The Basics of Estate Planning

The Basics of Estate Planning

What Is Estate Planning?

Estate planning, at its core, is a way for you to protect and take care of your family’s needs after your death. It is also a way for you to protect your assets and your family if you are unexpectedly incapacitated. There are many different estate planning tools you can use to plan for your family’s protection. But, don’t try to create what you think you need from an online legal form.

Proper estate planning is more complex that what you can do with a simple do-it-yourself form. You need an attorney who is knowledgeable and experienced in estate planning to help you create a good plan.. The actual documents you need in your estate plan depend on your individual situation.

You need to talk to an attorney about your options. A “one size fits all” form simply won’t protect you. And, a comprehensive estate plan actually prepares you for death and if you are unexpectedly incapacitated.

Planning for your family’s future is critical. By planning ahead, you get to determine how your property is handled and to whom it is distributed. And, if you do become incapacitated, either permanently or temporarily, an estate plan can protect you and your family when you can’t make decisions for yourself.

Planning for Your Death

When preparing for death, proper estate planning actually has two parts. One part provides that your debts are paid after your death. The other part designates the beneficiaries of your assets the debts are paid.

A Last Will & Testament is the most common estate planning tool that covers both of these situations. A Will is essentially your written instructions about how you want your property handled after your death. In it, you also specify who you want to manage your property.

Planning for Incapacity

There are certain situations in life that can result in your becoming incapacitated. Sometimes an injury can create that situation, other times it may be a medical condition. In either situation, however, you need someone to take care of you and make decisions for you when you can’t do so.

This is why planning for incapacity is crucial. And, when planning for being unexpectedly incapacitated, there are actually two parts to that plan as well. The first part of an incapacity plan deals with your person healthcare. In that part of the plan, you name the person you want to make healthcare decisions for you when you can’t do so yourself. The other part of the plan deals with your financial affairs and is where you designate the person you want to make decisions that affect you financially if you are incapacitated.

The need to plan ahead in these areas cannot be over emphasized. If you do become incapacitated and you don’t have a plan in place, it may be necessary for your family to seek court intervention to appoint a guardian for you. That process can be extremely expensive so it is a good idea to plan ahead.

To get your plan in place, call me at (254) 203-0843. I’d be happy to visit with you, discuss your needs, and craft an estate plan specifically tailored to meet your needs and protect your family.  As an alternative, you can complete an online questionnaire and I’ll get started on your estate plan after a brief discussion with you.

Four Tips for Planning Your Estate

Four Tips for Planning Your Estate

We don’t like to talk about death and dying. I understand that. Really, I get it. But, it’s important to plan for what happens to your assets after you die. Your family needs the security that only your planning can give them.

The National Association of Estate Planners estimates that more than 120 million Americans do not have an up to date estate plan. There’s no legitimate reason for not having a plan in place. Here are four tips for you to consider as you think about your own estate planning.

1. It’s all about planning ahead.

You have to plan before you get seriously ill or become disabled. So, before either of those things happen, you need:

a. A durable power of attorney to appoint someone to make financial decisions for you

b. A medical power of attorney to appoint someone to make medical decisions for you

c. A living will to state your preferences with regards to end of life options

2. Draft a will

If you don’t plan where your assets go at your death, the state has a plan for you. But, you won’t like that plan. So, get a will and specify how you want to distribute your assets at your death.

3. Update beneficiary designations.

You should regularly review your beneficiary designations and updated them as needed. A good rule of thumb is to review your beneficiaries when you experience a major life change, like getting married, having children, children graduating from college, children getting married, having grandchildren, etc.

4. Don’t forget about your digital estate.

You have accumulated digital assets over the years. Most people don’t think about those things. So, plan ahead and keep an inventory of your digital estate. Make sure your family knows about your accounts and has access to the passwords when the time comes to use them. And, leave instructions for how you want your heirs to handle your social media accounts.

Estate Planning Is Not Just for the Rich

Estate Planning Is Not Just for the Rich

There is a common misconception “out there” that estate planning is just for the rich. Let me clear that up … estate planning is NOT just for the rich. It’s for everyone. That’s right … everyone. It doesn’t matter what you do for a living, whether you have a dozen kids or no kids, whether you think you have an estate to plan or not, estate planning is for you.

What Is Estate Planning?

Estate planning is really nothing more than a plan that protects your loved ones when you die. Notice, I said, “when” you die, not “if” you die. Dying is a certainty for all of us. So, we should all plan for it. It’s really simple. If you have a plan for when you die, your loved ones will have adequate protection. If you don’t have a plan for when you die, your loved ones won’t be protected.
What do you need to protect your loved ones? Any well prepared plan includes a will, along with powers of attorney to deal with financial and medical issues, and a living will. Depending on your particular situation, you may also want to consider a living trust so your family can avoid probate.

