Go Ahead, Talk Turkey over the Holidays

With Thanksgiving and the winter holidays rapidly approaching, there is a slew of opportunities to gather the family under one roof and get talking. Estate planning and Wills should be part of that discussion. Although it may be tempting to avoid what many consider to be a morbid topic, it’s important to talk to your loved ones so they will know what to do when the time comes.  Communicating openly and honestly with your heirs while you’re still around can help everyone avoid conflict after you’ve passed. Here are eight tips for broaching the sensitive subject with your loved ones.

Be as transparent as possible.

Give your family a heads-up that you would like to discuss your estate plan when you gather.  Have an agenda that outlines the discussion points and circulate it to family members a few weeks in advance to avoid surprises and to allow everyone to mentally prepare for the discussion.

Strategize for any likely sticking points.

You know your family’s internal dynamics.  Maybe your son will be taken aback that his sister was selected as your executor.  Or maybe your daughter will be upset by the details of your advance healthcare directive.  If you predict that something might present a significant issue for a family member, consider reaching out to them to touch on it beforehand so that it doesn’t derail the family meeting.

Avoid holding the meeting at a time when everyone has had a few drinks.

As tempting as it may be to hold the meeting in the evening after the kids have been put down and everyone has a glass of wine in hand, resist the inclination to include alcohol at this meeting.  As we all know, alcohol can amplify peoples’ emotions and exacerbate existing issues.  Pick a time when everyone is fresh, relaxed and sober.

Arrange for childcare.

Keep this meeting an adults-only event so that everyone can participate without the distractions of babies and children.  Perhaps hold the meeting after bedtime or ask the older children to supervise a movie night in a different part of the house.

Don’t immediately dive into the heavy stuff.

Start the meeting with a discussion of a lighter part of the plan.  Perhaps start the meeting by sharing the name of a charitable cause that you have included in your plan.

Prepare your paperwork.

Once you’ve hammered out the details of your estate plan, have the appropriate documents drafted and notarized to cement your wishes before you sit down with your loved ones.  Bring copies to ensure clarity and reduce the chances of misunderstanding your plan.

Set an inclusive tone.

While you should remain firm in your estate planning decisions during this meeting, try to convey that you are welcoming the family to share your vision and goals through this discussion. Try to communicate that every decision was made with their best interests at heart.  If you can get everyone on the same page and openly communicating about the matter from the get-go, you will reduce the risk of disputes later.

Consider inviting a professional to attend the meeting if you feel it would be appropriate.

Depending on your family dynamics, it may be helpful to have an outside expert, such as your financial advisor, estate planning attorney or accountant, help facilitate this conversation, explaining the reasoning and implications of decisions.  Keep in mind that this could possibly make the meeting more of a formal affair than if only family members attend.

All too often, surviving loved ones are left searching for necessary documents, or worse, suffering through expensive legal processes because no estate planning documents were ever created.  Take advantage of the high spirits and cheer of the holiday season to launch this crucial conversation on a positive note.

5 Scary Mistakes People Make When Estate Planning (and How to Easily Avoid Them)

An estate plan is a complex, essential set of legal documents that can offer a person a great deal of financial and emotional security. But, while the estate planning process is far less prolonged and painful than some people fear, there is, like any legal process, no shortage of ways in which someone can stumble when it comes to making their arrangements.  Here are five of the most common (but by no means only) estate planning mistakes to avoid.

You don’t have an estate plan at all.

Approximately 60% of adults don’t have a Will or Estate Plan.  Are you part of the majority?  Perhaps you assume estate plans and Wills are only for the extremely wealthy. Perhaps you are in your 20s or 30s and feel that you don’t need one yet.  Perhaps it overwhelms you so you’d rather keep bumping it to the bottom of your to-do list.  Regardless of your reasons, every adult needs at least a simple Will.

