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Houston Probate & Estate Administration Law Blog

Estate planning when an heir might have addiction issues

Texans who are taking the necessary steps with estate planning will have different concerns depending on the circumstances. One issue that is growing problematic not just for society in general, but for those who are thinking about their beneficiaries, is drug addiction. The opioid crisis is something that is becoming a national epidemic and more and more people are thinking about this when they craft an estate plan. People who have heirs who they believe might already be involved in drugs or could be susceptible to the temptation should know how to account for this when they formulate their end of life documents.

Each day, an estimated 142 people are dying from a drug overdose. Because of the concerns, people are accounting for addiction in their estate plans. Since addiction can result in emotional and financial ruin not just for the addict, but for the family that is trying to help that person, there are several estate planning choices that can be useful, albeit difficult. Disinheriting the person can be perceived as a "for their own good" strategy. This might seem cruel, but if the alternative is leaving a significant estate to a person who will use it for drugs, it might be preferable. Telling the person that this is a possibility might be a way to inspire them to get treatment.

Can estate planning address care for pets?

Texans will undoubtedly want to ensure their loved ones are cared for after they are gone and they do so by formulating a comprehensive estate plan. An aspect of an estate plan that is often important to pet owners is how the pet will be cared for. Increasingly, people are taking legal steps to make certain the pet will not be abandoned, ignored or worse after the owner's death. There are important issues to remember with pets and people can put in writing how the pet will be handled.

The owner should select a caregiver. It is not simply a matter of picking a person and believing the pet will be safe. It should be a person who expresses willingness, has the ability and shows responsibility for an extended period that is often the pet's lifespan. This is especially true if the pet needs specific care. It is also smart to have a second caregiver in case something happens with the original choice. Money will be an inevitable issue. Pets can be costly and the needs for its entire life must be calculated. There are ways to save the funds. There can be a bank account that the executor or guardian will control. A trust can have provisions to make sure the pet is cared for.

How the federal government can affect heirs' tax responsibilities

There is an ongoing debate in Washington D.C. about the estate tax and how it will be handled. Texans who have a substantial enough portfolio where it will be affected by the estate tax if it stays in place or if it is repealed should keep track of the proposals and potential changes that might be made as it will be important to their estate planning and how it affects their heirs. In general, people who are considered wealthy are affected by the estate tax. However, the argument to repealing it is to make certain that those who have hefty assets will have a chance to maintain their wealth.

When a person dies, their assets will be calculated to determine if they are subject to the estate tax. Currently, the amount for couples is $11 million and for individuals, it is $5.5 million. Should the estate tax remain in place, it is set to rise in 2018. Any amount that is inherited when a person dies will be free from the estate tax up until it reaches these amounts. After that, it will be taxed at 40 percent. Those who are in danger of being subjected to this tax at the time of death should take steps to shield their heirs from having to pay it.

Key estate planning documents in the event of disability

Texans who take the necessary steps by completing their estate plan often believe that a will is sufficient. However, the reality is that there are other documents that are necessary for full and encompassing protection. If, for example, the person becomes incapacitated, there are strategies that should be in place. There are multiple alternatives to account for this type of event and it is imperative to know what they are and select those that apply.

A medical power of attorney - also referred to as an advanced health care directive - allows the testator to select the person or persons who will decide about their health care if there is illness or injury. A durable power of attorney is for those who become incapacitated and need someone to pay bills, manage their finances and more. This differs from a basic power of attorney which will not be in effect when the person becomes incapacitated.

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.