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Dallas Estate Planning Law Blog

Estate planning is a maze best traveled with professional help

An estate plan under Texas law is a way of designating how one's assets may be distributed at death. Estate planning also takes into account uses of those assets during life and provides for a smooth transition if the owner of the assets becomes incapacitated and unable to take care of his or her own financial affairs while still alive. One of the most important considerations of an estate plan is that it gives the individual the power to direct the disposition of his or her assets as the person desires and not as state law would dictate it.

Estate planning can even provide funding that begins in the benefactor's lifetime, in the form of a living trust. The trust provisions may direct the use of the funds until the donor's death, at which time it will be distributed according to the trust terms. An individual can also set up a testamentary trust in his or her will. This trust does not begin until the testator dies.

Family meetings good for long-term care planning process

A Fidelity survey this year regarding caregiving needs of parents and the ability of children to provide those needs found some increased conflicts over the 2014 survey. Likely speculation says that the better economy in Texas and elsewhere may have a paradoxical effect on whether adult children want to sit down with their parents and have a discussion about getting older, long-term care and dying. In 2014, 52 percent of children said those discussions should occur but this year only 37 percent felt that way.

Elder law specialists have long recommended such a meeting and actually, several of them, so that both generations can get used to the idea and the solutions that are agreed upon. Without the family meetings, children and their parents can have very different expectations about what will occur in the later years of a parent's life. Thus, 72 percent of parents expected at least one of their kids to be a long-term care giver and caretaker, if necessary, whereas 40 percent of the children were surprised to hear that opinion.

Making a will involves important and vital preparations

It seems that the reason that more than half of Americans, including those residing in Texas, don't have a will is because people do not like to think about death. People also have a tendency to view themselves as immortal. That tendency, however, is not amusing or tolerable when a family ends up having to spend substantial funds and engage in a great amount of work to clear up the problems left in the wake of a loved one who passed without having prepared a will.

It is best to put a plan in place for several reasons, not the least of which is the desire to assure a smooth transition for those who are left here to cope and to grieve. Putting a plan in place can ensure that your assets are properly handled and family members are taken care of should something happen. Once the decision is made to make this conscientious effort to protect one's loved ones, there are other principles to observe.

A will is a key concept in the terminology of estate planning

Some people in Texas and elsewhere may find the terminology of estate planning to be somewhat confusing. For example, a will and a living will are two very different things. A will is a testamentary declaration that legally states the testator's instructions for distributing his or her assets at death. A living will is a legal declaration addressed to one's health care providers telling them how to handle one's treatment during a last illness.

The living will may instruct the doctors what to do with life support protocols when the person has become brain dead. Other terminology of note is the distinction between different types of powers of attorney. The durable power of attorney gives the authority to a person's appointed agent to act in his or her behalf to conduct all business affairs during a period of incapacity. This is different from a health care power of attorney that authorizes one's agent to be responsible for health care instructions and decisions.

High costs cause many to ignore long-term care needs

The federal government estimates that 70 percent of persons 65 and older will need help with daily activities during their later years. Despite that figure, other reports indicate that over one-third of people 40 and over have done nothing to prepare for the time when they may need such care. Generally, people throughout the country, including here in Texas, are lacking the confidence that they will be able to pay for long-term care needs, and they have in a sense blocked the subject from their consciousness.

There is a fairly good reason for all of the indecisiveness of Americans on this subject. The average range of long-term care expenses is from $17,680 through $92,000 annually. The high figure is for a nursing care placement, whereas the lower amount is for day-care assistance. These figures will tend to increase in light of the fact that the future demand for such services is expected to steadily increase.

Estate planning and financial planning work together

Those residing in Texas who take pride in having a growing asset base and a secure financial life will likely also be inclined to plan for their estates. These matters are best coordinated into an organic whole, connected together. Estate planning can set one's finances on the right path and give the peace of mind that comes with knowing that one's loved ones are protected.  

In order to connect one's estate plan with a financial plan, the first thing to do is to get an estate plan process started. The first step is to select the professionals who will guide the process forward in accordance with the person's best interests and wishes. With a relatively high-end asset base, it may be prudent to have both a tax expert and a certified financial planner on board.

Estate planning succeeds with aggressive action and expert help

For those Texas residents who are uncertain of its meaning, estate planning is the process of planning for the orderly and most effective use and disposal of one's assets both during life and at death. Estate planning is closely related in many ways to the activity of financial planning. Some concrete examples of estate planning actions are: making a will, buying life insurance, creating a living trust, opening a retirement account and supporting the funding of an investment portfolio.

Procrastination is the constant foe of estate planning. When procrastination prevails over action, a person's financial affairs during life can be challenged. At death, his or her family may suffer negative consequences and lose substantial amounts of assets that would have otherwise been inherited.

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.

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