (they are known as "fiduciaries") will literally make or break how the estate planning documents work in real life. These fiduciaries will have incredibly powerful authority which will not be supervised by a court or a bonding company. You need to know that the fiduciary authority granted in most estate planning documents is comprehensive in nature. Select your candidate wisely. A spouse, a child, or another who has your trust may not have the experience or ability to serve in a fiduciary capacity. Likewise, someone with the proper experience or ability to serve in a fiduciary capacity may not be entirely trustworthy. An inappropriate choice of executor, trustee, or other personal representative can destroy a good estate plan, and also substantially damage family relationships.