Why We Don’t Plan Ahead

I have people tell me they know it’s important to prepare for death. They say they’ll make an appointment to talk about their options. The vast majority never follow through. Why is that? If we know a plan is so important for protecting our families, why don’t we actually follow through and make a plan?

Here’s what I think …

We’re in denial.

Whether we admit it or not, we all think we’re not going to die. After all, that’s something that happens to the other guy … right? No, that’s not right. We’re all going to die. And, we all know that death is inevitable.

So then I hear …

“You’re right. I am going to die. Of course, I know that. But, the day I’m going to die is not today. I’m going to die ‘some day’ down the road. Right now I’m just too busy to deal with it. I’ll do it ‘some day’ before the inevitable happens.”
The problem is that you don’t know the day. Postponing a plan most likely means you’ll die without a plan. Don’t let that happen.

Or, I hear …

“I don’t have to worry about what happens when I die. My spouse and I have everything in our names jointly. If one of us dies, the other gets everything.”
But, what happens if you die together … like in a car accident (I’ll give an example a little later in this article)? Do you have a plan for your children?

Or, I hear …

“I don’t have an ‘estate’ so I don’t need a plan.”
Really? Tell me, do you own a home? Do you have life insurance? Do you have a car, bank account, or 401(k)? If you have any of these, then you have an “estate” that is subject to the probate process and you need a plan.

Or, I hear …

“I can’t afford to pay for an estate plan.”

Hmm … do you have minor children? If so, you can’t afford NOT to have an estate plan because you need to appoint a guardian to take care of your children if you and your spouse both die before they’re grown. And, what about the expense of creating an estate plan? Have you purchased a new flat screen television for your home? How about new living room furniture? Well, it costs about the same to prepare an estate plan. It’s just a matter of priorities, really.

I’ve even heard …

“I’ll be dead so what do I care about what happens to my estate?”

Should I really have to address a question like that? Unfortunately, I do hear that from some people. The answer is that you should care a lot if you have loved ones.

There’s just no excuse for not at least having a will. It doesn’t matter how young or old you are or what your financial circumstances are, you should at least have a will.

If you die without a will, the State of Texas decides who gets your “stuff.” The State will also decide who takes care of your minor child. Besides, it’s incredibly irresponsible to leave your family a mess to unravel after your death. So, at least prepare a will.

Using Online Services for an Estate Plan

Let me say this right up front … I do NOT recommend using an online form to create a will, power of attorney, or any other legal document pertaining to your estate. Doing it yourself works well for a lot of things but this is not one of them. A will is one of the most important legal documents you’ll ever create. It is not something you want to trust to an online form or service.

If you’ve ever visited one of these legal online sites, you’ll notice they have lots of disclaimers making sure you understand that they’re not giving legal advice. They have those disclaimers because they can’t give legal advice. All they can do is give you a form with cookie cutter language and leave you to your own devices to try and figure out how to fit your situation into that mold.

How do you know if you’re doing it right? How do you know your family will get what you intend for them to get? Without proper legal training, you don’t know. And, if you use the wrong words and phrases in a will, you may very well end up doing the exact opposite of what you mean to do.

The horror stories involving poor drafting of wills are legendary. You do not want your estate to join the scores of such stories so don’t try to do it yourself. Here’s a story illustrating my point. The names are fictional, but this actually happened.

Unintentional Disinheritance

Jim and Laura had two grown children and five grandchildren. They wanted to make sure they had a will to protect the inheritance for their children and grandchildren. So, using a popular online service, they prepared a will. They followed the prompts, answered the questions, checked the boxes, printed and signed the documents. They thought they had adequately protected their children and grandchildren.

A few years later Jim and Laura, along with their son, were killed in a car wreck. Afterward, the family discovered that three of the grandchildren were disinherited. What happened?

Well, when Jim and Laura completed that online form it included a sentence that read “our estate should go in equal shares to our two children.” Of course, that sounded right to them so they never questioned it beyond the “check box” presented by the online service. But, what Jim and Laura didn’t realize is that they made no provision for what would happen to the share of any child who died before them or at the same time as they died. As a result, they had no statement in the will that would give the children of a deceased child the share the deceased child would have received.

When Jim and Laura died in that car crash with their son, his three children were not included in the inheritance through the will. They were unintentionally disinherited. This unintentional disinheriting would not have happened if Jim and Laura had consulted with a qualified attorney to create their will rather than depending on a generic, fill in the form, online service.

This tragic scenario is played out over and over again in real life situations. Estate planning is not a do it yourself project. Go to a qualified professional who can help you make the right decisions to carry out your plans to protect your loved ones.

Always Consult a Qualified Professional

Planning your estate and protecting your family is the most important thing you can do before you die. Don’t leave the decision to later because it may be too late. And, don’t depend on a form from the internet or a legal service on the internet. The decisions you need to make are too important to trust to anyone other than a qualified professional.

