Share

Houston Estate Planning and Probate Blog

Tuesday, December 9, 2014

Is a copy of a will sufficient?

Many people keep their important documents at home where they are easily accessible. It’s not at all uncommon to find people with a filing cabinet or even a shoe box containing passports, account statements, deeds, tax returns, birth certificates and social security cards. Wills are often added to these files once the estate planning process is completed. In choosing to store your important estate planning documents at home, however, you risk having the originals lost or destroyed in the case of fire, flooding or theft.

So what happens if the original version of your will is lost or ruined?

Generally when a person dies, state law determines what must happen in the state probate proceeding. In most cases, the "original" of the will must be submitted to the probate court in the county where the person resided. If the original of the will cannot be located and provided to the court, there likely is a provision in your state's probate code that would permit the submission of a photocopy of that signed will.

In many cases, the attorney who prepared the will maintains a copy of the estate planning documents. Assuming, that the copy your attorney has could be submitted to the probate court, additional steps may need to be taken, and additional pleadings prepared and/or proof presented in order to submit a copy.

Should you lose the original signed will, the best practice would be for you to execute a new will which would make things easier for your family and loved ones upon your death. In that case there would be better assurances that your wishes were followed and carried out. Preparing a new will should not take much time for your attorney. He or she likely still has the word processing file on his or her computer, and could easily modify it for you to execute again. If for some reason this is not done, you may wish to execute a document stating the original was destroyed in a flood or fire but that you did not intend to revoke it. However, it’s important to note that this may not be effective in every instance as many states have very strict requirements in terms of requiring originals and execution formalities.

To keep the originals of your estate planning documents safe, even in the face of disaster, you might consider purchasing a fireproof/waterproof safe for your home or rent a safe deposit box with a local bank where you can still easily access your documents but keep them secure off-site. If you choose to keep them in a safe deposit box, just make sure that your named Executors know where they are located and are authorized signers on the box so they can access the documents when needed.


Tuesday, December 2, 2014

Selecting An Executor Post Mortem

The death of a loved one is a difficult experience no matter the circumstances.  It can be especially difficult when a person dies without a will.  If a person dies without a will and there are assets that need to be distributed, the estate will be subject to the process of heirship and administration instead of typical probate proceedings.

In this case, the decedent’s heirs can select someone to manage the estate, called an administrator instead of executor.  State law will provide who has priority to be appointed as the administrator. Most states’ laws provide that a spouse will have priority and in the event that there is no spouse, the adult children are next in line to serve. However, those who have priority can decline to serve, and the heirs can sign appropriate affidavits or other pleadings to be filed with the court that nominate someone else as the administrator. Once the judge appoints the nominated person they will then have the authority to act and begin estate administration.

In certain circumstances, it may be necessary to change the initially appointed administrator during the administration process. Whether this is advisable depends on many factors. First, the initial administrator will have started the process and will be familiar with what remains to be done. The new administrator will likely be behind in many aspects of the case and may have to review what the prior administrator did. This can cause expenses and delays. Also, it is possible that the attorney representing the initial administrator may not be able to ethically represent the new one, again causing increased expenses and delays. However, if the first administrator is not doing his or her job, the heirs can petition the court to remove the individual and appoint a new one.

If you are currently involved in a situation where an estate needs to be administered, it is recommended that you speak with an estate planning attorney in your state.



Tuesday, November 4, 2014

(Grand)Parenting 2.0

According to the National Census Bureau, grandparent-headed homes are among the fastest growing household types in the United States. Grandparent-headed homes are defined as living arrangements where the primary financial and caregiving responsibilities are held by one or more grandparents rather than a parent. Though the reasons that lead to this type of arrangement vary, many speculate that a difficult job market and economy has led to an increase in the past few years.

At the height of the financial crisis, the Wall Street Journal published an article describing the financial strain placed on grandparent-headed households. For grandparents who have already retired, finding a job at an advanced age can be next to impossible. The unemployment rates for this demographic are disproportionately high as are levels of ‘discouragement,’ or the part of the population is so frustrated with trying to find work that they are driven from the workforce. The degree of financial hardship is exacerbated by the increase in the price of everyday goods and necessities, like food and clothing.

