Special Needs Trust
A Special Needs Trust is a trust created during your life-time or at your death (through your will). This trust is designed to provide for the needs of those with disabilities, in an effort to preserve their eligibility for needs-based benefits while providing for their supplemental needs.
The trustee can purchase “non-countable assets” for the beneficiary. This property is not considered to be a resource for purposes of determining eligibility for the SSID and Medicaid programs. These items could include:
Burial Plans – Irrevocable burial insurance policies are not counted as assets;
Life Insurance – Life insurance policies with cash surrender values less than $1,500 are not counted as assets;
A motor vehicle – The trustee can purchase a vehicle for the beneficiary regardless of the value, without affecting their SSID eligibility.
Personal Property – Whether the beneficiary has a house or lives in a group home, any personal property is exempt, including televisions, furniture, clothing, jewelry, etc;
Real Estate – The trustee can purchase the beneficiary a primary residence which does not disqualify them from receiving SSID; however, if the beneficiary only receives Medicaid, the value of the home will be limited.
Work Equipment – The trustee can purchase any items the beneficiary needs to run a business, either as an employee or as an owner. There are limits on the value of these items.
The trustee cannot give any funds directly to the beneficiary because it would affect their benefits. Instead the Trustee would purchase the services or assets for the beneficiary, provided the purchases do not violate the trust or the law. These services can include personal care attendants, education, recreation, funeral plans, vehicles, out-of-pocket medical and dental expenses, physical rehabilitation, medications not covered by benefits, personal residence, medical insurance, special dietary needs and even vacations.
If you need assistance creating one of these types of trusts, please contact Patricia Cole at 817-336-2400.
Common Law Marriage in Texas
Many misconceptions exist as to whether someone has a common law marriage. It is actually quite easy to create a common law marriage if you are not careful.
The law requires only three things to establish a legally binding common law marriage:
- An agreement between the parties to be married;
- The parties live together in Texas as husband and wife (for any amount of time and it does not have to be continuous);
- The parties represent to others that they are married.
Sounds relatively easy, right? However there are many hurtles that one must get through to determine if a common law marriage has been created.
The hardest thing to establish is that an agreement existed. This requires that there be a meeting of the minds between the two parties that they are now married. The case law in Texas states that there must be evidence that shows that the parties intended to have a present, immediate, and permanent marital relationship wherein they both agreed to be husband and wife.
This is NOT an agreement that they will get married, intend to get married, make a promise to get married in the future or make plans to get married in the future. Instead it is an agreement where the parties agree that THIS MOMENT FORWARD WE ARE MARRIED! It is not always possible to prove or disprove this element without some circumstantial evidence. The intent of the parties can be shown with circumstantial evidence, such as the following:
- The parties wear wedding bands;
- The parties celebrate a wedding anniversary date;
- The parties file joint tax returns;
- The parties announce their wedding to family members;
- The parties host a party to celebrate their union; and
- The parties refer to each other as “husband” and “wife”.
Many people think that a couple have to live together for a certain amount of time, however, this prong does not suggest any time limit. Instead, it requires that the couple, after making their agreement, start living together as husband and wife in the state of Texas. Many misconceptions arise around what it means to live together as husband and wife. The way to answer this is to look at the difference between a husband/wife relationship versus a boyfriend/girlfriend room mate relationship. In the first one, the couple each have duties they take on, such as, the wife doing laundry, cooking, taking care of the children, and the man takes on such choirs as taking care of the lawn, fixing things and taking out the trash. The couple also would likely have a joint bank account, even if it is not their only account, and they should be paying the bills together as a married couple would do. They should both be disciplining the children, going on vacation with the children, attending school events with the children, etc.
REPRESENT TO OTHERS:
The last prong and easier prong to prove is “representing to others that you are married”. This prong merely requires that take some sort of directed action to make others think you are in fact married and not just living together. This usually means you call each other “husband” and “wife”, you file joint tax returns, you enter into contracts for services as husband and wife, you never correct people when they assume your married, you celebrate a wedding anniversary, you change your social media status to “married” or you wear wedding bands. It does not require all of these things but instead only a few actions that caused people to believe you were married.
Do you have a will already? If not then get one so your family can avoid litigation!
Many people think that estate planning is only for the elderly or the wealthy, but have you thought about what would happen if you unexpectedly died? Do you really want to leave you wife and kids to figure out how to manage your affairs while they are grieving? If you have a will, then your family has options on how to proceed and it makes the legal process less trying on them. It is even a bigger issue when you are in a blended family. Imagine your minor children living with your ex-spouse becoming a one-half owner of your house with your current spouse. This in it self creates drama for all those involved when it could be avoided with a simple document expressing your desires.
