Wills & Estate Plans Q & As

Death affects people in a number of ways. As families cope with the loss of a loved one, relationships, values and judgment are tested. A valid Last Will or Trust prepared by an experienced estate planning attorney can help to insure an orderly transfer of your estate.

At Patrick G. Hubbard’s firm, we are committed to helping our clients preserve their legacy. Wills and Trusts are not just for the rich. They are for people who care about their family. We can help you determine whether a Will or Trust is right for you.

Intestacy

If you die intestate – meaning without a valid Will or Living Trust – your assets will be distributed according to state law. In Texas, this is somewhat complicated as property is distributed differently depending on its classification as either community or separate, real or personal, and whether or not the deceased individual was married or had children from a prior relationship.

Dying intestate is a recipe for disaster for blended families, minor children, and disabled heirs. In addition, intestate estates are often difficult and hence, more expensive, to settle.

Last Will and Testament

Patrick G. Hubbard prepares all types of Wills including:

  • Simple Wills
  • Pour-over Wills used in conjunction with Living Trusts
  • Wills with contingent trusts and guardianship appointments for minor children
  • Wills with testamentary trusts for adult children to accomplish asset protection objectives
  • Wills with Special Needs Trusts for disabled beneficiaries to preserve public benefit eligibility
  • Wills with bypass trusts to minimize federal estate taxes
  • Wills with pet trusts

When preparing Wills for clients, we routinely prepare the following ancillary documents:

  • Durable Power of Attorney
  • Medical Power of Attorney
  • Directives to Physicians (Living Will)

We offer our estate planning services on a flat fee basis. We encourage you to call today for consultation.

Living Trust

A common theme among clients is the desire to avoid probate. A properly funded and managed Living Trust can eliminate the need for probate, providing the privacy and continuity of management sought by many families.

A Living Trust is a revocable trust that can be changed by the trust creator or grantor during his or her lifetime. The grantor is also the lifetime beneficiary and, in most cases, is the initial trustee. Upon the grantor’s incapacity, death, or resignation, a successor trustee, often a child or corporate fiduciary, assumes responsibility for the trust’s administration. After the grantor dies, the trust property is distributed outright to the beneficiaries or held in trust to be invested and distributed according to its terms. At this point in time, the trust becomes irrevocable and can provide asset protection to the beneficiaries.

Importantly, the trust agreement only controls the investment and distribution of trust property. Therefore, it is important when using a Living Trust to make sure that the trust is properly funded and to check all investment account beneficiary designations to make sure they are correct. This involves deeding property into the trust, updating financial accounts, and assigning personal property.

If you are interested in learning more about our Wills and Trusts services, call us today for a consultation.

Marital Property Agreements

Clients often kid that nothing says “I love you” like a prenuptial or postnuptial agreement.  While we are sensitive to client uneasiness regarding pre-nups and post-nups, these martial property agreements can play a vital role in estate planning.

Texas is a community property state.  As a result, unique forms of property ownership can arise within a marriage.  Without careful and proper planning, these unique ownerships can have significant estate tax consequences, and cause many other complications.  These complications are not indicative of your love for your spouse or trust of your spouse’s decisions.  Rather, these agreements, like your marriage, represent the culmination of financial consideration and smart planning.

Our estate planning and asset protection assistance can help you determine whether a martial property agreement is appropriate in your situation.  Some common scenarios in which we utilize such agreements include:

  • Blended families where the husband and wife have different dispositive provisions in their will or trust;
  • A spouse married to an individual with malpractice or other liability exposure due to their profession or business (doctor, lawyer, etc.) seeking ways to protect important financial resources in the event of lawsuit;
  • An aging couple wanting to minimize their anticipated estate tax liability by converting community property to separate property or vice versa depending on the situation; and
  • A spouse married to an individual receiving Medicaid long-term care benefits wanting to protect against the Texas Medicaid Estate Recovery Program.

Pre-marital plans arise from intelligent and caring decisions, and are not merely self-serving documents. Discussing pre-marital planning and postnuptial agreements with your spouse can be a difficult task. With our help, you can effectively and successfully address the topic and begin building a plan to ensure the continued success of your family.

Frequent Asked Questions:

Q1: How can a person change a will?

A: If a will is valid, it is effective until it is changed, revoked, destroyed, or invalidated by the writing of a new will. Changes or additions to an otherwise acceptable will can be most easily accomplished by adding a codicil. A codicil is a document amending the original will, with equally binding effect. Therefore, a codicil must be executed in compliance with applicable law, using the same formality as the original will. Wills cannot be changed by simply crossing out existing language or adding new provisions, because those changes do not comply with the formal requirements of will execution.

Changes to an individual’s personal property may prompt a change to an existing will. To avoid frequent changes as property is acquired, a will can specify that personal property (property other than money and real estate) is to be distributed in accordance with instructions provided in a separate document. Many states provide for such a document, which can be updated as often as needed without requiring a formal codicil or revised will. A personal property instruction should be kept with the will to which it relates, and should describe each item in detail to avoid later confusion or hard feelings.

An outdated will may not achieve its original goals because its underlying assumptions have changed. Additionally, changes in probate and tax law may change the effectiveness of certain provisions. If a will is based on outmoded circumstances, for example if a chosen devisee has died or has alienated the testator, the probate period may be extended as the court determines how to construe the old provisions. Wills should be reviewed at least every two years, as well as upon major life changes such as births, deaths, marriages or divorces, and major shifts in a testator’s property. Because state law governs wills, if a testator moves to another state, the will should be reviewed for compliance with the new state’s laws.

