Houston Estate Planning and Probate Blog

Monday, October 14, 2013

A Simple Will Is Not Enough

A basic last will and testament cannot accomplish every goal of estate planning; in fact, it often cannot even accomplish the most common goals. This fact often surprises people who are going through the estate planning process for the first time. In addition to a last will and testament, there are other important planning tools which are necessary to ensure your estate planning wishes are honored.

Beneficiary Designations
Do you have a pension plan, 401(k), life insurance, a bank account with a pay-on-death directive, or investments in transfer-on-death (TOD) form?
When you established each of these accounts, you designated at least one beneficiary of the account in the event of your death. You cannot use your will to change or override the beneficiary designations of such accounts. Instead, you must change them directly with the bank or company that holds the account.

Special Needs Trusts
Do you have a child or other beneficiary with special needs?
Leaving money directly to a beneficiary who has long-term special medical needs may threaten his or her ability to qualify for government benefits and may also create an unnecessary tax burden. A simple vehicle called a special needs trust or supplemental needs trust is a more effective way to care for an a child with special needs after your death.

Conditional Giving with Living or Testamentary Trusts
Do you want to place conditions on some of your bequests?
If you want your children or other beneficiaries to receive an inheritance only if they meet or continually meet certain prerequisites, you must utilize a trust, either one established during your lifetime (living trust) or one created through instructions provided in a will (testamentary trust).

Estate Tax Planning
Do you expect your estate to owe estate taxes?
A basic will cannot help you lower the estate tax burden on your assets after death. If you think your estate will be liable to pay taxes, you can take steps during your lifetime to minimize that burden on your beneficiaries. Certain trusts operate to minimize estate taxes, and you may choose to make some gifts during your lifetime for tax-related reasons.

Joint Tenancy with Right of Survivorship
Do you own a house or other bank accounts or investment accounts with someone “in joint tenancy with rights of survivorship”?
“Joint tenants with rights of survivorship” is a common form of asset ownership with a spouse. This form of ownership is known as “joint tenancy with right of survivorship,” “tenancy in the entirety,” or “community property with right of survivorship.” With this type of ownership, when you die, your ownership share in the property passes directly to your spouse (or the other co-owner). A provision in your will bequeathing your ownership share to a third party will not have any effect.

Pet Trusts
Do you want to leave money for the care of your pets or companion animals?
Pets are generally considered property, and you cannot use your will or living trust to leave property (money) to other property (pets). Instead, you can use your will or living trust to name a caretaker for your animals and to leave a sum of money to a Trustee to pay to the caretaker provided the caretaker takes proper care of the animal pursuant to your instructions in your will or trust. 

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