Many people believe that having a will makes their family go through the costly process of probate, however, in Texas the process is not costly and its a lot easier than letting Texas laws decide who gets your stuff.
How does the probate process work? After you pass away, your executor, who you named in your will, will collect and distribute the assets to your beneficiaries during a process known as probate. This will include settling any debts you have with creditors. The process is inexpensive, simple and non intrusive into your loved ones lives.
What happens if you don’t have a will?
- If you are married and all your kids are from your spouse? Your spouse gets your community property and your spouse splits your separate property with your kids.
- If you are remarried and have kids from another marriage? Your new wife and your kids share all your property. In this scenario it is common for your wife and kids to become joint owners of your home.
- If you are single with kids? Your stuff goes equally to your kids and if one is not living then their share goes to their children (your grandchildren from that kid).
- If you are single without kids? Your stuff is divided between your parents, if one of them is deceased then that parent’s share goes to your siblings.
So you can see how the laws in Texas might not be how you want your things to be distributed and having a will leaves the decision solely up to you! We can always find a distant relative to be your heir, but do you really want someone else deciding? So get a will today! My office can help, just call 817-336-2400 and ask for Patricia Cole.
Texas Supreme Court Rules – Intentional Interference with Inheritance Rights is not a cause of action in Texas.
The Texas Supreme Court made a ruling last week that may change the way we look at inheritance rights in Texas. In many family disputes concerning the estates of a loved one, there is a claim that a will is not valid due to lack of capacity or undue influence. But what if there is no will to probate because the perpetrator had the Deceased sign a deed transfer ring their house, or made them beneficiaries on bank accounts or life insurance policies, all which make probate unnecessary.
In May of 2017, the Texas Supreme Court refused to rule on whether Texas has a Tortious Interference with Inheritance Rights cause of action. But in an about face, this month they took the plunge in Archer v. Anderson an appeal out of the 3rd Court of Appeals of Texas. In that case, the Texas Supreme Court found that the tort of interference with inheritance is not recognized in Texas.
Intentional Interference with Inheritance means one who by fraud, duress or other tortious means intentionally prevents another from receiving from a third person an inheritance or gift that he would otherwise have received is subject to liability to the other for loss of the inheritance or gift. (Restatement of Torts Section 774B) However, not all restatements are made into law in all states and Texas has never drafted a specific law on this issue.
The overall point of the Texas Supreme Court was that the testator (Decedent) has the right to dispose of their assets anyway they want. However, if they lacked the capacity, were coerced or mistaken in their bequest or gift then the courts are able to undo the bequest or gift. Also the Court already has broad authority to rectify inequalities using a constructive trust in an action for restitution to prevent unjust enrichment. These specialized doctrines and procedures in the probate court help distinguish the true intent of the testator. Therefore the cause of action of Intentional Interference with Inheritance is not needed.
While the court is correct that the Archers had other adequate remedies to recover against the perpetrators, those remedies do not allow them to recover attorney fees and court costs. So the moral of the story is take care of your loved ones, stay in their lives and make sure no one takes advantage of them!
Preplanning to avoid probate litigation!
There are several things you can do now while you are alive to prevent your loved ones from having to probate. This is especially important if you are married and your spouse will be your sole beneficiary. This is not to say you should not have a will. Everyone should have a will just in case some asset comes up that we didn’t plan for properly or in the event you die accidentally and litigation ensues.
- Name Beneficiaries – you can name your beneficiary on various types of accounts, including bank accounts, life insurance, retirement accounts, and investment accounts. Review these accounts every few years to ensure they have the beneficiary of your choosing.
- Joint Tenants with Right of Survivorship – when you purchase a house ask the title company have the deed read “joint with right of survivorship” which transfers the house to your spouse immediately upon death. If you already own your house, you and your spouse can execute a new deed that makes the ownership “joint with right of survivorship” so that the house is automatically transferred upon death.
- Living Trust – while this may seem to be the most straight forward approach, only an attorney can tell you if you really need one. Many people get living trusts and never properly fund them so probate turns out to be necessary anyways. Also a living trust does not protect you from liability as many people think it does.
- Transfer on Death Deed – this document is a new statutory document created by the Texas Legislator to help protect your real estate. While this document is a deed, it is not a traditional deed, in that it does not immediately transfer ownership to your beneficiary but allows you to instead retain all ownership rights. Upon your death the real estate automatically transfers ownership to your named beneficiaries. These types of deeds are used mostly by people wanting to transfer their home to their children or grandchildren upon their death.
For more ideas and ways to plan so your family can avoid probate court contact your attorney! Remember that “an ounce of prevention is worth a pound of cure”.
