What is Estate Planning?

Lawyers use the term “estate planning” to refer to preparation of documents that serve to manage an individual's assets in the event of their incapacitation or death. At times, estate planning encompasses considerations of possible estate taxes. While most people think about having a will prepared to transfer assets upon their death, as important are other documents which deal with issues involving continued life. At Dankesreiter & Emmet, LLP, we can discuss with you and prepare:

• Last Wills and Testaments

• Trusts

• Plans dealing with married, single or blended families

• Guardians for children

• Declaration of Guardian, in the event an adult requires one in the future

• Medical Power of Attorney

• Financial Power of Attorney

• Directive to Physicians which is sometimes referred to as a Living Will

• Beneficiary Forms for IRA’s, 401(k)s, and Life Insurance

What is the cost and process of Estate Planning?

We charge nothing for your initial visit. When you schedule a meeting with us, we will listen to your goals and objectives, address your concerns, and make recommendations for your particular family circumstances. We can also review any existing estate planning documents that you have already executed. At times, we find that clients already have everything that they need. During that first visit, we will quote fees to prepare the documents you request. We will have you return to our office to execute your estate documents so that we can assure that the legal formalities of execution are followed. When coming to our office is not possible, we come to your location. After signing your documents, you will keep the original signed documents and our firm keeps a copy.

Why not use just use forms from the internet or software to create a will for myself?

Wills and Trusts are important documents which can have a large impact on a person’s family. A valid will in Texas has many requisites both in the document and in the execution. An invalid will or a unclear will can create a lot of controversy which is typically not discovered until after death - when it cannot be corrected. Many times, this makes the “less expensive” choice very costly. We have reviewed wills and trusts drafted from internet forms or software programs which did not do what the drafter intended and sometimes they were determined to be invalid.

We have seen a disclaimer on the Legal Zoom website which stated that the blank forms used to create legal documents on their system were filled out incorrectly 80% of the time. The Texas State Bar warns, “Forms, kits, computer software programs, and websites may not be tailored to the requirements of Texas law.” Lawyers experienced in drafting wills, trusts and other estate planning documents have the professional judgment to create and properly execute the documents which fulfill your needs and protect your family.

If a person dies without a will, who inherits?

When someone dies without a valid will, called intestate, the heirs must be determined in Texas probate court proceedings called Dependent Administration and Heirship Determination. Legal fees for these proceedings can easily double the fees for probate.

During those Heirship Proceedings, if the deceased person had one marriage, the surviving spouse usually receives 100% of the decedent’s assets. If the decedent has no spouse at death, the estate usually goes to the children. However, if the deceased person was in a second marriage, the law gives the decedent’s children by the first marriage 1/2, 1/3 and 2/3 of all assets, depending on whether the assets are real estate or personal property, and community or separate property. The second spouse receives 1/2, 2/3 or 1/3 of the assets.

We have found that many times the intestate distribution required by the Texas Estate’s Code is not what the decedent would have wanted or very practicable. If you hire us to prepare estate planning documents, your heirs will avoid unnecessary costs, complicated legal proceedings and delays.

Are Powers of Attorney valid after death?

Powers of Attorney are legally invalid once the person who granted the power has died. A person holding a power of attorney does not have legal authority to take any action on behalf of the deceased person including, but not limited to, withdrawing funds from banks, transferring assets, closing accounts, changing beneficiaries. Once a person dies, the Executor named in the will must take over gathering and administering assets. However, a Executor has no legal authority to act until after the Executor has been appointed by a probate court and Letters Testamentary are issued. Trustees do have immediate authority to act.

What is a Trust?

A trust is an arrangement in which one person, the trustee, holds property for the benefit of another person, called the beneficiary. The person creating the trust is called the grantor. The grantor can be the trustee and the beneficiary under the terms of a trust. Trusts are useful tools, not only to transfer property to the next generation, but also to manage assets during the beneficiary’s lifetime - especially in the event of disability.

Property that passes through a trust is not subject to probate. Since it is private, a trust does not become part of the public record like a will. This means that the transfer of property through a trust is not held up by the probate process. Transfer of assets can take place immediately upon death, or if you want to delay the transfer, you can direct that the trustee hold the assets until some specific time such as when a beneficiary reaches a certain age.

A trustee is a fiduciary of the trust beneficiary. A fiduciary is legally bound to act within the confines of the law and in the best interest of the beneficiary. Trustees must fulfill the terms of the trust which addresses such matters as when and how the trust property will be given to the beneficiary.

What is the difference between a Testamentary Trust and Revocable Living Trust?

Testamentary Trusts are created by your will and do not come into existence until your will is probated. At that point, selected assets passing through your will can "pour over" into the trust. Testamentary Trusts can be used to pass assets to minor children and allow management of those assets without the need to create a costly and cumbersome guardianship in the event of a parent’s untimely death. They can also be used to pass assets to adult children.

Revocable Living Trusts are similar in that they pass assets at the time of death. However, these trusts come into existence while you are alive. During your life, they are funded with your assets such as your house, boat, and investments. A Living Trust also has the advantage of allowing you to name a trustee to manage your assets for an extended period of time if you can no longer handle your own affairs during your lifetime.

What are common misunderstandings and misrepresentations regarding Revocable Living Trusts?

Yes, there is a lot of misunderstandings and misrepresentations regarding these trusts which can be found on the internet and are even made by attorneys who do not regularly practice in this area. This is such a serious issue that the State Bar of Texas has posted a guide called “Living Trust Scams” on its website which states in part:

• Statements that Living Trusts save taxes are misleading because most estates will face no death or estate tax at all. In 2020, estates with a value under $11.58 million will not be taxed at death.

• Statements that Living Trusts will help you qualify for public assistance benefits such as nursing home Medicaid benefits are false.

• Statements that Living Trusts help you avoid creditors or provide asset protection are false. During your lifetime, assets in a Living Trust are subject to the claims of your creditors. After death, these assets are subject to the claims of your estate’s creditors.

• “The key is to work with a Texas attorney familiar with estate planning to assist you in determining which instrument is right under your particular circumstances.”

What are the duties of a successor Trustee of a Living Revocable Trust?

When a person who established a Living Revocable Trust, called the Grantor, passes away, the successor trustee has the obligations as set out in the trust document and also has fiduciary duties to the remainder beneficiaries. While trusts do not have to be filed in probate court, there are still steps the trustee must take. The beneficiaries must be contacted; assets must be gathered, valued and managed; potential creditors must be notified; debts, taxes and final expenses must be paid; and, ultimately, any remaining income and assets must be distributed in compliance with the trust terms. Whether you are a trustee or a beneficiary, the lawyers at Dankesreiter and Emmet, LLP can help you with these complexities.