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Wills & Trusts

Estate Planning is one the most crucial, but ignored area of legal planning by persons of all ages and conditions. Many think that it is only necessary to have a will if you are wealthy or have children you are involved in some high risk activity. Actually, almost everyone needs to have a basic estate plan or they risk losing the ability to determine what will happen to their estate when they die. This is especially problematic when their is property or small children or greedy relatives involved.

John Worley has an LLM degree which is a graduate law degree which gives specialized training in Estate Planning. From simple wills and other basic documents like Powers of Attorney or Directives to Physicians, to complex Estate Plans utilizing sophisticated strategies with Trusts, private annuities and Family Limited Partnerships, John Worley can give wise counsel to guide you to the right plan for your estate — whether large or small.

The Estate Planning process is also a perfect time to look at and assess Asset Protection Strategies and needs, as well as lifetime planning tools like Revocable Living Trusts. If you have property in multiple states or want to keep the assets of your estate out of the public eye, a Revocable Living Trust may be a good option for you. Whatever your situation, don't put off planning for this very important aspect of your life. If you have the basic estate planning documents everyone should have, you and your loved ones can rest assured that if something happens to you or you are disabled or unable to take care of yourself, others are authorized to do so and your wishes will be followed even in incapacity or death.

Video - Do I need a Will?

Do I need a Will or an Estate Plan?

No one wants to think about death – certainly not our own death, and especially not a premature death at a young age. For the vast majority, there is no reason to do so as most folks will live a long and healthy life. However, no one knows for sure how long they have and even though it is not a pleasant subject to think about, if you care about your family, you need to have an Estate plan. This is the only way you can make sure that they are cared for in the best manner possible when you are gone.

Some people think that if they are young and do not have much or are single, they do not need to have an Estate Plan. Most in that situation think – I don’t even have an Estate, so why would I need an Estate Plan?; However,everyone has an Estate. Some have small estates with only a car and bank account, maybe a retirement account at work or a savings account. Even with a small Estate, it is important to have an Estate Plan.

So what is an Estate Plan? It is really just a set of documents that express your desires in the event you are incapacitated or die. If you don’t have an estate plan, it just means someone else – usually a judge in a court will decide for you – and it will probably cost a lot more money than it would if you have a will and powers of attorney. This is especially important if you have children, but it is best for everyone to make their own decisions about these important matters.

Most people have simple Estates and so all they need is a simple Estate Plan. In a simple estate plan, there should be 4 documents:

1) A simple will

2) A directive to Physicians

3) A Durable Power of Attorney for Healthcare

4) A Durable Power of Attorney for Finances

This combination of documents allows you to express your desires for your Estate. A simple will leaves all your Estate to your spouse or children if you have a family, or to whomever you specify otherwise. It also designates who will become guardian of your minor children. A directive to Physicians just tells the doctor whether you want to be kept alive on life support if you are in a terminal incurable condition. Durable Powers of Attorney let you designate who can make health care and financial decisions for you if you are incapacitated.

If you do not have these documents, a judge in a court will make these decisions for you and it will be costly, time consuming and frustrating to your loved ones at a very difficult time.

It is possible to prepare these documents for yourself, but they must be done carefully or they may not be valid. I will prepare the 4 basic documents for $500 for an individual or $800 for a couple. This may seem like a lot of money to some, but if your loved ones have to go to court in the event you are incapacitated or to probate your estate with no will, the cost could be in the thousands or even the ten thousands before it is all over.

Estate Planning Basics–Using Revocable Trusts to Avoid Probate

Estate Planning is one of those topics that most people do not like to think about. It makes them think about their mortality and what the future holds. So individuals who either live in or own significant property are often surprised to discover that once they pass away their estates are usually subject to the probate process. Probate is a court proceeding where the probate court essentially steps into the shoes of the deceased person, gathers up the assets in that person’s estate, and then distributes those assets to the persons who are supposed to receive them. Different rules apply to a person’s probate, depending on the level of planning a person engaged in prior to death.

Intestacy

If a person passes away without doing any estate planning, then that person’s estate will be subject to what are called the intestacy laws—a set of distribution rules designed to cover what the legislature believes most people would want to have happen to their estates. These default rules generally provide that any community property of a decedent will go to that decedent’s surviving spouse. If the person has no surviving spouse, then the person’s estate generally gets distributed to the person’s children (or grandchildren, if the children pass away before the parent).

The intestacy laws do a relatively good job of handling what people consider the traditional family—where there’s a mother and father who have children together. However, in this age of blended families and stepparent/stepchild relationships, these rules often create friction and discord. When a person passes away with significant separate property, this property is generally divided up between the surviving spouse and the surviving children. This can lead to acrimony if the parent and children are not related to each other, except through the now-deceased spouse/parent. A great deal of estate litigation arises from these kinds of situations.