Beyond the financial strain, taking care of a young child can also have a significant impact on a grandparent’s mental and physical well-being. If an infant is placed in the grandparent’s care, he or she may have disrupted sleep due to nightly feedings. Grandparents raising young children are also frequently exposed to diseases and infections common in childhood. Depression and anxiety disorders are not uncommon and for children with developmental delays or behavioral problems, the demands placed on caregivers are that much greater.

In some cases, grandparents may become the head of a household even when parents are present. In situations where a parent has become unemployed or otherwise cannot care for the children, he or she may move the entire family into his or her parents’ home. In addition to grandparent-headed homes, other types of arrangements where the parent is not the primary caregiver are on the rise. These may include instances where an aunt or uncle takes responsibility for a nephew or niece.

Fortunately, many federal and state governments have started to recognize this trend and are putting resources in place to assist non-parent-headed homes. The American Association of Retired Persons has also created a comprehensive guide and resource center for grandparents parenting a child.



Thursday, October 30, 2014

What is a Pooled Income Trust and Do I Need One?

A Pooled Income Trust is a special type of trust that allows individuals of any age (typically over 65) to become financially eligible for public assistance benefits (such as Medicaid home care and Supplemental Security Income), while preserving their monthly income in trust for living expenses and supplemental needs. All income received by the beneficiary must be deposited into the Pooled Income Trust which is set up and managed by a not-for-profit organization.

In order to be eligible to deposit your income into a Pooled Income Trust, you must be disabled as defined by law. For purposes of the Trust, "disabled" typically includes age-related infirmities. The Trust may only be established by a parent, a grandparent, a legal guardian, the individual beneficiary (you), or by a court order.

Typical individuals who use a Pooled Income Trust are: (a) elderly persons living at home who would like to protect their income while accessing Medicaid home care; (2) recipients of public benefit programs such as Supplemental Security Income (SSI) and Medicaid; (3) persons living in an Assisted Living Community under a Medicaid program who would like to protect their income while receiving Medicaid coverage.

Medicaid recipients who deposit their income into a Pooled Income Trust will not be subject to the rules that normally apply to "excess income," meaning that the Trust income will not be considered as available income to be spent down each month. Supplemental payments for the benefit of the Medicaid recipient may include: living expenses, including food and clothing; homeowner expenses including real estate taxes, utilities and insurance, rental expenses, supplemental home care services, geriatric care services, entertainment and travel expenses, medical procedures not provided through government assistance, attorney and guardian fees, and any other expense not provided by government assistance programs. Make sure to check the federal provisions and your state and local laws to determine applicability in any specific situation.

As with all long term care planning tools, it’s imperative that you consult a qualified estate planning attorney who can make sure that you are in compliance with all local and federal laws.


Monday, October 20, 2014

Testamentary vs Inter Vivos Trusts

The world of estate planning can be complex. If you have just started your research or are in the process of setting up your estate plan, you’ve likely encountered discussions of Wills and Trusts. While most people have a very basic understanding of a last Will and Testament, Trusts are often foreign concepts. Two of the most common types of trusts used in estate planning are testamentary trusts and inter vivos trusts.

A testamentary trust refers to a trust that is established after your death from instructions set forth in your Will. Because a Will only has legal effect upon your death, such a trust has no existence until that time. In other words, at your death your Will provides that the trusts be created for your loved ones whether that be a spouse, a child, a grandchild or someone else.

An inter vivos trust, also known as a revocable living trust, is created by you while you are living. It also may provide for ongoing trusts for your loved ones upon your death. One benefit of a revocable trust, versus simply using a Will, is that the revocable trust plan may allow your estate to avoid a court-administered probate process upon your death. However, to take advantage this benefit you must "fund" your revocable living trust with your non-retirement assets while you are still living. To do so, you would need to re-title most assets such as real estate, bank accounts, brokerage accounts, CDs, and other assets into the name of the trust.

Since one size doesn’t fit all in estate planning, you should contact a qualified estate planning attorney who can assess your goals and family situation, and work with you to devise a personalized strategy that helps to protect your loved ones, your wealth and your legacy.


Friday, October 10, 2014

How to Ask Your Partner for a Prenuptial Agreement

Discussing your desire to establish a prenuptial agreement with your future spouse has the potential to be a complete disaster, but approaching the topic with the comfort of your partner in mind can help alleviate much of the stress associated with the process of creating a premarital agreement.

