Estate Planning FAQs

What if I Die Without a Will or a Trust?

When you die without a will or a trust, you are essentially relinquishing one of your freedoms in life—the freedom to decide what will happen to your assets when you die. If you fail to take advantage of that freedom, your assets will be distributed according to a legal formula that will have no bearing on your wishes or your circumstances. Below is a snapshot of how the state of Texas will distribute your assets in the event you die without a will or trust:

• If you are single, have no children, and die without a will or trust in Texas, your estate will pass in equal shares to your parents if they are living. If only one parent is alive, and you have no brothers or sisters, your entire estate will go to your surviving parent.
• If you have siblings and nieces or nephews, your surviving parent will receive half of your estate, and your siblings, nieces, and nephews will divide the remaining half of your estate.
• If you have no surviving parents, all of your estate will go to your siblings and/or your nieces, and nephews.
• If you have no surviving parents, siblings, nieces, or nephews, your estate will be divided in half; one half will pass to relatives on your mother’s side, while the other half will pass to relatives on your father’s side. (If there are no surviving relatives on one side or the other, then the entire estate would go to the surviving side).
• If you die with absolutely no surviving heir, your estate will go to the State of Texas.
• If you are unmarried but have children, then all your property will pass to your descendants. If all your descendants are of the same degree of relationship (as an example, all are your children, or all are your grandchildren), then your assets will be divided equally among them. If, however, your descendants are of differing degrees of relationship (a mixture of children and grandchildren), then the grandchildren are only entitled to share what their parents would have received.
• If you are married, the assumption is that your surviving spouse will inherit all of your estate, however, this may or may not be the case. Your spouse will inherit all of your community property if all your children are also the children of your surviving spouse.
• If all of your children are not the children of your surviving spouse, then one-half of your community property will go to your spouse and the other half to your children.
• If you have separate property, your surviving spouse will receive one-third of that property and a life estate—the right to use the property until his or her death—in one-third of your real property. The rest of your separate property will be inherited outright by your children.
• If you are married but have no children or descendants, your surviving spouse is entitled to all your separate property unless you have surviving parents and siblings. In this case, your surviving spouse will receive one-half of your separate property, and your surviving parents and/or siblings will receive the other half.

If you would not be happy with the above distribution of your assets, then it is definitely time to think about a will or trust! 

When Should My Family Start Thinking About Estate Planning?

Far too many people believe estate planning is only for the elderly or for the super-rich. In reality, virtually every adult has some level of an estate and could benefit from estate planning. Further, if you are even remotely thinking about estate planning, then the time is definitely now. It is extremely important that you ensure your assets pass to those you would choose, that your minor children or adult special needs children would be cared for and that your estate will be handled properly, without unnecessary expense or drama. If you are young and healthy, the mere thought of death or incapacitation may seem like very distant concepts. You may not think you have the money to engage in estate planning, or you may really not know who you would leave your assets to.

Estate planning gives you control over what would happen in the event of your death or incapacitation and knowing you have provided for your loved ones can provide you with significant peace of mind. You may have no idea how you should begin estate planning. Consider starting with a simple will, after you have made a list of all your assets, including how they are titled, their value, and whether there is debt against any of the property.

Review all your insurance policies and the beneficiaries of those policies. If you have minor children, determine who you would want to raise your children in the event of your death, and how you would ensure they were financially provided for. Once you have a will in place, consider establishing a trust, a power of attorney, and a medical power of attorney. Finally, consider including a separate sheet regarding funeral planning. So, the short answer is that you should consider estate planning now—from whatever point you are in your life. Once your estate plan is complete, you will review it from time to time to ensure it still fits your needs and your life.

What is a Durable Power of Attorney?

A durable power of attorney is a written document that creates a relationship between the person granting authority (the principal) and the person to whom authority is granted (the agent, or attorney-in-fact). When the principal signs a durable power of attorney, he or she is authorizing another person to engage in specific business on his or her behalf—whether financial or legal. This power of attorney is known as a durable power of attorney because it does not terminate upon the principal’s incapacity. In the state of Texas, for a durable power of attorney to be legal and effective, it:

• Must be signed by an adult;
• Must name an agent or attorney in fact;
• Must expressly state that the authority given to the agent must either begin at signing or upon the incapacity of the principal, and
• Must be properly acknowledged.