Wills

Many people, when they think of estate planning, immediately think of wills. A will is basically a letter of instructions about what a person wishes to have done with his estate following his or her death. Wills can be relatively simple, or they can be very complex, stretching over many pages of detailed instruction. Drafting a will allows a person to opt out of the default rules of the intestacy regime. A person can opt not to leave assets to a surviving spouse or child. A person can choose to leave gifts to persons and entities not covered in the intestacy rules, such as a close friend or a church or charity.

In addition, a person can put conditions on gifts in a will. Sometimes a person will have children who have substance abuse problems or mental or physical impairments. In cases like these, leaving a substantial inheritance that child might either enable the child’s substance abuse or cause the child to lose state or federal benefits. A carefully drafted will can help a parent to make sure that he or she doesn’t inadvertently create or exacerbate problems for his children by making unwarranted or ill-timed gifts.

Pitfalls of Probate

In either of the situations above, where a person dies intestate or with only a will in place, the person’s estate needs to be probated if it has property to which the title must legally be passed to someone else. Probate serves a useful function in society, by providing an orderly system for notifying heirs of distributions and making sure that estate assets go to the people who are supposed to receive them. Probate in Texas is considered relatively easy and inexpensive compared to many states, but there are still reasons that cause many to avoid it:

1) Probates, like almost all court proceedings, are public. Any interested person can stop by the probate court and ask to see a copy of a person’s probate file. The file will usually include the person’s will, a list of heirs, a list of assets and their approximate values, and a host of other information. Many people consider this a violation of their privacy.

2) Probates can take a long time—usually somewhere between eight months and two years. Certain assets of the estate are frozen during this time. It is not unusual in a probate for a surviving spouse to have to petition the court for an allowance from the estate to provide for day-to-day living expenses. In Texas, there are expedited probate processes for simple estates, so if you have a small estate with no debt, it will not take this long.

3) Probates can be very expensive. Probate fees, which are the fees paid to the executor and the attorney for the estate, can easily run into the tens of thousands of dollars depending on the size of the estate.

4) If you own property in more than one state, your heirs will have to go through probate in each state where own property, multiplying the time, expense and hassle of transferring your assets to your heirs.

Revocable Trusts

For these reasons, many people choose to avoid the probate process by setting up a revocable trust. A trust accomplishes the same goal as a probate: distributing assets to the people who should receive them. However, a trust is generally considered superior to a probate for several reasons.

A properly-drafted trust allows a person all the flexibility of a will, but with the added advantage of private, non-probate administration. A trust administration is private—the only people entitled to notice or accounting of trust assets are the beneficiaries of the trust. Distribution of trust assets can often be accomplished within a few weeks of the death of the person who set up the trust. In addition, a trust administration is usually fairly inexpensive compared to a probate. Where a probate might cost the estate thousands or even tens of thousands of dollars, a trust administration can often be completed for a small fraction of that amount – or nothing.

Setting Up a Trust

Drafting a trust or a will may appear to be relatively simple, and many people use inexpensive forms or computer programs to set them up themselves. However, there are numerous pitfalls that can cause problems for the unwary. Oftentimes people will be unaware of important provisions in the law that may lead to unintended consequences. Sometimes individuals inadvertently disinherit someone they intended as a beneficiary, and sometimes, as mentioned above, individuals cause significant problems for beneficiaries who are receiving state or federal disability or other benefits. An improperly drafted trust can also cause significant tax headaches for a surviving spouse or child.

What happens to my estate if I don’t have a will?

What Happens if you die without a will in Texas?

If you die without a will (“intestate”), inTexas, the state will ‘write one for you’. That is known as the law of descent and distribution. Contrary to popular belief, your estate will not go to the state (“escheat”), unless no heirs can be found. Your estate will be responsible for the costs of searching for your heirs, and for the legal costs of an ‘attorney adlitem’ whom the court will appoint to represent unknown and missing heirs.

More likely than not, the court will also appoint an Administrator to handle your estate, and the administration most likely will be a dependent administration; i.e. the Administrator is subject to court supervision in the administration of your estate. The Administrator must apply to the court for every action the Administrator wishes to take, the court may grant permission after a hearing, then the Administrator has to report back to the court on the actions taken, and the court then may approve the actions after a hearing. All those costs of administration are borne by your estate before any distribution is made.