A prenuptial agreement is a legal document drafted and signed before marriage that lays the groundwork for the distribution of assets should the marriage fail. Although these agreements aren't a requirement for engaged couples, many attorneys agree they are an important part of the pre-marriage process, as they provide a binding agreement that each partner must adhere to in the event of a divorce. Many are sensitive to the idea that signing an agreement of this kind means one partner thinks the marriage will fail, but prenuptial contracts are really just meant to serve as a contingency plan.  Think of a premarital agreement like homeowners’ insurance – you purchase it and then hope and plan to never need to use it. 

Below are three ways to make the discussion easier.

Know the basics of a prenuptial agreement.

You likely have an inkling as to how your partner will react to you bringing up the subject of a premarital agreement. Whether you think they will be neutral or get defensive at the very mention of the idea, explain that drafting the agreement as a couple gives you the ability to design it in a way that could financially protect both of you in the event that your marriage fails or one spouse passes before the other. Make sure your partner is aware that their feelings during this process are of the utmost importance to you. It's best to seek the guidance of an experienced family law attorney prior to discussing a prenuptial agreement with your future spouse in order to gather all the information you need to have a thorough discussion on the subject. These small preparations can help the conversation flow more smoothly between you and your partner, hopefully resulting in a relaxed and honest discussion about what you both expect from your marriage.

Don't wait until the last minute to tell your fiancé you want a premarital agreement.

Both of you should be involved in the process of drafting the prenuptial agreement. It shouldn't be one of you presenting the other with a contract at the rehearsal dinner right before the wedding. Not only are last-minute agreements on "shaky ground" legally speaking, but you're more likely to upset your partner if you expect them to read and sign this type of contract without any warning or independent legal advice. Prenups that are signed shortly before the wedding aren't necessarily lawfully invalid, but they are much more likely to be legally challenged than agreements that were signed well before a couple says "I do." In order to avoid inflicting massive pre-wedding jitters on your partner, talk about your desire to have a prenup as soon as possible following your engagement. Working together to draft the agreement provides both of you with a chance to state how you feel "work" will be divided throughout your marriage, which can make you more secure with your decision to marry. The prenuptial agreement takes the guesswork out of a divorce, as it determines who owns what property and how things will be divided.

Consider working with a mediator to draft your premarital agreement.

Working with a mediator allows you, the couple, to draft a contract that combines both of your best interests. Before meeting with a mediator, couples should come up with some issues they would like to address in their prenuptial agreement. Discussing what key points you want the agreement to include beforehand ensures that you are on the same page as a couple, and it will make the meeting with the mediator more productive. This method is a smart way to guarantee each spouse equal bargaining power. As a matter of protection and precaution, it is always a good idea for each spouse to hire their own independent attorney to advise them and to draft and/or review the agreement.

 


Tuesday, September 30, 2014

When Will I Receive My Inheritance?

If you’ve been named a beneficiary in a loved one’s estate plan, you’ve likely wondered how long it will take to receive your share of the inheritance after his or her passing.  Unfortunately, there’s no hard or and fast rule that allows an estate planning attorney to answer this question. The length of time it takes to distribute assets in an estate can vary widely depending upon the particular situation.

Some of the factors that will be involved in determining how long it takes to fully administer an estate include whether the estate must be probated with the court, whether assets are difficult to value, whether the decedent had an ownership interest in real estate located in a state other than the state they resided in, whether your state has a state estate (or inheritance) tax, whether the estate must file a federal estate tax return, whether there are a number of creditors that must be dealt with, and of course, whether there are any disputes about the will or trust and if there may be disagreements among the beneficiaries about how things are being handled by the executor or trustee.

Before the distribution of assets to beneficiaries, the executor and trustee must also make certain to identify any creditors because they have an obligation to pay any legally enforceable debts of the decedent with those assets. If there must be a court filed probate action there may be certain waiting periods, or creditor periods, prescribed by state law that may delay things as well and which are out of the control of the executor of the estate.

In some cases, the executor or trustee may make a partial distribution to the beneficiaries during the pending administration but still hold back sufficient assets to cover any income or estate taxes and other administrative fees. That way the beneficiaries can get some benefit but the executor or trustee is assured there are assets still in his or her control to pay those final taxes and expenses. Then, once those are fully paid, a final distribution can be made. It is not unusual for the entire process to take 9 months to 18 months (sometime more) to fully complete.

If you’ve been named a beneficiary and are dealing with a trustee or executor who is not properly handling the estate and you have yet to receive your inheritance, you should contact a qualified estate planning attorney for knowledgeable legal counsel. 