There are no witness signatures necessary on a durable power of attorney unless the agent will use the durable power of attorney for real property transactions. A durable power of attorney may take effect when it is executed, or it may “spring” into effect upon the incapacity of the principal or when another specified event occurs. A springing durable power of attorney may have the incapacity which would trigger the document clearly defined—if it is not clearly defined, then it will require a physician’s certification of incapacity. Unless a time limit is specified, a durable power of attorney does not lapse.

What is a Medical Power of Attorney?

A medical power of attorney allows the person granting authority (the principal) to designate a person (the agent) to make medical decisions on behalf of the principal in the event of incapacitation. Once you have chosen a trusted friend or family member to be your agent, that person is given broad authority through the medical power of attorney to make health care decisions on your behalf. That authority could be restricted in the medical power of attorney, granting very specific authority to make health care decisions. Many people believe medical powers of attorney are only for the elderly; however, it is important to understand that an unexpected injury or illness can occur at any age.

In the state of Texas, a medical power of attorney must be signed by the agent, in the presence of two witnesses, who will also sign the document. If you choose not to have two witnesses sign, you can sign your medical power of attorney in front of your attorney, with your signature acknowledged in front of a Notary Public. Before you sign a medical power of attorney, you will be required to sign a statement that acknowledges you have read and understood a disclosure statement.

If you choose to have witnesses acknowledge your medical power of attorney, at least one of those witnesses cannot be the person you chose to make health care treatment decisions for you. At least one of the witnesses must not be related to you (by blood or marriage), must not be a beneficiary of your estate, must have no claim on your estate, must not be your attending physician or employed by your physician, and must not be an employee of the health care facility in which you reside.

A medical power of attorney becomes effective as soon as it is executed and delivered to you, and, absent a specific termination date, it is effective indefinitely, unless and until it is revoked, or you become competent. If your medical power of attorney does have a termination date, but you are incapacitated on that date, the document remains in effect until you are competent. A medical power of attorney authorizes the person you choose as your agent to act on your behalf as soon as your physician judges you incompetent. You can revoke your medical power of attorney by notifying your agent or health care provider in writing, or orally. If your spouse is your agent and you divorce, his or her power of attorney is revoked.

What Taxes Should I Be Aware of When Planning My Estate?

Texas is one of thirty-eight states which has no estate tax, although Texas residents may still be subject to federal estate tax laws. An estate tax is often referred to as a “death” tax—a tax levied on the estate of the decedent before the money passes to the decedent’s heirs. This estate tax is only levied on estates that reach a specific monetary threshold. Estate taxes are not the same as inheritance taxes, which are taxes taken by the government after the beneficiaries have received the decedent’s money or possessions.

Not only is there no estate tax in Texas, there is also no inheritance tax. If a loved one from another state leaves you money, that money will fall under the other state’s laws regarding inheritance tax. In the same way, if you have property in multiple states, your heirs may be subject to inheritance taxes on some of the other properties. Finally, the state of Texas has no gift tax, therefore essentially the only thing your heirs will have to worry about will be federal gift tax, which, as of 2019, gave you the right to gift up to $15,000 to an individual without and federal gift taxes being assessed.

While you, your estate and your heirs will owe no taxes to the state of Texas, there may be estate taxes owed to the federal government, if your estate is large enough. The federal estate tax for 2019 “kicks in” at $11.14 million, or twice that for a married couple. If your estate exceeds this amount, the top federal estate tax rate is 40 percent.

As an example, if your estate is worth $20 million, and you are not married, you would subtract $11.14 million from the $20 million, leaving you with a taxable estate of $8.6 million, placing you in the highest tax bracket of 40 percent, and making the amount to be paid $3.44 million. As you can see, Texas is a very tax-friendly state, meaning your primary worry when considering estate planning will be federal taxes.

Is a Trust Better Than Having a Will?

Trusts are generally not used as often as wills in the state of Texas, although this is changing. There are a number of differences between wills and trusts, with the most prominent difference being the fact that a will requires court-supervised probate following death, while a living trust does not—assets held in a living trust pass to designated beneficiaries with no court involvement. A will does have certain benefits, including:

• A trust is more expensive to have prepared than a will;
• A will does not require assets to be transferred into it as a trust does;
• If the executor of a Texas will qualifies as an independent Executor, then probate proceedings are much quicker and less expensive than in other states, and
• A will is a vehicle used to designate a guardian for minor children.