Distribution is based upon marital status, presence or absence of children, whether the children are of the decedent and/or of the marriage, if parents or siblings survive, and the type of property in the estate. Note that adopted children are considered as natural-born, and sometimes may inherit from their natural parents as well as their adoptive parents. Children of the surviving spouse, but not the decedent’s natural children, are not heirs at law unless adopted by the decedent.Only children of the decedent, and of the surviving spouse, are “children only of the marriage”

The following chart showsintestate distribution in Texas (click link below to open a printable PDF):

Texas Intestate Succession

Marital Status/Children Property Type Separate Property Community Property
Married, any children not of the marriage Real Property 1/3 to spouse for life, remainder to children.

2/3 equally to children subject to life estate.

1/2 owned by spouse

1/2 equally to children

Personal Property 1/3 to spouse

2/3 equally to children

1/2 owned by spouse

1/2 equally to children

Married, no children, parents surviving Real Property 1/2 to spouse

1/2 equally to parents. Parent’s portion to siblings, or sibling’s descendents, if parents deceased.

All to surviving spouse
Personal Property All to surviving spouse All to surviving spouse
Unmarried, no children, parents or siblings surviving Real Property and

Personal Property

1/2 to father, 1/2 to mother. Parent’s portion to siblings, or sibling’s descendents, if parents deceased. No community property
Widow or widowerwith children Real Property and

Personal Property

Equally to children or their descendents
Married, children only of the marriage Real Property 1/3 to spouse for life, remainder to children.

2/3 equally to children subject to life estate

All to surviving spouse
Personal Property 1/3 to spouse

2/3 equally to children

The Probate Process Explained

Probate is one of the most common and least understood legal proceedings. It basically comprises the settlement of all financial matters pertaining to the estate of an individual after their death. This includes paying any outstanding debts or tax liability, collecting any amounts due to the estate and, where necessary, determining the validity of the decedent’s last will and testament. If no will is found, the probate process typically includes a fair and equitable division of assets among the heirs of the deceased person; in community property states, the entirety of the estate passes to the spouse and no probate proceedings are required. Typically an administrator is appointed to handle the legal and financial concerns of the deceased; this individual is known as the executor, and deals with all administrative concerns relating to the disposition of the estate. When there is no will, the probate process is much more difficult and expensive.

Normal Probate

The probate process is generally lengthy (see below for exceptions) -lasting up to a year or more, and typically begins with the appointment of an executor or administrator. Executors are usually specified in the will of the deceased. The executor’s first act is usually to file a Petition for Probate of Will and Appointment of Executor; a hearing is then scheduled to review the will and to approve the selection of executor. Once the will has been certified as genuine, the executor is usually approved to begin the probate process. If no will exists, then an administrator is appointed by the probate court to handle the financial affairs; usually this is a family member or close friend. Both executors and administrators are paid an hourly fee for their services.

The initial stages of the probate process involve itemization, inventory, and appraisal of all assets belonging to the estate. This includes real estate, bank accounts, investments, life insurance policies, and all other items of value that constitute a financial asset. Some assets, including antiques, motor vehicles, and real estate holdings, require a professional appraisal of their value before they are added to the total worth of the estate.

Debts and liabilities are also assessed; typically, these financial responsibilities are dealt with in a predetermined order. A small allowance is sometimes paid to the immediate survivors, including the spouse and children of the deceased. After that, administrative costs are paid first, including the fees due to the executor or administrator. Funeral expenses and burial costs are dealt with next, followed by all other debts and claims. Pending lawsuits against the estate are typically paid after they are decided in court, although a settlement may be offered at any time during the probate process.

Once all outstanding and pending debts have been paid and a legally-required waiting period has elapsed, a final settlement is approved by the probate court and the remainder of the estate is distributed by the executor in accordance with the will or, if there is no will, the administrator makes distribution in accordance with the applicable state law. At this point, the assets of the estate may be directly provided to the heirs in their original form as real estate, financial securities, or other assets, or those same assets may be sold and the proceeds distributed as required by the provisions of the will or state law. This final disposition concludes the probate process and dissolves the estate as a legal entity, allowing the survivors of the deceased closure on the inheritance process.

Expedited Probate

There are expedited processes for going through Probate in Texas which are available to Estates that have a will and do not have any debts or other reasons that necessitate administration. Many small estates can qualify for this type of probate and even large estates which don’t have debt or other complications. These expedited probates can be completed in a much shorter period of time – sometimes in as little as a month with only one court appearance.

No Probate

To avoid Probate altogether, you can establish a Trust during your life and move your assets into the Trust before your death. This is especially helpful if you own real property in more that one state – thus requiring probates in two different states when you die. If you establish a trust during your lifetime and put the properties in the trust, you will not have to go through probate in multiple estates. This can save significant money to your estate as the cost of setting of a trust is usually less than the cost of even one probate proceeding.