Losing a spouse doesn’t necessarily mean probate court! Ways to avoid formal probate.
After losing their spouse, many people don’t contact an probate attorney because they believe that everything just goes to them immediately. But this way of thinking may cause more harm down the road. Nothing in life is absolute except death and taxes, so at least consult an attorney to make sure there is nothing you should do or to find out what your time limits are with regards to probate. Here are a few cases where waiting caused more problems:
- Jane Doe dies and her husband Don doesn’t probate her will. Four years pass, and then Don Doe dies. Since Jane’s will was not probated within the 4 year statutes the only alternative is to probate as “muniment of title” to clear title to the house or cars. In this case there is no formal probate of Jane’s estate which may create problems with certain asset at financial institutions and may force the beneficiaries to pay all debts prior to probating.
- Jane Doe dies and her will isn’t probated because her husband, Don Doe, doesn’t want to waste his money. Years later Don learns that there are assets in both of their names that need to be probated. Jane’s will can not be probated after 4 years because Don is the one at fault for not probating. Don goes to an attorney and finds out that since Jane had children from a prior marriage, they take her 1/2 instead of him.
- Sarah Jones dies and she does not have a will. Four years pass, and Mike Jones tries to sell their house. Just prior to closing on the house, Mike finds out that the house is still in both his and Sarah’s name. Mike contacts an attorney to probate and must wait more than 30 days to get the probate finalized, so he loses the sale on the house.
As you can see there are many different situations that warrant consulting an attorney to ensure probate is not necessary after the death of a loved one. While there are many different reasons that may take you into probate court, there are ways to avoid probate court such as:
When there is a will:
Muniment of Title – while this process requires you to file in probate court, you are not opening a formal administration so once the court signs an order you are done with the probate court. So if you find that all the deceased person’s unsecured debts are paid and you just need to transfer title to the assets, have your attorney probate the will as a “muniment of title” which transfers title only and does not open a formal estate.
When there is no will:
Affidavit of Heirship – when there is no will, there is an informal process of having an “affidavit of heirship” prepared by an attorney and filed in the county real property records. This is not a costly process and it will benefit the parties in the long run. Don’t try to do one yourself, as mistakes will end up costing more in the long run. Do this now rather than later because witnesses may die, move away, not remember, etc. This document will clear up title to property and vehicles so that the parties can move forward in life and not be held back when trying to sell such assets.
Determination of Heirship – This process is similar to the Affidavit of Heirship above, but it involves going to the probate court, having them appoint an attorney ad litem to verify the heirship information and signing an order on who the heirs are in an estate. This process may be required of certain financial institutions that do not want to rely upon a “Affidavit of Heirship” and who may want the Judge to make a formal finding.
Small Estate Affidavit – This process is for very small estates under $75,000.00 (not counting exempt assets) or when trying to transfer the decedent’s homestead to their spouse. The form is prepared and filed with the probate court. The judge will then approve the Small Estate Affidavit to allow the transfer of assets to occur. Keep in mind that this form will not transfer title to real property (other than the homestead), so if there is no spouse (so no homestead) or other rental real estate then this form won’t work.
Estate planning in anticipation of divorce litigation!
Trusts can be useful tools in a divorce proceeding especially when a spouse has a direct or indirect interest in a trust. Counsel should identify specific trust features that could make a difference and impact whether trust assets can be reached, potentially affecting alimony and property division determinations.
Within the context of a divorce, trust and estate attorneys should understand specific discovery techniques family law practitioners may use to determine whether a spouse has an interest in a trust, whether that interest is material, and what attack can be made against the trust. The key is make sure your attorney is knowledgeable before you do any estate planning in anticipation of a divorce.
Common Mistakes Women Make in Estate Planning!
A large amount of women hold a substantial amount of wealth in this country, however, many do not take the correct steps to protect their assets. It’s a simple fact that Women live longer than men! By the time a woman is 85+ she will outnumber men by 25% and she is 9 times more likely to live past 100 than a man. When the husband gets ill, becomes disabled or passes away, it is the WIFE who is left to deal with the couples finances. Therefore, it is necessary for women to get more involved in the couple’s finances well before any of these life changing events occur. What should a Woman avoid?
Putting off Estate Planning. Probating an estate without a will takes longer, cost more money, requires more court involvement and the state law determines who gets your possessions. But the biggest reasons you should have a will is to keep the family harmony! There’s no excuse for putting your family through the drama of trying to probate an estate without a will!
Trying to Do It Yourself! There are numerous ways to transfer assets upon death and a will is just one of them! There are also numerous documents you may need depending upon your own circumstances.
- Who gets your stuff once you pass?
