Texas Estate Planning & Probate
What is an Estate Plan?
An estate may consist of your home, real estate, personal property, bank accounts, vehicles, brokerage accounts, life insurance, and retirement account. An estate plan allows for your wishes and aspirations to be carried out the way you want, and not how the state of Texas wants - which is the alternative.
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Who Needs an Estate Plan?
Everyone needs an Estate Plan. An estate plan is more than a will, everyone's situation is unique and requires provisions to protect your wishes, such as:
Proper Estate Planning Can Prevent or Minimize:
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Probate and court involvement
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Excessive taxes
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Administrative costs
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Legal Fees
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Family disputes
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Provisions for loved ones that have difficulty managing finances and require creditor protection.
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Special needs family members where they maintain existing Government Benefits.
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Minor Children in need of proper guardianship, or an inheritance manager.
TRUSTS
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WHAT IS A TRUST?
A trust is achieved through the creation of a legal document that holds legal title to property for your beneficiaries. A trust details rules you want followed in the handling of the property. A trust involves:
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A trustee -- the person with the right to manage the property.
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A beneficiary -- the person(s) that hold the beneficial right to the use and enjoyment of the property.
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A trustor -- the person giving the property.
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WHAT IS THE DISTINCTION BETWEEN A TRUST AND LIVING TRUST?
A living trust is a trust created while the creator is living (compared to a testamentary trust, which is created at, or after the creator's death under the terms of his or her will). In a living trust, the trustor (creator) is often times the trustee, which gives the trustor the right to control and manage the property during the life of the trustor,
AND A REVOCABLE TRUST?
A living trust can be revocable. It allows the trustor (creator) to make changes to the trust, or revoke the trust, during the life of the trustor. When most people speak of a living trust, they are referring to a revocable trust created during the creator's lifetime for the management and disposition of the creator's property.
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A revocable living trust is usually a good idea when the creator holds property in another state, your age or medical condition makes pending disability likely, if there are privacy concerns, or if it is likely that loved ones will contest a will.
PROBATE
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WHAT IS PROBATE?
It is a formal legal procedure that passes some assets from the descendant to his or her heirs or beneficiaries. Probate involves a judge giving legal permission for assets to be passed on, whether or not there is a last will.
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WHEN DOES PROBATE OCCUR?
Probate may occur regardless if the descendant had a will. Often times, someone dies without a will. In this situation, certain assets pass to the heirs without court involvement, and certain assets require court involvement, this is when probate occurs.
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If the descendant had a will, the probate process is typically quick and efficient (If the will is properly constructed). The probate process just implements the provisions of the will. If there is no ambiguity or valid protests to the will, then a judge will appoint the administer provided for in the will to carry out its terms, and court involvement will generally end there.
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WHAT TAKES PLACE IN PROBATE?
There are two types of probate:
(1) Supervised and (2) Unsupervised.
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(1) Supervised probate can be pain pain-staking due to the fact that a judge must approve all acts of estate administration. The first thing that will happen is certain debts and taxes of the descendant will be paid from the estate before anything left is distributed to heirs or beneficiaries.
(2) Unsupervised probate is when the judge appoints an estate administrator, and that administrator is able to manage the estate, including paying debts, taking care of tax situations, and then distributing assets. This process is more efficient.
There are certain ways to avoid probate (depending on your circumstances):
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Joint Tenancy - Allows property to automatically pass to the surviving tenant.
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Transfer on Death or Pay on Death - In Texas, we allow for bank accounts to provide a provision for a "TOD" or "POD." This automatically transfers the account to the named beneficiary at the time of the grantor's death.
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Revocable Living Trust