Estate Planning
What is a Will?
A Will is a legal document that directs how a person's estate should be distributed and other affairs handled upon his or her death. When you create a Will, the decisions regarding how your property should pass, how your debts should be paid, and how your estate should be administered are made by you, rather than the State of Texas. By drafting a valid Will, you may leave your assets to the persons, charities or other entities that you personally select. If you pass away without leaving a Will, your property will be divided and distributed by operation of law according to the probate statutes in effect in Texas on the date of your death. Since these laws may or may not give your property away as you would nave chosen, it is imperative to contact an attorney to discuss the creation of your Will.
Along with providing for "who gets what," a Will also allows you to appoint a person of your choosing to preside over and administer your estate (your "executor"), to select who should provide the care and custody of your minor children (a "guardian"), provide how you want your estate handled in the probate court ("independent administration" or "dependent administration"), and direct how your debts and taxes will be paid.
There are certain requirements which must be met under Texas law in order for your Will to be considered valid. For example, a person making a Will must be at least 18 years of age and of sound mind at the time of signing. Other statutory procedural requirements must be met with regard to executing the Will, ensuring proper witnesses are present, and appropriately making the instrument "self-proving."
Why should I prepare a Will?
There are several key reasons why everyone needs a Will. The first of these is quite simply choice. Drafting and properly executing a Will gives you the power to choose who will receive your property when you pass away. You work hard during your lifetime to acquire financial wealth, a homestead, vehicles, or personal property, and therefore it should be you who decides how your assets will be distributed to your family, friends, charities, or other persons and entities when you pass away. Regardless of the size of your estate, a Will allows you to allocate your money and belongings as you see fit.
It is also important to consider the alternative. If you do not choose for yourself "who gets what," the State of Texas decides for you. Texas provides default laws that dictate how your probate assets will be distributed if you do not create a valid Will, and that default distribution scheme is sometimes counterintuitive and surprising. Drafting a Will allows you to select for yourself who gets-and maybe more importantly, who does not get your property. Since you put in the effort to acquire assets during your lifetime, you should likewise put in the effort to decide who will inherit those assets at your death.
A second key reason for creating a Will is to take advantage of the opportunity to appoint a guardian for your children. If you (and your spouse, if applicable) were to pass away while your children are under the age of 18, you-not a court-should appoint who will take care of those children. A properly drafted Will provides the peace of mind that comes with knowing your children will be well cared-for if the need for a guardian arises.
Other important reasons for drafting a Will include the ability to quickly and painlessly transfer title to real estate, to create a testamentary trust for your children, or to implement other trusts for estate, gift, and generation-skipping tax savings purposes.
Perhaps most importantly, creating a Will makes the handling your affairs after your death significantly less burdensome and often less costly on your family. If you create a valid Will during your lifetime, your family will be afforded the opportunity to take advantage of Texas' relatively straightforward and streamlined probate process. With a legally sound Will, probate can be handled quickly and effectively so that title to your property is changed to your loved ones very often with little complexity or delay.
Can I draft my own Will?
When a person undertakes the drafting of his or her own Will, many common pitfalls often arise. Errors often seen are that handwritten provisions will be mixed with typed provisions, clauses will be scratched out or overwritten, or portions will be illegible. In a do-it-yourself Will, much room is left for error and statutory violations. Holographic Wills (self-prepared, handwritten Wills) are often used in situations of grave health or significant danger, when an attorney-prepared Will is either pending or unfeasible. If however, your circumstances allow time and opportunity for a consultation with an attorney, it is strongly suggested that you have a clear, properly-drafted, and properly-executed Will drafted by Texas-licensed estate planning attorney.
Some individuals choose to create their own typewritten Wills with the aid of pre-printed office supply-store forms or documents downloaded from the internet. These pre-created Will forms are usually very general in nature, and do not consider the unique requirements and circumstances of the testator. Therefore, persons using such forms very often do not account for and coordinate all assets, do not take into account advantageous planning strategies, do not provide for ultimate wealth transfer tax savings, and do not tailor the provisions to the circumstances of their particular estate. Further, much room is left for scratch-outs, handwritten additions, or other changes-which open the door for challenging the validity of the Will. For instance, if changes are made to the self-created Will by the testator without the statutory formalities being observed, such changes could give rise to a claim of fraud or forgery. Potential Will contestants could allege that a self-made addition or change was made by a fraudulent third-party and should therefore be stricken. It is often difficult to prove who, exactly, made the changes or why.
