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Houston Probate & Estate Administration Law Blog

Tailoring an estate plan based on the new tax laws

Texans who are drafting estate planning documents should pay close attention to changes in laws that come about with every governmental power shift. Such is the case with the Trump Administration and its changes to federal tax laws. With it, the amount that people can pass on to heirs doubled without the need to think about the estate tax or to use various trusts to shield wealth.

Heirs can get slightly more than $11 million as individuals with the changes to the estate tax. Couples can get double. Other strategies, in conjunction with these changes, save people even more. For example, an irrevocable dynasty trust can be used to grow an estate, sans concern about the estate tax, and continue passing those assets along for generations. Another tactic that people might want to consider is simply amending a will to account for changes in the law.

Should you update your estate plan to include a living will?

You may take pride in choosing to prepare for situations that are possible, even if you do not know whether they may actually come to fruition. Feeling prepared and having a plan may allow you to feel less stress in your life, especially when those plans prevent your loved ones from finding themselves in a difficult predicament. When it comes to knowing your end-of-life wishes, you may want to ensure that your loved ones have the information they need.

As part of your estate plan, you may want to include instructions on how your care should be handled in the event that you cannot express your wishes at the time the need for care presents itself. Luckily, a living will could help you detail your instructions for this type of scenario, and though you may never need to use it, having it in place could allow you to feel more certain that your family will not have to make difficult decisions regarding your care on their own.

How does a durable power of attorney work in Texas?

Residents who are taking the necessary steps to protect themselves and their estates will want to know all the different tools that can be used under estate planning laws. One is a durable power of attorney. With a durable power of attorney, there will be another person (an agent) who is granted the power to make decisions on behalf of the person (the principal), when the principal is unable to do so. This can involve health care and end of life care, among others.

The designated person can be anyone whom the principal trusts with these important decisions. These decisions include whether the principal should be placed on life support, and whether to use extraordinary measures to keep the principal alive.

Important considerations with a special needs trust in Texas

One of the most common concerns for Texans when they think about the future and with drafting estate planning documents is if they have a loved one who will need to be cared for after they are gone. Statistics show than there are more than 40 million people across the nation who had a disability in 2016.

Since some of these disabled people are not capable of caring for themselves, parents and other guardians should take steps to protect their loved ones. Toward that end, a special needs trust should be considered. There are certain factors to consider with these issues.

Avoiding updating estate plan documents is a mistake

A concern that might not be at the forefront for Texans who have already completed an estate plan is ensuring that it is up to date. However, it is important to think about personal and legal changes that might make it necessary to alter the document to account for them. One issue that is making it wise for just about everyone who has taken the initiative by drafting estate planning documents is the changes to the tax code. Having legal advice when deciding if and how the tax changes will influence an estate plan is imperative.

In the past, people with substantial assets took various steps to shield themselves from estate taxes. The amount that people can protect has risen to $11 million for a single person to $22 million for couples. Obviously, there are not many people who have assets at that level. Strategies to protect assets are different for people who are wealthy than they are for those with a lower net worth, but there are still documents that everyone should have and these too should be updated.

Legal help with "ancillary" parts of estate planning

Even Texans who are drafting estate planning documents and taking the necessary steps to protect their assets and their heirs need to cover all the bases. Part of that is knowing about "ancillary" parts of the estate plan. These factors might not come to the forefront when drafting estate planning documents, but they can be as, if not more, important than the basics like wills, trusts and other documents.

Ancillary documents will address such issues as illnesses or injuries that leave the testator unable to decide on his or her own how best to deal with various circumstances. It is not easy to consider this possibility, but it is imperative and taking the necessary steps is an integral part of a comprehensive estate plan. There are many different documents that can be part of ancillary estate planning and an attorney who is experienced in estate plans can help to determine which are a priority.

Drafting estate planning documents with a notable art collection

Texans who are thinking about their estate planning needs will frequently focus on the basics, such as asset distribution and basic property matters. However, if it is a person who has accrued wealth and used some of that wealth to collect items, such as art, this enters the realm of complicated estate planning. For those who have collections whose value can be confusion to the uninitiated and might fluctuate based on markets and desirability, it is wise to have strategies to account for these properties. With art, this is particularly important.

For people who collect art, they might do so as an investment or because of a personal preference and eye for what they like. Collecting is different from disposal and if they are ardent collectors, selling the pieces is not something they consider. After death, this can be an issue for heirs, especially if the collection is vast and could have major value. Frequently, these individuals do not consider their art to a major degree when they craft an estate plan. If they do not do so, it can lead to massive costs to the heirs with estate taxes raised significantly.

Is bad information stopping you from signing a power of attorney?

As you grow older, you may find it becoming more difficult to do things for yourself. Perhaps you first noticed it in the mornings when getting out of bed and walking down the stairs took longer because your knees and ankles hurt. With each holiday or annual occasion that rolls around, you are less able to participate as you used to. Now you are beginning to wonder if you will lose the ability to manage the necessary tasks of your daily life.

You may have heard of the benefits of signing a power of attorney, placing a trusted individual in charge of your medical and financial decisions. However, as long as you are able to manage, you believe there is still time to take care of that. This is one of several ways in which people commonly misunderstand critical elements of a power of attorney.

Strategies to neatly organize finances and craft an estate plan

Texans who are thinking about starting the new year by cobbling together their estate planning documents should make certain they take the necessary steps to ensure that its strategies suit their needs. One method that might sound unnerving is known as "death cleaning." The truth is that death cleaning is a wise maneuver to make certain that the person's estate is free of complications and is simplified as much as possible. This is a beneficial decision for people young and old. Knowing what to do to make it a reality is crucial.

Consolidation of financial accounts is a wise step. The more accounts a person has, the more likely he or she is to be victimized by attempts on the part of unscrupulous entities to commit fraud. For example, transferring retirement plans into a single account can make the portfolio simpler. Bank accounts can be put into a single account. Other factors with this are important such as FDIC insurance limits. Automating payments for bills can avoid late payments, late fees and damage to credit scores. This can keep the estate free of unexpected payments after the testator has died and leave more for the heirs.

Hugh Hefner estate plan shows different types of trusts available

When a Texan is contemplating strategies for an estate plan, the individual situation will largely dictate how they go about it. Circumstances and personal preferences will play a significant role. If trusts are the preferred method when drafting estate planning documents, there are many options available and individual desires can be paramount. This is exemplified by the details of the trust created by the late publishing magnate Hugh Hefner. In his estate plan, he made certain to include a stipulation that his heirs needed to maintain a certain lifestyle to get their portion of the trust.

In Mr. Hefner's estate plan, he states that his beneficiaries must avoid legal and illegal substances that can lead to dependence. If the person becomes dependent on a substance, they will no longer be part of the trust. The heirs include his widow and four children. The trustees will be relied upon to determine if the beneficiaries are using or taking illegal substances and have become dependent on them in any way; are using alcohol to the degree they are dependent on it; or are using other legal substances and are dependent on them and they have not been prescribed by a medical professional.