Tuesday, September 23, 2014

Your Wishes in Your Words

During the estate planning process, your attorney will draft a number of legal documents such as a will, trust and power of attorney to help you accomplish your long-term goals. While these legal documents are required for effective planning, they may not sufficiently convey your thoughts and wishes to your loved ones in your own words. A letter of instruction is a great compliment to your “formal” estate plan, allowing you to outline your wishes with your own voice. 

This letter of instruction is typically written by you, not your attorney. Some attorneys may, however, provide you with forms or other documents that can be helpful in composing your letter of instruction. Whether your call this a "letter of instruction" or something else, such a document is a non-binding document that will be helpful to your family or other loved ones.

There is no set format as to what to include in this document, though there are a number of common themes.

First, you may wish to explain, in your own words, the reasoning for your personal preferences for medical care especially near the end of life. For example, you might explain why you prefer to pass on at home, if that is possible. Although this could be included in a medical power of attorney, learning about these wishes in a personalized letter as opposed to a sterile legal document may give your loved ones greater peace of mind that they are doing the right thing when they are charged with making decisions on your behalf. You might also detail your preferences regarding a funeral, burial or cremation. These letters often include a list of friends to contact upon your death and may even have an outline of your own obituary.

You may also want to make note of the following in your letter to your loved ones:

  • an updated list of your financial accounts with account numbers;
  • a list of online accounts with passwords;
  • a list of important legal documents and where to find them;
  • a list of your life insurance and where the actual policies are located;
  • where you have any safe deposit boxes and the location of any keys;
  • where all car titles are located; the
  • names of your CPA, attorney, banker, insurance advisor and financial advisor;
  • your birth certificate, marriage license and military discharge papers;
  • your social security number and card;
  • any divorce papers; copies of real estate deeds and mortgages;
  • names, addresses, and phone numbers of all children, grandchildren, or other named beneficiaries.

In drafting your letter, you simply need to think about what information might be important to those that will be in charge of your affairs upon your death. This document should be consistent with your legal documents and updated from time to time.

 


Tuesday, September 16, 2014

Family Businesses: Simple Steps to Avoid Common Pitfalls

If you have a family business or are thinking about starting one, kudos to you! There are few better ways to create tradition, meaning and bonds within a family, and a family business can be a gratifying way by which to build wealth.

Family enterprises, however, can bring conflict, legal challenges and financial distress when simple preventative steps are not taken. An experienced attorney can assist you with the following issues commonly faced by family businesses:

  • The absence of a succession plan. If the leader of a business dies, sells or becomes incapacitated, the business he or she leaves behind will appoint a leader, somehow, by necessity. The succession process at that point, however, will likely be complicated, and the result may not be optimal for the business or your family. An attorney can assist in identifying all of your options, and help you select one that works best for you and your business. For instance, if the business belongs exclusively to you, you can simply leave it to the person you feel should own and run it. If the business is professional in nature, such as a medical or legal practice, you can identify an outside buyer/successor and prepare him or her using a process agreeable to both of you. If the business belongs to two or more family members or other individuals, a contractual succession plan can be devised, lessening stress both now and at the time the succession occurs.

  • The lack of employment agreements. It’s rare that families who start businesses together are initially comfortable discussing the particulars of vacation and sick days, wages, raises and absenteeism. Yet these issues affect every business and will affect yours. The time for all parties to discuss expectations and rules is now, before issues arise, not later, when issues have already led to resentment and confusion.

  • The failure to acquire a business license. Often, small business start-ups skip the step of acquiring a business license that may be required in a particular industry, perhaps choosing instead to wait and see whether the business will succeed. It’s important, though, not to avoid this step. By not acquiring a business license and necessary zoning permits and by not meeting other legal requirements, you expose your business not only to penalties but also the possibility of being shut down with financial and reputational consequences that accompany an unexpected closing.

  • Mixing personal and business funds. The separation of personal and business funds isn’t just good business; it can save you money. When personal money “disappears” into a business owned by you and others, you’ve lost at least part of those funds regardless of how successfully they’re put to use by the business. An issue related to separating personal and business funds is that of separating personal liability from that of the business. By housing the business in a legal entity, such as a corporation or limited liability company, you can shield yourself from liabilities faced by the business.