Again, as long as the self-written or self-created Will complies with Texas law, it can be found as valid, but significant room is left for error and future challenges in the probate court. It is most prudent to create your Will with the assistance of an experienced estate planning attorney.
Can I have both a Will and a Trust?
Yes. A Will and a Trust are very often used in conjunction with each other to accomplish estate planning needs. A Trust may be created within a Will (a "Testamentary Trust"), which can be funded and begin being administered at the time of the testator's death. Or, a Will can pour assets over into a Trust already in existence prior to creation of the Will (such as a "Living Trust", also called a "Revocable Inter Vivos Trust").
A trust is no more than a legal relationship in which one person or trust company (a "trustee") holds property for the benefit of himself or another person (a "beneficiary"). The person creating the trust is called the "trustor," "grantor," or "settlor." The trustee receives legal title to the property transferred into the trust, and manages it according to the grantor's wishes. (Many times, particularly in living trusts, the grantor, trustee, and at least the initial beneficiary are the same person.)
When the trust arrangement is used, the law looks at the trust assets as if the trustee owns them. The trustee has "legal title" to the property, and the beneficiary has "beneficial title," meaning he or she still has the right to benefit from the property in the trust.
Generally, a Living Trust is created for the purpose of handling the grantor's assets both during life, during his or her incapacity, and at his or her death. Some items of property, however, may be intentionally or unintentionally left out of the trust, or be inappropriate as trust property. In this instance, a "Pour-Over Will" may be used as a backstop, to filter all non-trust property through the provisions of the trust at the grantor's death, and to ensure the grantor's overall asset transfer goals are met.
Further, as mentioned, a Trust may be created within a Will (a "Testamentary Trust") to effectively hold and manage the inheritance of a minor child, of a person who is incapacitated, or. of an individual whom testator believes is unable to handle an inheritance responsibly if he or she were to receive such inheritance immediately upon the testator's death. Testamentary Trusts are also beneficial tax-planning vehicles, in that marital deduction planning, federal exemption planning, and other tax-driven mechanisms may be accomplished through their use.
The estate planning attorneys at the Law Office of Dale A. Burrows are available to assist you in determining whether implementing a Will, a Trust or both in conjunction is right for your particular circumstances and needs
What types of property pass under a Will?
It is important to remember that not all property you own will pass to the persons you choose by means of a Will. Only "probate assets" are distributed through a Will (or by Texas' default "intestacy" laws if you die without a Will). As opposed to "probate assets," "non-probate assets" are left to your beneficiaries entirely independently from you Will, instead passing via contract. Therefore it is very important to recognize the difference between probate and non-probate assets. A qualified estate planning attorney will help you distinguish and coordinate the two in order to accomplish your overall estate planning goals.
Probate assets generally consist of titled property (such as real estate, mineral rights and vehicles), personal property (such as clothes, jewelry, heirlooms, memorabilia, collections and other household items), and stocks or other financial holdings for which no payable-on-death designations have been made. Thus if your entire estate consists of home and its contents, a car, and a non-POD bank account, a Will should wholly provide for the distribution of your property, as these are all "probate assets." Frequently, however, a person's estate will also include assets such as a financial account with right of survivorship, a retirement account, or life insurance. Therefore it is most likely that an estate will consist of a mixture of both probate and non-probate property.
In fact, non-probate assets very often constitute the major portion of a person's estate. Non-probate assets generally consist of financial assets, including but not limited to insurance policies; retirement accounts; payable-on-death bank accounts, pension accounts; employee benefit plans; and joint holdings with a right of survivorship. With these types of assets, the owner will complete a beneficiary designation card or other contract that instructs the bank or holder to distribute the asset to a pre-determined person or entity upon the owner's death.