As long as the testator is mentally competent, his or her will can be revoked entirely without replacement by a new document. A testator can revoke a will by intentionally destroying, obliterating, burning, or tearing the will. If the will was executed in multiple originals, or if additional copies exist, those should be treated in the same fashion. If a testator wants to minimize estate taxes and probate, he or she should make validly executed changes to a will or replace the will with a subsequent will, rather than completely revoking the will. If undertaken, however, the testator should have the revocation witnessed and recorded to avoid future contentions that the will is still valid, but has been lost.

Q2: What is a community property state and how does it affect estate planning?

A: Some states use a community property model to attribute ownership of the property of married individuals. The community property system of ownership segregates property an individual owned before marriage, as well as property received individually as an inheritance or gift, as that individual’s separate property. Other property gathered during the marriage, such as wages and items purchased jointly or by either spouse individually, is community property considered to be half-owned by each spouse. The important distinction of the system is that each spouse is considered to own half of the community property regardless of his or her contribution to the marital assets. Neither spouse can sell or give away part of the community property during the marriage unless the other spouse agrees. Each community property state uses certain variations on the concept, but the basics are the same. Upon death without a will, community property either goes to the surviving spouse, or in some states, the late spouse’s share is given to his or her descendants. If one spouse dies with a will, that document can dispose of separate property and his or her half of the community property, but not the surviving spouse’s half of the community property.

Nine states have a community property system: Arizona , California , Idaho , Louisiana , Nevada , New Mexico , Texas , Washington , and Wisconsin . The remaining states and the District of Columbia use a common property system, which allows a surviving spouse to make a legal marital share claim on a portion of the late spouse’s estate, regardless of whether that property was gained prior to or during the marriage, or by what means.

Q3: What is probate and how does it work?

A: When an individual dies owning property in his or her name, that property generally must go through probate. Probate is a legal procedure that establishes ownership of property in others. The probate system is designed to ensure the validity of a will, to give notice to all possible claimants of property and to resolve ownership disputes and rights. Probate courts also distribute property not covered by a will (intestate estates) according to legal defaults. Some property does not require probate to change hands: joint tenancy property and contractual arrangements such as insurance policies and retirement accounts generally go directly to the surviving joint tenant or named beneficiary without probate oversight. Probate also is not required for assets held in trust.

The probate court first establishes whether the deceased left a valid will. If so, the probate process guides the division of property in accordance with the will’s provisions. If the estate is intestate or if a will is found to be invalid, the probate division applies state laws to divide up the estate. The probate court signs off on the final accounting of the distribution, thereby finalizing the transfers of ownership.

There are two levels of probate:

* Informal probate covers estates that require no court supervision or adjudication due to their clear, undisputed nature and simplicity. This procedure allows the personal representative to accept full responsibility for promptly, completely, and legally probating the estate with only minimal court oversight. Typically, the personal representative can act more quickly to divide the property under this process, with the probate court giving final approval once the estate is fully distributed. Personal representatives may apply for informal probate, but should be aware of the possible legal liability for mistakes that their acceptance of the procedure involves.
* Formal probate applies to more complex or contested estates, and involves court supervision of distribution. The probate court supervises the personal representative on each legal step he or she takes to administer the estate, adding substantial time to the process. The personal representative may post a bond to guarantee his or her performance and to protect the estate’s creditors. The court may need to hear and resolve conflicting claims to the estate assets, or even find heirs when they are not apparent. The court scrutinizes each distribution. While this procedure takes far more time, it is indispensable when disputes and complex issues are involved.

Most personal representatives hire a lawyer to help them with at least some of their duties, even in informal probates. While making a will does not prevent the need for probate, a carefully drafted will minimizes the time a personal representative spends in court and speeds up the distribution of property to survivors.
Q4: How can a person leave property to minor children?

A: Generally, the law requires that adults manage children’s inheritances until the children turn eighteen. If a testator wants to leave property to children, it makes sense to name an adult to manage that property. Otherwise, a court will name someone to safeguard the property, a procedure that may delay speedy transfer of assets. There are several ways a will can provide for property management while heirs are underage:

* Trusts: A will can establish a trust to handle property left to children. A trustee is named to manage the property for the children’s benefit, and distribute trust property according to the testator’s instructions. A will can either set up an individual trust for each individual child, or a pot trust that covers multiple children. The trustee usually follows instructions to spend trust funds to meet children’s needs until they come of age. When the child or youngest child covered by the trust reaches eighteen or another given age, the trust funds usually are distributed amongst the beneficiaries and the trust ends.
* Uniform Transfers to Minors Act (UTMA) custodians : The UTMA is a law that exists in almost every state, and gives a testator the ability to choose a custodian to manage property left to a child. If at the testator’s death, the child is under eighteen, twenty-one, or twenty-five (depending on the specific version of the state UTMA law), the custodian will manage the property until the child reaches the statutory age. At that age, the child receives whatever is left of the property outright. Unlike a trust, the testator cannot change the age at which the child receives this distribution.
* Property Guardians : A will can name a property guardian for a child. At the testator’s death, if the child is still underage, the probate court will appoint the chosen guardian to manage property for the child. This option is available when a trust or UTMA custodian is not specified.

The option chosen for gifts to children will depend on the testator’s goals, the size of the intended gift, and the age and character of the children.

 DISCLAIMER: This site and any information contained herein are intended for informational purposes only and should not be construed as legal advice. Seek competent legal counsel for advice on any legal matter.
 
Contact Patrick G. Hubbard Firm for a confidential consultation to assist you with your legal needs. Licensed to practice in all courts in the State of Texas. 

 

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