Answers to Common Questions Regarding Estate Planning

Answers to Common Questions Regarding
Estate Planning

Who Needs a Will?

It is advisable for each person over the age of 18 to have a will. In particular, if you are married, own a house, or have children, you need a will. Husband and wife each need a separate will. Unfortunately, a surprisingly large number of people die each year without a will. If you die without a will, Texas law determines who will receive your property and these persons may not be who you would have chosen to inherit your property. A will gives you the choice to determine how your assets will be distributed, to whom and who will be in charge of the distribution. Moreover, the will has no effect on your property until you die. Furthermore, your will automatically covers property acquired after it is made and your will can be amended or revoked at virtually anytime.

Do I Need a New Will?

You should reevaluate your will every few years. Even if you have a will, you may well need a new one. If you have married, had a child or additional children, moved in with someone, divorced, remarried, purchased a house, had a loved one pass away, or your personal representative has become unavailable, then you should consider a new will. Even if none of these events happen, you may still need to have your will and estate documents updated.

Can I Write My Own Will?

Yes, a handwritten will may be valid in Texas, but a court battle may ensue after you die. Texas law is very specific about what constitutes a valid will. Moreover, an informal will may seem to accurately reflect your wishes at the time you write it. Obviously, after your death you will not be available to answer any questions about your intent. If the will is challenged and fighting over the validity and meaning of your informal will should occur, the costs involved in litigating those matters can be high. Furthermore, if the will is not executed properly, or does not have the proper witnesses, the will may be thrown out, leaving your affairs to be settled by the intestacy laws of the State of Texas. By contrast, the will which we prepare follows all of the formalities necessary for admission to probate and can be admitted upon testimony of one person. Moreover, while any will may be challenged, a will that meets all of the formalities for admission to probate is much more likely to survive a challenge without the need for lengthy and costly litigation.

Is a Will All I Need?

Probably not. Although the will can handle proper disposition of your assets, there are other important questions. Who makes medical decisions for you if you become incapacitated? How will your business be affected if you become incapacitated? Will you be allowed to die naturally if your death is imminent? These questions are not addressed in a will. Other estate planning and estate related documents, such as powers of attorney, medical powers of attorney, guardianship appointments, organ donor forms, and directives to physicians are all documents we suggest you carefully consider.

Won't My Assets Go to My Spouse and Kids Anyway?

Without a will, the answer is - depends. If there are children who are not the biological children of that marriage, then Texas law gives a portion of the estate to the surviving spouse and a portion to the children. Accordingly, the surviving spouse may end up owning the house, cars, bank accounts, and other assets essentially in partnership with the children. The result is further complicated if the children are minors who do not have the legal capacity to enter into transactions or consent to property transfers. The will we prepare solves these potential problems by designating who receives your property and by establishing a contingent trust for those beneficiaries under the age of 18 or who lack legal capacity.

What is Probate?

The original meaning of the word "probate" referred to the court proceeding to determine the validity of a will. While this is still part of the modern day meaning of probate, the term now generally refers to all matters and proceedings relative to the administration of estates and guardianships. The Probate Court determines if a will is valid and if a person dies without a will, the Probate Court determines who the heirs of the deceased are so that the estate of the deceased can be distributed.

Is Probate Expensive?

Contrary to popular belief, probate of a typical estate in Texas can be a fairly simple and inexpensive process with a properly drafted and executed will. With proper documents, an estate can be handled virtually without court supervision, with only the filing of an application, a short hearing, an initial accounting and publication of notice to creditors. The cost of other mechanisms to attempt to avoid probate, such as a living trust, may well exceed the combined cost of probate and the will.

The Will or the Living Trust?

A living trust is a type of trust created during the maker's lifetime. Typically, all of the maker's property is transferred to the trust at the time the trust is created. For the assets ion the trust, probate is not necessary at the maker's death because the trust owns those assets, not the maker. The living trust has been highly promoted by some as a method for avoiding probate. However, that is not always the case. If the maker of the living trust has or later acquires assets which are not contributed to the living trust, the estate of the maker may still have to be probated, thus defeating the presumed advantage. For some people, the living trust may have greater advantages, but the initial cost of preparation is high. Once an asset has been contributed to a living trust, the person has given away ownership of the asset to the trust. Thus, if the maker later wants to transfer the asset, doing so may or may not be possible. By contrast, when a will is drafted to govern the distribution of assets, the transfer does not occur until the death of the maker and if the maker wants to transfer an asset while the maker is living, such property can be transferred at anytime.

What About Estate Taxes for 2005?

The simple will which we are offering to prepare is designed for single individuals with estates valued (including life insurance, pensions, etc.) less than $1,500,000.00, or married individuals with combined estates valued at less than $3,000,000.00 (including life insurance, pensions, etc.) If the total of your assets are less than $1,500,000.00 (if single) or $3,000,000.00 if married), currently your estate will not pay any federal estate tax upon your death. However, if you or you and your spouse have assets over these amounts, then you may wish to take advantage of some estate planning which can lower or diminish the federal estate tax on your portion of your estate which exceeds these amounts. We would be happy to discuss such matters with you.