It is of the utmost importance to understand that your estate planning is not complete-even after executing a valid Will until you have provided for the transfer of both your probate and non-probate property. The estate planning attorneys at the Law Office of Dale A. Burrows are available to guide you in understanding the difference between which assets will and will not pass to your beneficiaries by means of a Last Will and Testament.
What is an executor?
An executor is an individual appointed by a testator in his or her Will to administer his or her estate at death. The executor will generally be the person to apply for the admission of the Will to probate, attend the probate hearing, receive letters testamentary, gather estate assets, and ultimately distribute those assets to the estate beneficiary pursuant to the terms of the deceased's Will.
Serving as an executor is a fiduciary position that comes with a great deal of responsibility; therefore, it is essential to put a great deal of thought into who you select as executor in your will. Executors are liable to the estate beneficiaries and may be challenged or removed upon a determination of misconduct. Therefore, if you have been selected as the executor of a loved one's estate, it is of the utmost importance to thoroughly discuss your rights, duties and obligations with a qualified probate attorney. The attorneys at the Law Office of Dale A. Burrows are available to guide executors through the Texas probate system, and equip executors with the knowledge necessary to competently and efficiently carry out their duties.
Those disqualified to serve as executor include convicted felons, incapacitated persons, non-residents of Texas who have not appointed a registered agent in Texas, corporations not authorized to act as a fiduciary in Texas, or any other persons whom the court finds unsuitable.
Most testators choose a surviving spouse, a child, or other close friend or relative to serve in the role as executor of their estate. However, it is strongly urged that those making a Will consult with a qualified estate planning attorney in order to fully understand the scope and responsibility of the executor position.
When should I update my will?
Just as one Will doesn't fit all, your Will may no longer fit you as time passes. Be sure to periodically review your Will to ensure that it still conforms to your wishes and meets your financial planning needs as you get older.
In general, you should review your estate plan every two to three years to ensure it still meets your needs. You should also review your Will upon any changes to the federal or state tax laws, or if any significant change in your circumstances has occurred. For example, if you have changed your mind as to the disposition of your property or as to your appointed fiduciaries; if you have moved to a new state; you have acquired property in a different state; if you have gotten married or divorced; if there has been a death or a birth in your family; or you have experienced a substantial increase or decrease in assets, it's time to call your estate planning attorney to review, and possibly revise, your estate planning documents.
The attorneys at the Law Office of Dale A. Burrows are able to review your documents, advise you on any significant changes in tax laws, and re-evaluate your Will to make sure that, as your circumstances change, your estate plan continues to preserve your wishes.
How can I update my Will?
There are two primary manners of updating a Will. It is strongly advised that you thoroughly discuss your particular situation and needs with a qualified estate planning attorney prior to deciding which manner is best for you, and certainly before you personally attempt to make any changes.
The first method is to simply have a new Will drafted. When you find that you need to restructure your distribution scheme, there has been a change in tax laws affecting your estate planning, or your circumstances otherwise change significantly, it is often advisable to "start from scratch" and revise your entire document, so that there is no question as to the changes made nor as to which Will-the former or the latter-is valid. In your new Will, it is important to include language revoking all previous Wills and codicils you have formerly made.
The second option for updating a Will is to write and execute what's called a "codicil." A codicil is essentially an amendment; it only revokes and changes a portion or portions of the original Will, leaving the remainder in full force and effect. A codicil is most advisable when the only changes needed to be made are minor, such as a change in an executor appointment or trustee appointment. If your updating consists simply of substituting a name, adding a specific bequest, changing the dollar amount of a bequest, or other issue that is straightforward and independent from the structure of the remainder of the Will, a codicil might serve to suit your needs rather than an entirely new Will. The codicil must be executed with the same formalities as the original Will (for example, with two witnesses present), and must be attached to the original.
Again, which method of updating that will be best for your situation will greatly depend on the extensiveness of the change and how that change affects or does not affect your overall distribution scheme, the overall structure of your Will, and the tax implications of your estate planning. Regardless of whether you believe a change to be "minor," it is highly advisable to consult with the experienced estate planning attorneys at the Law Office of Dale A. Burrows to discuss and implement revised estate planning documents.