A Will documents your wishes regarding your property and assets, and appoints a legal representative to oversee the process of distributing your estate to your beneficiaries.  If you pass away without a Will (or die “intestate”), the state will appoint someone to decide how your property will be distributed. This could mean that your assets end up in the hands of people other than those you intended. Moreover, the important needs of loved ones that you’ve prioritized may not be addressed. Having a simple Will in place can prevent delay, expense, frustration, and even loss after you pass. More importantly, a well drafted Will provides security for those you leave behind.

You don’t talk to an attorney.

While it isn’t required that you use an attorney to prepare your Will and estate plan, I strongly recommend it, especially if you have significant assets, minor children or a blended family.  Involving an attorney early in the process will ensure that your wishes will be carried out appropriately later down the road. If you opt to go the DIY route, consider having an estate lawyer review the will you created, just to be safe.

Estate planning attorneys have years of experience analyzing clients’ unique circumstances, explaining the ramifications of their decisions, and tailoring documents to address their unique needs and specific objectives.  This experience means that you walk away with a comprehensive estate plan that you know will stand up in court even if it is contested.  Many people find that this peace of mind alone makes it all worth it.

You don’t update your will.

Once they have finalized and signed their Will, many people file it away in a safe deposit box and forget about it. However, there are many reasons to regularly revise your Will and other estate planning documents after you’ve initially sorted it all out.  Every major life change should be reflected in your estate plan.  This includes a divorce, the death of one of your heirs, the birth of a potential new heir, a major change in your financial situation, and significant modifications to your investment portfolio.

You assume that you don’t need a trust.

Many people assume that trusts are reserved for those of extreme wealth, but the benefits that they can offer to someone with even moderate assets can be significant, depending on the individual’s circumstances.  Wills only account for divisions of assets after your passing, but trusts govern the distribution of your assets for an extended period of time.

Since trusts enable restrictions on the timing of asset distribution and conditions for heirs to receive bequests, they can be useful tools to help to care for heirs who are unable to manage their finances, such as minor or special needs child.  They can also be used to shelter certain assets from estate tax or to provide for a surviving spouse or a charity of the grantor’s choosing.

You name the wrong executor.

When crafting your estate plan, a crucial step includes selecting the person who will be responsible for administering your estate and carrying out the provisions of your will.  This person, the executor, will help ensure the timely, accurate distribution of your estate.  Picking the right executor is vital, even if your estate is not large.

Many people appoint a relative or old friend as their executor without much thought. These people usually know us best, so naming a significant other, adult child, or dear friend to fill this role seems like the most logical choice. And often, it probably is.  But other factors should be considered as well.  First and foremost, your executor should be someone that is likely to outlive you.  Beyond that, they should have the time and willingness to handle the responsibilities of executorship.  Ultimately, you want to pick someone who respects your wishes and won’t let their personal feelings about those you’ve named in your will get in the way of executing your estate plan as you’ve intended.  Read more about selecting an executor here.

Estate planning is undoubtedly complex, but a properly prepared plan can save your loved ones a lot of grief and hassle.

Estate Planning Milestones for Parents

There’s no question that having kids changes your life. Naturally, your priorities and responsibilities shift, and this should also be reflected in your estate plan. Here are a few checkpoints
throughout your child’s life when you should recalibrate your estate plan, ensuring that, no matter what, your child is provided for if something were to happen to you.

Newborn

In the midst of adjusting to parenthood and sleepless nights, crafting an estate plan can easily slip down to the bottom of your to-do list.  Without a doubt, it can be a daunting process.  Many new parents would prefer to avoid thinking about such a grim topic during one of the most exciting times of their lives.  Regardless of how much you’d rather push the matter to the back of your mind, this significant development within your family requires that you update your estate plan (or create one if you don’t already have one in place).

When welcoming a new member of your family into the world, there are two important things to address within your estate plan: the care and custody of that child and the management and distribution of the assets you will leave to them.

