Thinking about death or disability is often an uncomfortable topic that many prefer to avoid, if possible. However, establishing an estate plan is one of the most significant and important steps you can take to protect yourself and your loved ones. Proper estate planning not only puts you in charge of your finances, but it can also spare your loved ones the expense, delay and frustration associated with managing your affairs when you pass away or become disabled.
If you leave your estate to your loved ones using a will, everything you own will pass through probate, and the process can be expensive, time-consuming and open to the public. The probate court and Texas Estates Code controls the estate administration process until the estate has been settled and distributed. Often, assets get frozen in the probate process and your surviving family is left without immediate and/or sufficient access to cash to pay for living expenses while your estate is being settled. This delay can leave your loved ones without sufficient resources for weeks or even months. With proper planning, however, your assets can pass on to your loved ones without undergoing probate in a manner that is quick, inexpensive and private.
At Prevost, Shaff, Mason & Carns, PLLC, we can assist you with planning your estate in a manner that will help you avoid probate and the inherent delays and costs associated with it.
Providing for Incapacity
If you become incapacitated, you will not be able to manage your own financial affairs. Many are under the mistaken impression that their spouse or adult children can automatically take over for them in case they become incapacitated. The truth is that – unless proper planning has been done beforehand – in order for others to be able to manage your finances, your friends or family must petition a court to declare you legally incompetent.
This process can be lengthy, costly and stressful. Even if the court appoints the person you would have chosen, this person will have to come back to the court every year and account for how they are spending every penny as well as account for all of your healthcare. If you want your family or friends to have the authority to immediately address your personal and financial affairs without court intervention, you must designate a person or persons that you trust in proper legal documents so that they will have the authority to withdraw money from your accounts, pay bills, take sell stocks, make medical decisions and living decisions on your behalf.
Providing for Minor Children
It is important that your estate plan properly and fully address issues regarding the guardianship, support and care of your children. Some issues to address are often obvious while others we can assist you in planning for as a result of our decades of planning and experience in these matters. If your children are minors, you may want to consider implementing a plan that will allow your surviving spouse to devote more attention to your children, without the burden of significant debts and/or work obligations. You should also discuss the possibility of both you and your spouse dying simultaneously, or within a short duration of time with your attorney. A contingency plan should provide for the persons you would like to manage your assets as well as the guardian(s) you would like to nominate to raise and care for your children. The person, or trustee in charge of the finances need not be the same person as the guardian. In fact, in many situations, you may want to purposely designate different persons to maintain a system of checks and balances. Otherwise, the decision as to who will manage your finances and raise your children will be left to a court of law.
You should give careful thought to your choice of guardian, ensuring that he or she shares the values you want instilled in your children. You will also want to give consideration to the age and financial condition of a potential guardian.
Avoiding a Will Contest
Unfortunately, Will and Trust contests are becoming more and more prevalent. As the likelihood of litigation around estate planning continues to grow, so does our approach to ensuring your documents are honored. First, the most common grounds for attacking Wills and Trusts are (1) lack of capacity to enter into the Will or Trust and (2) undue influence by a party or parties.
In order to have testamentary capacity under Texas law, the person signing the documents must have the ability to know and understand several key elements:
At Prevost, Shaff, Mason & Carns, PLLC, if we have any concern about your ability to satisfy the list above, we employ several strategies to reduce the likelihood of success of a contest on the basis of lack of capacity and/or to dissuade any such contest. For example, we recommend that you visit your physician prior to and close in time to the signing of your Will or Trust, and we assist your physician in preparing a letter regarding your capacity to enter into a Will or Trust.
The second most common ground for a Will or Trust contest is undue influence. Under Texas law, undue influence generally requires that the person seeking to sign the document is being influenced by another person such that their intent is being overpowered and that they would not have signed the document without that influence.
At Prevost, Shaff, Mason & Carns, PLLC, if we have any concern about an undue influence affecting a client and/or there is a strong likelihood that your Will or Trust may be contested due to many factors we look for that have previously led to such contests, including but not limited to blended families, late in life marriages, substantial separate property of one or both spouses or what we believe would appear to be an unnatural disposition of your estate, we recommend that several precautionary measures are employed to reduce the likelihood of success of a contest on the basis of undue influence.
If you are concerned about whether your Will or Trust will be contested or believe that your loved one or friend’s estate planning documents were executed without capacity or as a result of undue influence, we would encourage you to call or schedule an appointment to visit with us to discuss your options.
Planning for Estate and Gift Taxes
Whether there will be any federal estate tax to pay depends on the size of your estate and how your estate plan flows. There are many well-established strategies that can be implemented to reduce or eliminate estate and gift taxes, but you must start the planning process early in order to implement many of these plans.
Do you want to benefit a charitable organization or cause? Your estate plan can provide for such organizations in a variety of ways, either during your lifetime or at your death. Depending on how your planned giving plan is set up, it may also let you receive a stream of income for life, earn higher investment yield, or reduce your capital gains or estate taxes.
At Prevost, Shaff, Mason & Carns, PLLC, we have over 65 years combined experience practicing law, and our experiences range from planning for complex estates in excess of fifty million dollars ($50,000,000) to more “everyday” Wills and Trusts. If you would like to discuss your estate planning, we would encourage you to call or schedule an appointment to visit with us to discuss your options.