A trust also has certain benefits, including:

• When property is owned in more than one state, a living trust avoids the necessity for multiple probate proceedings;
• A living trust provides advantages if you should become incapacitated;
• A living trust is private, whereas a probated will is public;
• A living trust is much harder to contest than a will;
• A living trust will transfer assets directly to beneficiaries without the time involved in probate, and
• Once assets are transferred into a trust, they are still controlled by you, then eventually distributed to your chosen heirs.

How Can I Contest a Will in Texas?

Although adults always have the ability to create their own will and/or trust—as well as other estate planning documents—there can be certain circumstances when the will process was not properly completed, and the will can be challenged. When a person challenges a will, he or she is, in essence, claiming the will is invalid.

Under Texas law, any interested person is allowed to contest a will. The term “interested person” is defined as a creditor, spouse, devisee, or heir, as well as any other person who has property rights or claims against the estate being administered. The person who chooses to contest a will must clearly show that he or she is an interested person with proper standing to contest the will.

If you are considering having a will prepared, you may want to include a forfeiture clause or a no-contest clause. This is a provision which states that the person who contests the will, receives nothing. Courts do not typically favor forfeiture clauses, and no-contest clauses are strictly construed.

To challenge a will in the state of Texas, a person must have one of the following grounds to do so:

• The original will was revoked;
• There is a lack of mental capacity by the person making the will;
• The will was improperly executed;
• There was undue influence on the person making the will;
• There was fraud involved in the preparation of the will, or
• The Will was made by mistake.

A will must be contested prior to probate. If the will has already been admitted to probate, a contest must be filed within two years of the date the will was admitted to probate. Once the will has been admitted to probate, the person contesting the will has the burden of establishing the will is invalid.

When Should I Update My Will?

Far too many people believe once they have a will prepared, it is essentially over and done with. This can cause serious issues down the road. Think about how much our lives change over the years. We get married—and perhaps, divorced—we have children, we have grandchildren, we gain additional assets or sell certain assets, or we have “issues” with someone who was a beneficiary in the original will. Financial situations ebb and flow, and relationships do the same. For all these reasons, it is imperative that you revisit your will at least every 3-5 years—or any time you have a major life change.

There have been instances of individuals who had a will prepared, then forgot all about it. In the next twenty or thirty years, the individual divorced, remarried, had more children and added considerable assets. Should that person unexpectedly die, the first spouse might still be named as beneficiary, meaning the current spouse and children could potentially be left with nothing. A will must never be considered as a “one and done” task. Revisit your will on a regular basis, and when you make major life changes, make sure your will properly reflects these changes. 

Who Should Receive Copies of My Estate Planning Documents?

Once you have completed your estate plan, you should take the time to sit down and read through the documents carefully. Make sure all your beneficiaries are properly listed, that all information is accurate and that you fully understand all the language in all the documents.  If everything appears in good order, you will then need to decide who will need copies of the estate planning documents. Since your will does not go into effect until after your death, you may or may not want to provide your personal representative (executor) with a copy of your will. You may, however, want to ensure your personal representative knows where your will is located so that it can be easily retrieved when the time comes.

Your original health care power of attorney (advance directive) should be given to your family physician so he or she can make a copy to add to your medical records. The same should be done for your durable power of attorney—take the original to your bank to have them make a copy for your banking records. (Make sure you keep the originals). Your attorney-in-fact, as well as your health care agent, should have a copy of your durable power of attorney and your healthcare advance directive. Make sure these individuals are aware of your wishes and what you would like them to do in the event of your incapacitation or other “triggering” event.

Next, consider any person who would conceivably be affected by your estate planning documents. This could include family members or friends who are beneficiaries or who are otherwise involved in your estate plan. Whether you will distribute copies of your estate plan to these people will depend on how you feel about sharing those details prior to your death. If you have specific or unusual bequests, will those bequests cause problems among family members if they know of those bequests prior to your death? If your goal is to leave behind peace and harmony among your family members, you might choose not to disclose the details of your will and trust just yet.

Remember that items of personal property are the most likely to cause emotional issues among family members. The personal property could have little monetary value, but significant sentimental value. Because of this, you might want to discuss these items with family members to determine whether one person has a particular interest in an item.