For most new parents, writing or revising their will is less about leaving their assets than it is about naming a guardian for their child.  This guardian will assume all responsibility for your child if something happens to you.   They will decide where your child will live and attend school, what type of health care your child will receive, and make other day-to-day decisions regarding your child’s upbringing.  If you don’t name a guardian and a situation arises where your child will need one, the Court will choose the guardian. Because the Court isn’t familiar with your family or your child individually, the person they choose may not be in line with your preferences.

In addition to selecting a guardian, you may also want to set up a trust for your child to preserve your assets for your child when they get older.  This trust could include assets such as your home, your life insurance, your retirement accounts, your savings and investments.  These assets and funds can then be used your child’s education, living expenses, and health care expenses.

Age 5

As your child heads off to kindergarten, you will most likely begin to plan for the upcoming years of schooling and how to lay the best foundation for their future.  You may begin to grapple with
the eventual costs of their education.  When you sit down to plan for their college fund or strategize how to pay for their private education, consider including these plans in your estate plan as well.

There are a few options for how to plan for your child’s education, many parents opt to utilize a 529 plan.   Also known as “qualified tuition plans,” 529 plans allow investment earnings to grow sheltered from federal income taxes.  Withdrawals used to pay for qualified higher education expenses are tax-free.

Age 13

As kids grow up, they organically develop their own relationships with family members and loved ones.  Certain relationships may grow stronger or weaker over time.  Due to these shifting dynamics, it is wise to reevaluate who is named as your child’s guardian when they enter their teenage years.  Does your child have a healthy relationship with the person you’ve designated as their guardian?

Also, consider the general health and circumstances of the guardian you had previously selected.  Have they experienced health complications that might prevent them from performing this role?  Have they moved to another state that would mean uprooting your child if they needed to fulfill these duties as the guardian?  Have they undergone any financial hardships?  As a parent, you know that raising a child is expensive, so consider whether or not this role would strain your chosen guardian’s financial resources.  (Find out more about guardianships)

Age 17

All Wills where a minor will inherit should include a trust to hold and manage the assets until the child reaches the age of majority.  However, when your child approaches adulthood, you may want to reevaluate if you want to give them access to these assets at 18 or later to give them time to mature.   Regardless of how mature your son or daughter may be, they may still fall victim to the bad judgment of others.   There are many potential issues that can put your child’s inheritance at risk, but some of these hypotheticals can be addressed if your plan is updated to take your child’s maturity into account as he or she ages.   (Read more about trusts)

Age 18

Once your child turns 18, he or she is considered an adult.  This means that your son or daughter is legally in charge of their own life now.  If a medical emergency arises, health care providers are no longer authorized to discuss or disclose the details of their condition or care with you.  Nor are you authorized to make medical or financial decisions on their behalf – even if you pay their tuition, cover their health insurance and claim them as dependents on your tax returns. Ensure that you can assist your child with decision-making if they suffer a serious illness or disability by having them sign a Medical Power of Attorney and a Durable Power of Attorney before they leave home for college or take the next step in life.

Age 25

Your estate plan should be revisited once your child marries or starts to have kids of their own.   Consider if you would like to include your grandchildren in your plan, and if you would, when they should be added.

Once an estate plan is completed, many people will put it in a safe deposit box and then forget about it.  I encourage you to avoid this “checked-the-box” mentality.  Estate planning isn’t a one-time thing, it’s a lifetime process. Your estate plan should evolve as your life evolves.

 

What Needs to be Done When a Loved One Passes Away?

When a loved one has passed those left behind are often at a loss for how to proceed.  What needs to be done?  When must it be done?  Can I delay the process to allow time to grieve?  Following are some general guidelines to help answer these questions for residents of Texas.  Since laws vary from state to state and change over time, you will want to consult an attorney to ensure you have information relevant to your situation.

There are several questions that must be answered to determine what options exist and what proceeding is required.

  • Is there a will?
  • What type of property is owned?
  • Are there unpaid debts of the estate?
  • How much time has passed since the death of your loved one?