Estate planning is what I do. I am more than happy to sit down with you, answer your questions, and help you prepare a plan that protects your family. There is no better way to have peace of mind about your family’s future after you’re gone than to know you’ve prepared a plan that ensures they are properly protected.

You can order your basic estate planning documents from me by clicking here.  I personally prepare your documents to conform to your desires.  You get the advantage of consulting with a professional and having your documents drafted specifically to your situation without having to visit my office.

Make It Easy for Your Loved Ones with an Estate Plan

Make It Easy for Your Loved Ones with an Estate Plan

I regularly meet with clients who want to take preventative measures to make sure their families are not burdened if they become incapacitated or die. The most common question I hear is, “What do I need to do to make it easy for my loved ones?”

I do have a few recommendations.

1. Prepare Your Will

When you die without a valid will in Texas, the law determines how your property is divided. You can see my previous post on that topic as it relates to single persons here. The statutory formula that determines how your property is distributed does not take into account your wishes or your unique circumstances. This often leads to a different outcome that you would expect or want.

Also, the process of settling your estate without a will may be significantly more complicated and, as a result, significantly more expensive. Having a will is the only way to make sure your assets are distributed the way you want and to make sure your estate is settled in an efficient manner.

2. Name a Guardian for Your Minor Children

Because you know your children better than anyone else, you are in the unique position of choosing the best person to raise them in the event of a tragedy in your family. But, if you don’t name a guardian, that decision will be made by a judge who must follow certain legal guidelines and doesn’t know you or your children. Again, this can often lead to consequences you would not want.

Suppose, for example, that the law requires a court to award custody to an orphaned child’s grandparents. But, the extended family of the child’s parents do not get along and disagree about who would be best suited to care for the child. In that situation, a legal custody battle over guardianship may be the outcome. Your child would be caught in the middle of that battle and be subjected to more stress during what is already an emotionally tumultuous time.

3. Leave Assets for Your Children in a Trust

Minors in Texas are considered incapacitated. If you leave them more than a nominal amount of money outright, a guardianship will have to be created to manage those assets for them. Guardianships can be expensive and time-consuming. Additionally, the assets you leave them will be distributed to them when they turn 18 years old when they may not have the wisdom or foresight to manage them wisely.

A trust can make sure that your assets are managed by a person of your choosing and that your property is ultimately distributed how and when you decide.

4. Coordinate Your Non-Probate Assets with your Overall Estate Plan

Non-probate assets include things like life insurance. I have seen clients spend time and money creating an estate plan only to forget to change the beneficiary designation on assets like life insurance that will not go through the probate process. You don’t want to let that happen.

After you finalize and sign your will, you must change your beneficiary designations to match the way your will disposes of your assets. If you don’t do this, your property may not be distributed in the way you desire.

5. Make Your End of Life Wishes Known

Do you know now whether you would want life sustaining treatment if you suffer from an irreversible or terminal condition? If you know what you want in that situation, share it with your loved ones. When they know your wishes and your reasoning behind those wishes it relieves a lot of stress they may feel in making those decisions without your guidance.

6. Prepare a Durable Power of Attorney

Should you become disabled without having a durable power of attorney in place, it may be necessary for your family to seek a court-ordered guardianship of your person and estate so they can manage your affairs for you. Such a guardianship proceeding is time-consuming and expensive. You can avoid that possibility by creating a durable power of attorney before a tragedy occurs.

7. Make Sure You Have Enough Life Insurance

Life insurance is the best way to ease the financial burden on your family in the event of a tragedy. This is especially true if you are the sole provider for the family. Not having enough assets or insurance at the time of your death may mean that your spouse cannot afford to maintain the family home or pay for living expenses.

Life insurance is especially important if you and your spouse both die together. Ultimately, it is your responsibility to provide for the financial support of your children in the event the unthinkable happens. Life insurance can help the guardians you’ve selected support your children.

8. Plan for the Disposition of Intangible Treasures

I find that many clients take great care to plan for their higher value assets like homes, 401Ks, IRAs and jewelry. But, my experience is that the items causing the most conflict after the death of a loved one are items that hold sentimental value.

My recommendation, therefore, is that your family openly talk about the items that hold specific sentimental value for any individual. You can then include a special bequest to those individuals for such sentimental items.

9. Organize Your Records

Your family will not appreciate having to rummage through your disorganized records while they are grieving your loss. Do them a favor and get your records in order so they can easily find what they need when they need it.

10. Tell Loved Ones Where Important Documents are Located

It really doesn’t matter where you keep your estate planning documents if know one knows where to find them. Tell your beneficiaries and your executor where you are storing your estate documents. And, don’t just tell them once but remind them over the years at family gatherings.

Following these 10 steps will allow you to rest easy and know that you have protected your loved ones when tragedy strikes. And, your family will be grateful.