- Who gets the responsibility of being your executor and what does that mean?
- Who makes decisions for you upon disability or incapacitation?
- Who makes burial decisions once you pass?
- Do you need a Special Needs Trust now or upon your death so your spouse or child doesn’t lose disability benefits?
These are all good questions to iron out with a professional! The cost of preparing a will by using a professional should not prevent you from being prepared. You can spend a little now or a lot later! However, the main reason you should leave it to the professionals is because doing it your self means there is good chance that you will make a mistake! I have had small and large estates where the person used a computer form incorrectly and it left us trying to figure out what they wanted to accomplish and cost the beneficiaries additional unnecessary expenses. I have also had clients write their own will giving away each of their assets to a specific person, but they forgot about after acquired items or potential future litigation.
Failing to Understand your financial situation. Many women find themselves lost when their husband passes away or becomes incapacitated because he was the one that handled the finances. While you may not want to be the one to deal with the bills on a daily basis you should always know what assets you have as a couple, how those assets are disposed of upon death, and what your estate plan is as a couple.
Failing to Probating Husband’s Estate. Women are more likely than men to put off probating their spouses estate. Many women think that they get it all so there is no need to probate, but this always causes problems down the road. It is necessary to probate the will to transfer assets such as, bank accounts, investment accounts and real estate. What happens when you want to sell or refinance your house and it is still in both names? What happens when you pass away and your children try to probate your estate and there are joint accounts or property?
In Texas, a Will can only be probated within 4 years of death unless there are extenuating circumstances and then it can only be probated as a Muniment of Title. So waiting to probate a Will seriously limits your options! Do you really want your children to have to deal with your husband’s estate years down the road? Do you really want the Court to tell you that you now only own one-half of your house because you failed to probate?
If your husband doesn’t have a Will, then it is important to probate now rather than later! The main reason is because you or your children may not be able to find witnesses in 10 or 20 years. So as you can see it is very important to consult an attorney after your spouse dies to discuss the ways you can go about making sure you preserve your rights.
Failing to Consider the Possibility of Incapacity. Women live longer and are more likely to be the caregiver of their husbands or parents, so it is likely that a woman is going to have to deal with long-term care during her lifetime. For this reason, it is important for women to be informed, involved and understands her financial affairs. Here are a few questions you need to discuss with your estate planning attorney are:
- Do I need a Guardianship Designation? It lets you chose now rather than allowing a Court to decide who will have control over your person and finances if you become incapacitated or the POA’s are not enough.
- Do I need to provide for a Special Needs Trust for disabled or incapacitated spouses or children? If your spouse or child receives financial assistance, you would not want to leave them assets that would affect this assistance.
- Do you need a Lady Bird Deed? This tool could help preserve your home to be left to your children at your passing being used to pay your creditors.
Failing to Consider Burial Plans. Since you will likely outlive your husband, have you considered that it will be up to you to make the funeral plans after his passing. Many women are too upset about their loss to handle these arrangements so it is left up to the children or funeral home. But what if you and your husband could make these plans in advance of either’s passing? This doesn’t mean you have to purchase burial plots and pay for burial plans! This just means you have a written plan in place and designate an agent to carry out this plan after you are gone. It makes sense to have such a plan because it is easier on the remaining spouse who has to deal with the loss or with the spouse’s other family members.
Choosing your agent for a POA is serious stuff! Understand their fiduciary duty!
Many people know they can find the Statutory Power of Attorney form online. But what they do not usually understand is the extent of the authority they are giving to their agent and how the form needs to be filled out properly to be accepted once incapacity occurs.
Giving a person agency over your financial affairs means they step into your shoes and can do all kinds of things, such as, sell your house, cars, spend your money, make investments on your behalf, etc. Therefore you should makes sure you do not not give away too much authority!
Texas law does provide that an agent under a power of attorney owes the principal a fiduciary duty. However, many times it is all but difficult to recover lost money or assets because the agent has already spent the money or disposed of the assets.
Therefore, the important lesson is to choose your agent carefully and use an attorney to make sure the POA does exactly what you need it too!
Landmines to Avoid When Taking Money from Family and Friends
I constantly have clients that open small businesses and they tell me they are using money from friends or family members. I try to warn them about the downside of such arrangements and how to avoid future problems. There are several big mistakes that most people just do not think about in the beginning! However once a problem arises it is usually too late!
Recently I found this great new article that sums it up quite nicely.
Four Landminds to Avoid! by NFIB.com
I do not usually endorse specific businesses but if you are a small business owner you should seriously think about joining an organization called NFIB (“National Federation Of Independent Business”). This organization was formed to bring together small business all over the country and give them a very big voice!