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Dallas Estate Planning Law Blog

Critical mistakes with your inheritance and the IRS

One of the greatest gifts in the world can also be the most costly in terms of taxes and the IRS. If one is the heir of a baby boomer in Texas, chances are his or her benefactor may have been saving a bundle in IRAs and employer sponsored accounts toward an inheritance. Over a lifetime, baby boomers reduced their tax bills using these plans, and an estimated $30 trillion in wealth will be handed down over the next 30 to 40 years.

If one has big plans for the inheritance that has just been received -- maybe a dream vacation, buying that dream car or paying off a home mortgage -- be prepared for IRS sticker shock. Traditional IRAs and 401(k) plans are great for saving since they are tax deferrable and more money is invested as it is earned, but cashing these accounts in after inheriting them will cost plenty. The tax fees alone can be staggering.

Assisted living: Making the right choice for long-term care

When a loved one reaches a point in his life that he can no longer live alone, assisted living arrangements may be the next option. Studies show that the average age for seniors moving into assisted living is 84-years old and is usually the result of a medical emergency. In 2016, the cost to rent a one-bedroom apartment in a Texas assisted living community was $42,180 or about $3515 per month for long\-term care

Assisted living communities often offer resort-like amenities with hotel-like service and a guarantee that tenants will receive all the help that they need. These communities are often geared toward high-functioning and active seniors, and sales and marketing people are filling apartments with the lure of high-end amenities. But as a senior family member ages and becomes more frail and sickly, the assisted living arrangement may no longer be the perfect fit. 

Choosing a trustee important part of estate planning

A living trust, or revocable trust, typically names the person who established it as the trustee. Should one spouse pass away, the surviving spouse would then become the sole trustee, in most cases. Since living trusts are often a component of the estate planning process for many Texas residents, it would be worthwhile to identify a successor trustee for when the surviving spouse also passes away. Financial experts say that children, other family members, friends or financial institutions are commonly named as successor trustees.

The oldest child in a family is often named as a successor trustee. However, other families decide to name all their children as co-trustees. Each person should consider the potential burden of administrating someone's estate as the determination is made. If a friend is selected as a successor trustee, analysts suggest that some amount of compensation be paid to them. Managing an estate could take a lot of time, depending on the complexity of the estate.

Long-term care planning critical for women, men alike

National statistics show that women in Texas and all around the country have a longer life expectancy than men. Women are likely to live until age 81, while the life span for men is 76. Since women are often the primary caregivers when family members become unable to provide personal care, there is a valid concern regarding who will care for them in the future when they are in need. Long-term care planning is an important issue to address as the population in the country ages.

Statistics show that around 70 percent of adults over age 65 will need long\-term care at some point in their lives. As opposed to medical care that seeks a cure for sickness, long-term care focuses on providing a certain quality of life for an individual. Services for medical, personal, housing and socials needs may be required when a person is incapacitated by illness or injury.

Avoid estate planning mistakes

Many Texas residents and others around the nation likely have a will that determines how their assets will be distributed after they pass away. While having a will is important, it is even more critical to have documents in place that specifies how one's needs will be met should he or she become incapacitated. Financial experts recommend several key documents to include as part of an individual's comprehensive estate planning process. 

A medical power of attorney, or advance health care directive, designates an agent to make medical decisions should someone become unable to do so. Another important document to have in place is a living will. This document identifies what types of medical treatment should be given when it is unlikely someone will get better. A living will ensures that family members know a person's wishes and can act accordingly with no disagreements. Without this document, such decisions would be made in court and could possibly go against what the person or family members may want.

Consider potential medical expenses in long-term care planning

Many Texas residents and other adults around the country are looking forward to their retirement years. While several may anticipate the less-structured days when they no longer must go into work, others are waiting for the opportunity to get started on Medicare and reduce their monthly insurance premiums. However, financial experts warn that Medicare does not provide the comprehensive coverage that most seniors need. In fact, those approaching retirement still need to consider long\-term care planning for many services that are not covered, even with a Medigap insurance policy.

Among those services that Medicare does not cover are the majority of alternative treatments, such as acupuncture or other holistic remedies. Though covered for correcting spinal misalignments, chiropractic care is not covered when used to get rid of or alleviate back pain. Many seniors need some type of home health care. When a physician approves care as part of a treatment plan, many skilled services may be covered. However, someone would need to secure unskilled care through a long-term care insurance policy, as Medicare would not cover those services.

Unmarried couples should also consider estate planning

Many couples in Texas and throughout the country are now deciding to live together rather than tie the knot. While many cite financial reasons for cohabitation, others simply have been married before and don't want to do it again. Most couples who live together don't see the need for estate planning, particularly if they don't have children. Industry leaders believe there are benefits for developing estate plans, regardless of marital status.

First, it would be wise for anyone to have a health care power of attorney. Someone would be designated to make medical decisions when a partner is unable do so. If such a document does not exist, unmarried partners are rarely allowed to make medical decisions for each other. A health care power of attorney can hopefully help couples avoid going to court with a costly guardianship case.

Long-term care planning essential to ensure wishes are followed

There are not many Texas residents or others around the country who like to think of a time when they may become seriously ill or unable to take care of themselves. While it is common for most people to make plans for their education, families and retirement years, they do not often consider long\-term care planning. Unfortunately, by the time it becomes an issue, it is too late to make the necessary decisions.

Experts strongly recommend addressing the issue of long-term care while individuals are able to speak for themselves and clearly communicate their wishes. While it may be an uncomfortable topic to address, it is much better to know that decisions are made when someone has the capability to adequately consider the potential possibilities. Furthermore, without the expressed wishes being documented, conflicts can arise within families over decisions about care. Well-intentioned family members may often make the wrong assumptions about what a person wants.

Avoiding common mistakes of an estate executor

Taking on the role of an estate executor may sound like an honor, but many in Texas soon learn that the job is far from glorious. While it is certainly humbling to find one trustworthy enough to handle one's final wishes, it is also time-consuming and can be frustrating. In addition, by taking on this responsibility, an estate executor may also face legal challenges regarding some of the common probate mistakes.

One of the duties of an estate executor is to make sure any bills and debts of the deceased are paid. However, some bills have higher priority than others. For example, if an executor quickly pays off credit cards or other bills that arrive in the mail, but neglects an overdue tax obligation, the executor may be held financially responsible for paying the tax debt if the assets in the estate cannot cover it.

Common misconceptions about estate planning

It is unlikely that most Texas residents have given much thought to how family members and loved ones will be affected after their death. However, it is a subject that needs to be addressed to ensure that someone's assets and property are distributed exactly as desired. While many may believe that estate planning is only needed for the wealthy, it can be a valuable process to help avoid family conflicts. Financial experts hope to convey the need for comprehensive estate plans by shattering some commonly held misconceptions.

The size of someone's estate is not the only determining factor when deciding to develop a plan. Appropriate documentation is necessary to ensure that assets go to the designated beneficiaries or that a business stays within a family. While the benefits of an estate plan mainly involve financial considerations, there are other benefits as well. Some plans may specify guardianship for children or provide protection for special collections. Another benefit is the privacy offered by having a trust.

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Austin, TX 78734
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Addison, TX 75001
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