A standard probate proceeding may be preferred or required if there is a will, property such as a home or car is owned or debts of the estate exist.  However, it must be less than four years since the death of your loved one.  Texas allows for independent administration if the appropriate language is included in the will.  Independent executors can be appointed without the appropriate language if all of the beneficiaries agree to it.  If there is no language and no agreement then a dependent administration will be created.  The key difference between the two is the number of court appearances required.  The independent executor must only appear once where the dependent administrator must get court permission for every decision that is made.

If a will exists, real estate is owned and the only debts of the estate are a secured lien on the real estate then a muniment of title proceeding can be used.  This procedure is completed with one hearing and must be commenced within four years of the death of your loved one.  No executor or administrator is appointed because nothing is required except transfer of title to property.

If no will exists and property is owned but the estate is low in value, a small estate affidavit is a proceeding that can be used.  This requires two disinterested witnesses and all heirs join in the affidavit that is submitted to the court.  No executor or administrator is appointed.

If no will exists and property is owned or there are debts of the estate or and there is a question about who are the heirs, then a determination of heirship is the starting point.  There is no deadline for this procedure as there is with a standard probate.  The court will appoint an attorney ad litem if there are unknown heirs or heirs whose whereabouts are unknown.  If an administrator or executor is needed to handle the estate then this proceeding is filed in conjunction with one of the probate proceedings detailed above.

An affidavit of heirship can be used whether a will exists or not.  Two disintrested witnesses must swear to facts of the deceased’s life before a notary.  The affidavit is then filed in the deed records.  However, the affidavit does not become effective for five years.

In many cases, the death of a loved one will be followed by some type of legal proceedings. Some people feel a need to postpone any proceedings until some time to grieve has passed.  While others want to get the process over with so that grieving and then life can move forward.  The best way to ensure you loved ones have either option is with advanced planning.  An estate plan including a will provides the most control for those who are left behind.

The Importance of Planning When Your Loved Ones are Estranged

Everyone knows they should have a basic estate plan. Powers of Attorney grant decision making authority for incapacity and a will specifies what should happen after your passing. Many people fail to grasp the potential for complication when some of your loved ones are estranged.

Consider the case of Sally who lost her adult son, George, in a car accident. Sally was no longer married to George’s father and George had not seen his father in over a decade. George was a young man and didn’t have a will. George’s accident left his estate with a potential lawsuit that could bring a considerable settlement.

If George had a will, his probate would be simple and straight forward. The executor would have legal authority to pursue that claim. Since he didn’t have a will, there must be a heirship proceeding to establish his heirs and appoint an administrator. The first problem may be locating the father. Since George wasn’t married both of his parents must have notice of the heirship proceeding.

Once the father is located it is possible he could be appointed the administrator for his son’s estate. In addition if the only heirs are the parents, he will inherit one half of his son’s estate. I suspect George might not have wanted that outcome for his estranged father.

This can get even more tangled if George had a child. The child would inherit but if the child is a minor someone else must be the administrator of the estate. If George was not married to the mother of his child, the courts will be looking back at George’s parents for administration. Should that be the grandfather who has not been in the picture? Most people would want to choose someone else to make those decisions regarding the estate that will go to their child.

A scenario that is even less clear arises if George was living with someone or was engaged. That person will likely have no rights at all. Once again, do you think that would be George’s wishes? While it may difficult to think about and may seem very expensive to young adults. Estate planning is for everyone!

Destroy Old Documents

At document signing ceremonies, I am often asked “What should I do with my old will, power of attorney and other estate planning documents?”  My answer remains the same.  The old documents should be destroyed and you should do it right away.

Why the urgency?  If you don’t destroy them right away you may forget.  This forgotten will replaced by a newer will can turn the family upside down after a death.  While your new will should state explicitly that it replaces all previous wills, if the old will exists it can rear its head.  Leaving the old will intact allows for the argument that it is still valid.  Then the family ends up in probate court arguing over which will is the true will of the person who has passed.