Some assets, like retirement accounts, bank accounts, and life insurance policies, have beneficiary forms that take precedence over wills. The funds in those types of accounts are distributed to whomever you have designated as a beneficiary, no matter what changes you make to your will. This information should probably be shared with your beneficiaries, so there are no major surprises when you die.

Keep your original estate plan with your other important documents—such as birth certificates, marriage certificates, and medical histories—in a secure, fireproof cabinet or lockbox. If you choose to keep these items in a safety deposit box, make sure your loved ones are aware of the existence of the safety deposit box and are able to access it upon your death.

Of course, your Texas estate planning attorney will have copies of your estate plan; if the originals are somehow destroyed, your estate planning attorney can easily recreate those documents from copies and have everything re-signed. It is virtually never a good idea to hide your will or other estate planning documents. If you do so, then when you die, or when you become incapacitated, those documents may not be able to be located, and the state of Texas might step in and take over.

How Can a Lawyer Help Me with My Estate Plan?

Far too many people make the decision to create their own will, trust, or other estate planning document by using an internet form. This is almost always a mistake. Estate planning is serious business; one wrong word, one missing signature, one wrong date, and the entire intent of the will or Trust could be altered. Since state laws govern estate plans, estate lawyers are likely to be among the few people who actually know these laws.

Estate planning attorneys know who can and cannot be listed in a will or trust, who can and cannot serve as a personal representative, attorney in fact, health care surrogate or trustee. Estate planning attorneys know who can witness a will or trust, and who can witness a medical or financial power of attorney. Finally, estate planning attorneys are cognizant of all the necessary formalities which must be observed when an estate plan—or any component thereof—is prepared.

Those who believe they will save a bit of cash by using Internet forms may find—at the most inopportune time—that sometimes in life you really do get what you pay for. You may believe you have taken care of your loved ones in the very best way possible. However, upon your death, it could turn out that part or all of your will, trust, medical power of attorney or durable power of attorney, is invalid due to a simple mistake. A Texas estate planning attorney is also an invaluable resource when you need to sort out complex situations in your life, such as:

• A second or subsequent marriage;
• You have minor children, an adult child with a disability, or “problem” children;
• You are the owner of one or more businesses;
• You own real estate in more than one state;
• You have no children;
• You have significant assets in IRAs or 401(k)s;
• You recently divorced;
• Your spouse recently died;
• You want to leave some of your assets to charity, or
• You have a taxable estate.

How Long After Someone Dies Must His or Her Will Be Probated?

Generally speaking, Texas state law allows four years from the date of death of the testator (the person who drafted the will) to file for probate. If the executor fails to file the will for probate within those four years, the Texas laws of intestacy will govern how the assets are distributed. This means that if the executor failed to submit the will for probate through the proper channels within four years from the death of the testator, then the state of Texas would decide who would inherit the decedent’s assets. Wills are generally probated in the state from between two months to one year following the death of the owner of the estate.

Once the executor receives these Letters of Testamentary, he or she has a specific length of time in which to provide notice to all creditors—usually one month, in which notice must be published in the local newspaper. The executor must then provide written notice to all beneficiaries. Once the will is admitted to probate, the executor usually has 60 days in which to provide certified, written letters to all beneficiaries. A copy of the will and the court order admitting the will for probate must be included with these letters to beneficiaries.

The time involved in a Texas probate can vary from estate to estate. The size and complexity of the estate have bearing on the amount of time it will take to complete probate. If a beneficiary or creditor files a claim against the estate or contests the will, the probate process is likely to be much lengthier—as well as much more expensive. It is rare that an executor would wait four years to have a will probated, although there could be certain instances where this could potentially happen.

Getting Help with Your Texas Estate Plan from Landrith & Kulesz, LLP

If you are considering having a Texas estate plan prepared, it can be beneficial to speak to a knowledgeable estate planning attorney from Landrith & Kulesz, LLP. We have highly experienced estate planning attorneys who are up to date on all state laws related to your Texas estate plan. We will go over all these documents and help you decide which of these documents are right for you and your circumstances. We will help you make decisions related to potential incapacitation, the best way to avoid taxes, and how to best provide for your loved ones after your death. At Landrith & Kulesz, LLP we will guide you through the process, answering all your questions regarding estate planning. Contact Landrith & Kulesz, LLP today for the best in estate planning.