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Dallas Estate Planning Law Blog

Prior marriages may complicate each spouse's will provisions

Standard formulas that are generally used in Texas by a married couple to divide their assets at death tend to fall away when one or both spouses have a prior marriage and separate children from that relationship. Usually, where a couple has three children, for example, they will leave their estates mutually to each other and then to their children in three equal shares. However, where one or both of them also have children from a prior marriage, each person's last will and testament tends to depart from the standard formula in order to recognize all of their children for sharing.

In the latter case, the tendency is for a spouse to leave less than all of his or her assets to the other, while leaving a reasonable portion to the children of the prior marriage. In that way, the prior children may be included along with the children of the current marriage for sharing in the assets. However, that pattern may not be efficient where the couple have only a modest amount of total assets that are all jointly owned.

Not having a will can create elevated charges against an estate

It is generally assumed that most people prepare wills during life for the efficient handling of their assets after death. The truth, however, is that over half of all Americans, including many in Texas, do not have wills. The situation of deceased pop star Prince is the most dramatic example recently of how the lack of a will can create havoc and elevated monetary expenses for a decedent's estate.

Virtually all wills appoint one or more persons to act as personal representatives on behalf of the decedent's estate. Without a will, someone must be appointed for this task. The next of kin is generally qualified to serve as an estate administrator, but what happens when several siblings each want to have the job or situations in which no one is available to serve?

Estate planning prevents chaos in distributing one's estate

Prince's death without a will appears to have opened a lingering uncomfortable subject in American culture, including here in Texas. The fact is that most adults are unaware of what happens if they die without a will. Experts point out that the state's laws take over in that event and that the ultimate disposition of the decedent's assets may or may not be in accordance with what the decedent would have wanted if an estate planning process had been completed.

The problems are even greater in a situation like the pop music star's because it is reported that there may now be hundreds of individuals vying for a share of the approximately $300 million estate. But even for a typical middle or upper middle-class person, dying without a will may cause problems for the loved ones left behind. Some beloved who were close to the decedent may be cut out or receive a far diminished share over what the decedent actually intended in his heart of hearts.

Estate planning decisions following a second marriage

For many people in Texas, determining how their estate will be divided is relatively straightforward. However, when a person remarries, there are special estate planning considerations that must be made. An attorney with experience regarding such issues can help ensure that a person's wishes are clearly understood and potentially able to withstand a legal challenge.

When a person remarries later in life, he or she must determine how the new spouse and any children will be treated in terms of asset distribution. If there are no legal documents in place, a spouse is entitled to a significant portion of assets. If a person wishes for a different form of distribution, a prenuptial or postnuptial agreement must stipulate the terms.

Estate planning will likely prevent dying without having a will

Unbelievably, it has been revealed that the musician Prince had no will at the time of his death. That is considered to be a major mistake by experts in Texas and elsewhere with respect to good estate planning principles. In fact, it is one of the four big mistakes of estate planning, according to some experts, and it demonstrates in this case that celebrities are as prone to procrastination as the rest of us.  

The lack of a will can be devastating to some family members who will not share in a loved one's estate simply because the state statute where the decedent lived will govern the order of distribution of assets. Therefore, even though the decedent may have favored a beloved sibling, that person may go without any inheritance under the state's statutory law. In addition, a living trust is a good idea for those who wish to maintain privacy about their affairs.

Long-term care planning is supported by family discussions

Many people throughout the country and in Texas have a sense of immortality that defies logic and reality. They believe, for example, that they will not become so disabled or unable to care for themselves at any time in the future such that they will need outside help or institutional care. When considering the expensive cost of long-term care, many people rationalize away the need for long-term care planning.

While one can admire the positive thinking that puts such thoughts out of reach, the statistics defeat the idea that a person will likely escape the need for outside help some day. Since the facts suggest that most people will benefit greatly from having a plan in place, it may be time for people to revise their unrealistic thinking and at least examine the options available. Perhaps the strongest way to do this is to start with obtaining an overview from a financial planning expert and from one's estate and long-term care planning attorney.

Estate planning now includes reference to one???s digital assets

Traditional estate planning in Texas has not yet caught up with the intricacies of the digital assets that most people are at least beginning to amass. These assets can include but are not limited to such things as PayPal accounts, bank accounts, intellectual property (such as blogs, e-books, poetry and other works of art), along with domain names and other electronic compilations. The best estate planning strategy to keep up with the growing list of assets that one may want to dispose of properly at death is to first of all prepare a thorough inventory of the items.

The list should give web addresses and passwords necessary to access accounts. The list should be provided to one's personal representative along with a letter of instructions describing how to handle each asset. If necessary, an asset may have to be included in one's will and bequeathed properly and legally in that manner.

Estate planning and long-term care elements may be combined

A trend for estate planners in Texas and elsewhere is to include long-term care planning as one of the initial funding tasks in the estate plan. Because people are now living significantly longer than in the past, the estate planning attorney must factor long-term care provisions into the estate plan. This may impact on how much can be bequeathed in one's will to the beneficiaries. Knowing in advance how this will be handled is better than being 80 years old, in declining health, and facing imminent nursing home care with no plans in place.

It may be that the client is capable of funding long-term care insurance. If so, that will fit easily into the plan and may be all that is needed. However, the hitch is that about one-third of all owners of such policies see them lapse prior to getting any value out of them. This may happen due to unaffordable premium increases. It may also occur due to the advancing age of the insured, which leads to some cognitive decline, and hence, a forgetfulness to pay premiums.

Estate planning seeks to avoid conflict among the beneficiaries

Residents of Texas who choose to do estate planning are often concerned about whether their adult children will argue over the parents' choices in their wills for dividing the inheritance. One survey notes that over half of all Americans intend to leave an inheritance approaching an average of about $200,000. Good estate planning procedures and a close working relationship with one's estate planning attorney will likely establish a low risk of arguments among the children after the testator's death.

Experienced estate planning attorneys generally agree that the openness of communications between parents and their children about estate planning choices will go a long ways to diffuse anxiety or resentment. The best policy is for the parents to give the decisions and the rationale to the children, preferably even in a group family meeting. Where that is not possible, the parents should make strong efforts to discuss their plans personally with each child and obtain an understanding with each of them.

Elderly planning is needed to provide for long-term care

Whether one resides here in Texas or in another state, retirement and estate planning is not enough these days for elderly persons. One must also engage in elderly planning for potential long-term health care costs at the later stages of life. Long-term care means the daily activities in which the elderly become less self-sufficient, such as bathing, dressing, eating, doing the wash, the dishes and going to the bathroom. For people with a net worth of $2 million or more, it may be a non-issue because they may be able to afford to pay cash for home health care, including nursing care.

For others who are unable to pay the estimated range of long-term health care bills, some elderly planning should be done as early in life as possible to avoid the excessive costs that come with late planning. Long-term care insurance is often mentioned as a solution. If it is started early enough, it may work; however, the premiums will be prohibitive if purchased later in life.

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