A similar problem exists with copies.  You should collect all the copies you made of the previous will and destroy them as well.  In Texas, there is a process to submit a copy of will for probate.  This means, even if the original has been destroyed the copy can be submitted to the court for acceptance.

This problem can exist with any document intended to provide direction to others regarding your life or death.  So all originals and copies of wills, powers of attorney,trusts, appointment of guardian or any other document that is a part of your estate plan should be destroyed when updated by a new document.

Since these problems often arise when there is a change in the document that displaces a previous beneficiary or named decision maker.  One solution in addition to collecting all originals and copies for destruction, discuss the changes with everyone affected.  Explain the reason for the change and address any anger, resentment or hurt feelings a that time.  If you are unable to have this conversation consider leaving a letter with the document that explains the change.

Particularly with a change in a will those left behind think it is a reflection of how that person felt about his loved ones.  While this may be true, it is often just a recognition that a particular family member has a greater need or ability.  Since these cases can often lead to family rifts that are never repaired, a bit of planning can prevent destabilization of the family.  Prepare a letter or video for each of your loved ones sharing your feelings about them, hopes, dreams and happy memories.  Consider updating the letter or video every year or when there is a major change in your documentation or their lives.

The Death of an Adult Child

The loss of a child is never easy for the parents who have to bury them.  However, the pain of this loss can be compounded if the adult child does not have a will.  A will provides direction to those left behind for how all of the loose ends should be tied up.  What happens if there isn’t a will?

If there isn’t a will the state statutes direct distribution of the estate.  The statutes also dictate who has standing to file for probate.  In some situations this is adequate to deal with all of the issues.  What if the facts are not neat and clean?  What if the family is not in contact or getting along?

Recently a mother lost her unmarried adult son.  Although unmarried the son was living with his fiance.  The son’s father had been out of the picture for years. These facts muddy the water and can result in both difficulties but a distribution that is inconsistent with the wishes of the son.

The fiance in this scenario has no legal standing for probate or to receive any of the property from the estate.  If she and the son have purchased items together then she must prove the item is co-owned.  If  she can then she will retain partial ownership rights.  How smoothly this process goes will depend largely on how well she and the family (in this case the mother) get along.  The son might have wanted specific items to go to her or wanted her to inherit everything.  A will would have accomplished that goal

In this scenario the mother and father would each inherit one half of the son’s estate and have equal standing for probate.  To proceed with probate the father would have to recieve notice of the proceeding.  Since he has been out of the picture, it may be difficult, time consuming and expensive to find him for notice or appropriate use of an alternate notice method.  It is unlikely the son would have wanted the father to inherit anything.  A will would have accomplished that goal.

Frequently Asked Questions About Wills

Can I use a computer or online program to prepare a Will?

You can but this should be done with extreme caution. If the will does not dispose of all of your property, have appropriate language for an independent administration, or include a self proving affidavit, you could actually increase the cost of probating your estate. Other problems could arise from using a software program as well.

If I have a Will from another state, will that work?

Since all wills are based entirely on state law you should have an out of state will reviewed by an attorney. The will may be effective in Texas but not provide for an independent administration or have a self proving affidavit. These features make the probate process in Texas quicker and easier. Furthermore, when you are moving from a non-community property state your will may not address what is to be done with the community property you have acquired in Texas.

Can I hand-write my Will?

Yes, you can hand-write your will. It must be all in your handwriting, dated and signed. This is certainly preferable to no will but may not address all the issues necessary to smoothly probate your estate.

How often do I need to change my Will?

You should review your will every 3-5 years or when there is a major life change. Major life changes such as births, deaths, marriages and divorces may result in a desire to change the terms of your will. After reviewing the will if all the terms are still an accurate reflection of your desires and no on named in the will has passed away then there is no need to make a change.

