Estate Planning

Estate planning in anticipation of divorce!

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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.

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Common Mistakes Women Make in Estate Planning!

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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.

Texas Durable Power of Attorney

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The Texas Legislature adopted a new Durable Power of Attorney form, effective as of January 1, 2014.  Click here to download the Durable Power of Attorney

NOTICE: This form is being provided for convenience only and is not intended to be construed as offering legal advise. You should always consult an attorney about giving someone your power of attorney!

Choosing your agent for a POA is serious stuff!

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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.  Power-of-attorney

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!

 

Does a Transfer on Death deed interfere with spouse’s homestead right?

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I was recently asked a specific question as to how the Transfer on Death deed affects the spouses homestead rights.

Example: A party is married and they execute a transfer on death deed to their children on their separate property which is their homestead.

The deed would not displace the spouse at death because the homestead right is attached to the separate property and community property. Therefore, while the children might own the property upon their parent’s death, the spouse has the right to live in the house.

 

Estate Planning advise from Warren Buffett!

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Marvin Blum (pictured on the far left) generated quite a bit of media coverage this past weekend when he posed a question to Warren Buffett at the Berkshire Hathaway annual meeting, where an estimated 35,000 shareholders gather each year in Omaha. Marvin’s question and a summary of Warren Buffett’s comments are below.

“I’m an estate planning lawyer, and it’s interesting as we wrap up today to ponder that the baby boomer generation is about to pass along the greatest transfer of wealth in history. I can design plans that eliminate estate tax and pass down great amounts of wealth to the next generation, but many of my clients come to me and say they want a plan like Warren Buffett’s, leaving their kids enough so they can do anything, but not so much that they can do nothing. Now they ask me, and I am asking you, ‘How much is that, and how do you keep from ruining your kids?'”

The following is a brief summary of Mr. Buffett’s insightful response:

• I think that more of our kids are ruined by the behavior of their parents than by the amount of the inheritance.
• I rewrite my will every five or six years.
• When your children are old enough (mid-thirties or thereabouts), you should explain your estate plan to them – It’s crazy for them to read the will for the first time after you’re dead.
• If your child is named as executor, your child should understand how to carry out his or her obligations that are embodied in the will before I sign that will, and we should talk it over.
• Rather than creating a dynasty of sorts, if you’re very wealthy, the money can have far more utility to society than to create a situation where your kids don’t have to do anything in life except call a trust officer once a year and tell him how much money they want.
• If you’re going to leave each of your children different mixes of assets, you want to make sure your definition of equality is understood by the children.

Marvin’s question drew immediate attention in the news media with coverage in The Wall Street Journal, The New York Times, The Washington Post, Bloomberg Business Week, The World-Herald, and commentary from these sources was syndicated and reprinted globally by many other outlets.

Article was provided by the Blum Firm, P.C.

Why you need a directive to physican!

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Many of you know I am very adamant that all my clients have a Physician’s Directive (Living Will), so I never charge for the document.  Why is it so important you ask?  Well, there are various reasons and scenarios that come into play that many people just do not think about.  Here is a wonderful article by attorney Harvey Cox that does a great job of illistrating why end of life decisions are so important, regardless of your age!

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The Difficulty of Life
or Death Decisions
By: Harvey Cox