Drafting contracts, obtaining needed licenses, negotiating with municipal entities and selecting and creating a business entity can involve complex legal issues. To ensure success and to protect your interests, contact a qualified attorney.


Tuesday, June 24, 2014

How Are Certificates of Shares Passed Down?

Certificates represent shares of a company. There are generally two types of company shares: those for a publicly traded company, and those for a privately held company, which is not traded on one of the stock exchanges.

Let's assume you hold the physical share certificates of a publicly held company and the shares are not held in a brokerage account. If, upon your death, you own shares of that company's stock in certificated form in your name, the first step is to have the court appoint an executor of your estate.

Once appointed, the executor would write to the transfer agent for the company, fill out some forms, present copies of the court documents showing their authority to act for your estate, and request that the stock certificates be re-issued to the estate beneficiaries.

There could also be an option to have the stock sold and then add the proceeds to the estate account that later would be divided among the beneficiaries. If the stock is in a privately held company there would still be the need for an executor to be appointed to have authority to act on behalf of the estate. However, the executor would then typically contact the secretary or other officers of the company to inquire about the existence of a shareholder agreement that specifies how a transfer is to take place after the death of a shareholder. Depending on the nature of the agreement, the company might reissue the stock in the name(s) of the beneficiaries, buy out the deceased shareholder’s shares (usually at some pre-determined formula) or other mechanism.

If you set up a revocable living trust while you are alive you could request the transfer agent to reissue the stock titled into the name of the trust. However, once you die, the "trustee" would still have to take similar steps to get the stock re-issued to the trust beneficiaries.

If you open a brokerage account with a financial advisor, the advisor could assist you in getting the account in the name of your trust, and the process after death would be easier than if you still held the actual stock certificate.


Tuesday, June 17, 2014

Paying for Your Grandchildren’s Education

The bond between a grandparent and grandchild is a very special one based on respect, trust and unconditional love. When preparing one’s estate plan, it’s not at all uncommon to find grandparents who want to leave much or all of their fortune to their grandchildren. With college tuition costs on the rise, many seniors are looking to ways to help their grandchildren with these costs long before they pass away. Fortunately, there are ways to “gift” an education with minimal consequences for your estate and your loved ones.

The options for your financial support of your heirs’ education may vary depending upon the age of the grandchild and how close they are to actually entering college. If your grandchild is still quite young, one of the best methods to save for college may be to make a gift into a 529 college savings plan. This type of plan was approved by the IRS in Section 529 of the Internal Revenue Code. It functions much like an IRA in that the appreciation of the investments grows tax deferred within the 529 account. In fact, it is likely to be "tax free" if the money is eventually used to pay for the college expenses. Another possible bonus is that you may get a tax deduction or tax credit on your state income tax return for making such an investment. You should consult your own tax advisor and your state's rules and restrictions.

If your granddaughter or grandson is already in college, the best way to cover their expenses would be to make a payment directly to the college or university that your grandchild attends. Such a "gift" would not be subject to the annual gift tax exemption limits (currently $14,000) which would otherwise apply if you gave the money directly to the grandchild. Thus, as long as the gift is for education expenses such as tuition, and if the payment is made directly to the college or university, the annual gift tax limits will not apply.

As with all financial gifts, it’s important to consult with your estate planning attorney who can help you look at the big picture and identify strategies which will best serve your loved ones now and well into the future.

 


Archived Posts

2017
2016
2015
2014
2013


Schnurr Law Firm, PLLC serves clients throughout the greater Houston area, including, but not limited to Houston, Bellaire, West University, Sugar Land, Missouri City, Richmond, Rosenberg, Katy, Cypress, The Woodlands, Kingwood, League City, Webster, Clear Lake, Pearland, Angleton, and throughout Harris County, Fort Bend County, Montgomery County, Brazoria County and Galveston County.



© 2017 Schnurr Law Firm, PLLC | Disclaimer
1111 North Loop West, Suite 1115, Houston, TX 77008
| Phone: 713-662-2889

Estate Planning | Family Limited Partnerships | Qualified Personal Residence Trust (QPRT) | Irrevocable Life Insurance Trust (ILIT) | Advanced Estate Planning | Probate / Estate Administration | Special Needs Planning | Elder Law | Pet Trusts | Business Law-Entity Formation | Uncontested Divorces | Mediation | Planning for Same Sex Partners & Unmarried Couples | Resources

Lawyer Website Design by
Zola Creative