Wills are Critical for People in a Second Marriage

Betty and George had been happily married for 15 years when he became ill.  She stood by him as the illness progressed and eventually claimed his life.  They did not have any children together but George had a son and daughter from his first marriage.  Betty and her step children were friendly but not close.

George died without a will.  He and Betty had lived a modest life and he felt there was not enough there to worry about.  However, that is not the way things turned out.  George’s children wanted all the family heirlooms and anything else the law entitled them to receive.  They hired a lawyer and demanded Betty turn over their inheritance.

The Texas statutes addressing inheritance state that if the children of the person who has died are not all also the children of the surviving spouse then the community property does not go to the surviving spouse.  The surviving spouse retains their half of the community property but the community property of the person who died is divided between the children.  In this case, George’s children will each get half of his community property or one fourth of George and Betty’s community property.

The difficulty often arises in how to divide the assets.  The children are entitled to one half of the value of the assets but they cannot prevent Betty from remaining in the house or force her to sell the house.  In your typical case you create an inventory of the assets and assess a value.  This value is then divided in half to determine how much the surviving spouse can retain and what goes to the children.

In George and Betty’s case they owned a home, 2 cars, household furnishings, they each had an IRA and a modest checking and savings account.  Betty will sell one of the cars, give them the family heirlooms and each child will own a small portion of the home. If Betty decides to sell the home the children will collect according to their ownership share at the time of the sale. Otherwise they will collect when Betty dies and her estate is distributed.

If George had a will he could have prevented this family discord.  He could have given his share of the community property to whomever he chose.  This would at the very least have prevented the legal battle.

What is a Probate Proceeding?

When a loved one has passed those left behind are often at a loss for how to proceed.  What needs to be done?  When must it be done?  Can I delay the process to allow time to grieve?  Following are some general guidelines to help answer these questions for residents of Texas.  Since laws vary from state to state and change over time, you will want to consult an attorney to ensure you have information relevant to your situation.

There are several questions that must be answered to determine what options exist and what proceeding is required.

  • Is there a will?
  • What type of property is owned?
  • Are there unpaid debts of the estate?
  • How much time has passed since the death of your loved one?

A standard probate proceeding may be preferred or required if there is a will, property such as a home or car is owned or debts of the estate exist.  However, it must be less than four years since the death of your loved one.  Texas allows for independent administration if the appropriate language is included in the will.  Independent executors can be appointed without the appropriate language if all of the beneficiaries agree to it.  If there is no language and no agreement then a dependent administration will be created.  The key difference between the two is the number of court appearances required.  The independent executor must only appear once where the dependent administrator must get court permission for every decision that is made.

If a will exists, real estate is owned and the only debts of the estate are a secured lien on the real estate then a muniment of title proceeding can be used.  This procedure is completed with one hearing and must be commenced within four years of the death of your loved one.  No executor or administrator is appointed because nothing is required except transfer of title to property.

If no will exists and property is owned but the estate is low in value, a small estate affidavit is a proceeding that can be used.  This requires two disinterested witnesses and all heirs join in the affidavit that is submitted to the court.  No executor or administrator is appointed.

If no will exists and property is owned or there are debts of the estate or and there is a question about who are the heirs, then a determination of heirship is the starting point.  There is no deadline for this procedure as there is with a standard probate.  The court will appoint an attorney ad litem if there are unknown heirs or heirs whose whereabouts are unknown.  If an administrator or executor is needed to handle the estate then this proceeding is filed in conjunction with one of the probate proceedings detailed above.

An affidavit of heirship can be used whether a will exists or not.  Two disintrested witnesses must swear to facts of the deceased’s life before a notary.  The affidavit is then filed in the deed records.  However, the affidavit does not become effective for five years.

In many cases, the death of a loved one will be followed by some type of legal proceedings. Some people feel a need to postpone any proceedings until some time to grieve has passed.  While others want to get the process over with so that grieving and then life can move forward.  The best way to ensure you loved ones have either option is with advanced planning.  An estate plan including a will provides the most control for those who are left behind.