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Houston Probate & Estate Administration Law Blog

An estate plan can help to preserve legacy

Often, Texans who are in the process of estate planning have concerns that go beyond the simple distribution of assets to their designated heirs. In some cases, they also want to preserve legacy. Legacy planning is a term that is frequently used along with or in lieu of estate planning, but it is all part of the process of creating a comprehensive document to suit a person's desires and needs. A problem that comes up with legacy planning is that it has certain perceptions that need to be overcome and facts to understand before adequately addressing the issues that are part of it.

Some might believe that a legacy is an act of ego. In truth, some people have created a life and a business that requires steps being taken to preserve legacy. It is not simply a love letter to oneself. It is a strategic plan to preserve the achievements one has reached in life. The basic idea is to ensure that the heirs live up to a standard that the testator has set. People who have a legacy plan are also accused of trying to control their loved ones after they are gone. In some instances, it might be viewed as necessary. In others, it is done to try and make certain that the heirs achieve to the best of their abilities and the legacy plan can push them toward that.

Should an irrevocable trust be part of your estate plan?

Estate planning is more than just having a will. In order to have an estate plan that actually protects your interests and keeps your beneficiaries from unnecessary harm, you would be wise to consider the benefits of a trust. There are many different types of trusts, but by having one in place, you may be able meet a specific goal or objective, such as caring for a Texas loved one after you pass.

A trust allows you to set money or assets aside for a specific person or cause, but choosing the right option is not always easy. One specific type of trust you may consider is an irrevocable trust. This option allows you to shield your trust from creditors and offers certain benefits that may not be available with other trust options.

Giving gifts to avoid tax implications when estate planning

Texans and people across the nation are paying close attention to how the Trump Administration handles various matters, such as the estate tax. This can be a problematic issue for those whose assets surpass the current levels to receive exemptions. Even if the estate tax remains in place and a repeal is not completed, there are options to use in the estate planning process to avoid paying needless taxes. A legal professional who is experienced in strategies to mitigate the estate tax can help in this endeavor.

Avoiding taxes and probate can be accomplished by transferring the property as a gift prior to incapacitation or death. There are several factors that must be taken into consideration when determining if this is the best course of action. For example, the exemption limits are imperative. There is an annual and a lifetime cap on the gift tax exemption. Maintaining an accurate record of what has been given as a gift on an annual basis and throughout one's life can avoid missing out on the exemptions. Various factors dictate when the limits are, so this must be accounted for.

What are the important, understated benefits of trusts?

Texans crafting their estate plan might have a notion of the benefits of trusts. But, fully understanding the multitude of trust uses is essentially before creating one.

A trust is a protective device for the beneficiaries. It can shield them from a legal filing, being pursued by creditors or losing assets in a divorce. With an irrevocable trust, a creditor or claimant will not have the ability to get a judgment against a trust's assets.

Wealth is not a prerequisite for writing and updating wills

A mistake made by many Texans who do not consider themselves wealthy is to shun creating a will. Wills are an integral part of an estate plan and should not be ignored, no matter the amount of money and assets. They will often believe that they do not have an estate worth making out a will. The important thing to remember about a will is that it is for the loved ones. Once the person dies, his or her assets will need to be dealt with, no matter how large or small. A will is vital toward that end.

People who have little more than a small amount of money in the bank and a car that is not believed to be worth a great deal can benefit from a basic estate plan and a will. It is also important to remember that those who fail to complete wills will leave their family members responsible for probate and the need to go to court. This can essentially hand the loved ones a bill and many tasks simply because the person did not create a will.

Legal requirements to create trusts in Texas

For many Texans, drafting estate planning documents can be a difficult chore. Knowing the preferable strategies is often difficult, but it is worthwhile. One estate planning document that can be beneficial is a trust. With a trust, there are certain requirements. Having a grasp of these factors is a foundational aspect of a legal trust.

When creating a trust, there are certain necessities. The settlor who is creating the trust must have an intent to do so, meaning that it was done on purpose. He or she must also have the capacity to convey his or her assets to the trust.

Turning over the reins of your family business

Although you run your small business efficiently and successfully, you may never have needed to follow many of the formal management processes that a larger company relies on. Your staff probably consists mostly of members of your family, and your business may be more of an extension of that family dynamic.

Recently, you may be feeling tired, either in body or spirit, and the idea of retiring may be more attractive as the seasons pass. Have you considered what will happen to your business if you walk away? Is there someone in the company who is ready to step into your shoes? On the other hand, are you comfortable with the idea of letting your business die with you?

Personal property, a major factor in estate litigation

Texans preparing for the future have well-crafted estate plans, focused on assets that are obvious, like a home, financial accounts, vehicles and similar items. However, estate litigation often arises not over the big-ticket items, but also for personal property and items of sentimental value. To avoid a court battle and unwanted bickering, testators should consider distributing property in a way that will account for these pieces of property.

Sentimental value will inevitably vary based on how much a person wants the item and what it means to them. Having a trinket could spark a dispute between heirs that goes beyond what they would do for items of legitimate value for which there is a clear statement as to how it is divided. Some people who are making their estate plan might be advised to ask their heirs what items they want. While a verbal statement could seek to head off any disagreements, it might not be binding especially if more than one heir was told the item was going to him or her. Putting it in writing is wise.

Estate planning and handing assets over to children

Texans who are constructing an estate plan might wonder whether it would be preferable to hand certain assets over to children and other heirs before death. They believe that this is a sound strategy to ensure that their assets stay in the family's hands, and their children get everything the testator wants without having to go through probate and worry about ancillary factors. This is often a mistake as it fails to provide certain protections. Understanding this and formulating strategies to maximize protection is a wise step with any estate plan.

Placing assets in trusts is a better solution than just handing them over. There are several different kinds of trusts to choose from, but there are ways to shield them from creditors. This is especially true when it is managed by a third-party trustee. If, for example, there is a divorce, a separate trust can make certain assets are not mixed together. If assets are in a trust, they might be protected from the estate tax if it stays in place in its current form.

Estate tax implications could be part of Trump tax plan

Texans who have substantial portfolios will keep a close eye on tax implications for their estate after they have passed on. People who are leaving behind a lot in assets will undoubtedly want to protect their heirs from a major tax hit by engaging in estate tax planning. However, the estate tax is constantly up for debate in the federal government with some wanting to repeal it and others wanting to keep it in place. When drafting estate planning documents, having strategies to account for various contingencies can be key.

This is especially true as the Trump Administration prepares its tax reform plan with potential elimination of the estate tax. The estate tax -- also referred to as the "death" tax -- is expected to be part of the tax plan and reform. Since the federal estate tax counts assets like stocks, hard currency and real estate when it goes from the decedent to the heirs, there are limits when it is determined whether there will be a tax or not. Currently, there is a limit of $5.49 million for an individual and double that for couples. This is expected to change in 2018 regardless of the results of changes to taxes. Those who have accrued wealth can face hefty bills simply for passing their assets on to loved ones. Although, the estate tax affects a relatively minor percentage of people, it is still a consideration for those who have vast wealth.