There are a wide variety of estate planning tools that are available in an estate plan. Each have their own purpose and function, but all are designed to work together to provide the maximum amount of protection to your estate. Wills and trusts are some of the most common estate planning documents. But what is the difference between them, and how do you choose what’s right for your needs?
What is a Will?
A will is a legal document that states your wishes and how you want your estate to be handled. There are many different types of wills from which you can choose.
What a will can do:
- Name an executor to distribute your estate
- Decide beneficiaries for your assets
- Designate guardians to care for children
- Express medical care preferences in the event of incapacitation.
If you have young children and assets to your name, it is always a good idea to have a well-written will. Without a valid will in place, the courts will have to decide how your assets are distributed, appoint guardians for your children, and other instructions for your estate.
What is a Trust?
A trust is an arrangement that allows a trustee (designated by you) to hold and manage the funds in the trust. Trusts are very flexible and can be designed with the terms that you want.
What a trust can do:
- Plan for incapacity
- Designate what happens to your property and assets
- Help minimize estate taxes
- Protect your estate from becoming public record
Should You Have Both a Will & a Trust?
Just because you have one document doesn’t mean that you can leave out the other. Most people can benefit from having both a Will and a Trust because it may be able to provide more protections for all aspects of their estate and legacy.
Things to consider when choosing whether to have a will, trust, or both:
- Probate – Probate is required when there is property in a Will that is solely in the name of the deceased. Many people try to avoid probate because it is costly and time-consuming.
- Privacy – If you want to keep your estate private, you can do so with a trust. Wills are required to undergo the probate process, which means your estate will become public record.
- Cost – In general, a living trust may cost more upfront to set up than a will because it is more complex to prepare.
- Backup – Having a will in addition to a trust can serve as a backup in the event that any newly acquired property was not transferred to your trust.
Discuss How to Protect Your Future
Choosing between a will, trust, or both essentially boils down to what your family’s needs are and your unique situation. At Adams Law Firm, our team of Katy probate and estate planning attorneys can assess your family’s goals and help you find an estate plan that meets your needs. We provide customized planning and personal service throughout each client’s case. Schedule your initial consultation to learn more about the various estate planning resources available to you.
As you enter your gray years or after you have accrued a noticeable sum of money and assets, you should think about creating a will as part of your estate plan. This legal tool will be invaluable to your loved ones as they figure out who gets what inheritances and how specific assets should be managed after you pass away. However, sometimes the opportunity to create a will comes and goes before one is actually drafted and signed. What happens then?
Texas Intestate Succession Laws
When a person passes away without create a will, it is known as intestate succession. Any asset or property that would have been included in a typical will can be subjected to Texas’s intestate succession laws. Anything that would not be covered in a will are not.
Some assets that probably won’t be affected by intestate succession are:
- Property put into a trust
- Finances gathered from life insurance policies
- 401(k), IRA, and retirement funds
- Bank accounts labeled “payable-on-death”
- Real property held in joint tenancy
As far as everything else, the state will step in and distribute property and assets based on its own laws. This is clearly not an ideal situation as there is nothing personal about it. In many intestate succession proceedings, people are disgruntled to find that they did not inherit something they were certain would be deemed for them had a will been created.
Without a will, the following will happen to assets subject to state distribution law:
- Child inherits everything: Decedent passes away with children but no living spouse, parent, or sibling.
- Spouse inherits everything: Decedent passes away with spouse but no living child, parent, or sibling.
- Parent inherits everything: Decedent passes away with parent but no child, spouse, or sibling.
- Sibling inherits everything: Decedent passes away with sibling but no child, spouse, or parent.
Situations get more complicated as more surviving family members are added. If a decedent passes away with a spouse and children, for example, the spouse will gain all of the community property and one-third of the separate property, and all else will go to the children. Another example is passing away with a spouse and parents, in which the spouse inherits all community property, all separate property, and half of separate real estate, and parents get what is left.
As it can be seen, intestate succession benefits no one. Even if things work out in the end, it was merely by luck of the draw. Better to start planning now and avoid complications that will frustrate your loved ones after you are gone.
Contact Adams Law Firm to speak with a Katy probate and estate planning lawyer today.
After a loved one passes away, many people start to understandably dread the idea of dealing withprobate. For some, receiving an inheritance can be the difference between accruing debt or paying bills, so probate can really be a problem and not just an inconvenience. Despite how unavoidable probate may appear seem, it actually isn’t.
Not everything that a decedent owns needs to go through probate before they can be distributed. With a carefully prepared estate plan in place, there are numerous ways to sidestep probate regarding particular assets.
Three ways to avoid probate include:
- Joint ownership: Anything that is owned jointly between the two or more people will usually – not always, as we will explain in a bit – avoid probate. If two people owned or controlled a piece of property and one of those people dies, the surviving person will gain total control of that asset automatically and without the need of the court’s attention.
- Designated beneficiaries: Certain assets will ask you to name a beneficiary at the time you first obtain them. A common example would be an insurance policy or a retirement plan. If you pass away, the value of that asset will be transferred to the named beneficiary, if possible.
- Trusts: Someone can allow significant portions of their estate to avoid probate if they are placed into a trust of some kind. You may want to consider a revocable living trust, for example, if you are concerned about a particular asset getting slowed by probate when a relative or loved one needs it most.
Two of the ways that an asset can get pulled into probate are:
- Sole ownership: An asset with only one person on the title or owning it will be pushed into probate if that person passes away. Probate court is the only authority that can strip names off titles without conflict, and so it is actually necessary and should not be automatically avoided.
- Contest: Sometimes a relative sharply disagrees with the way inheritances were planned to be distributed. Taking the matter to probate court and challenging the validity of a will can bring just about anything into probate, if the court believes there is validity behind the petitioner’s claim.
For more than 35 years, Adams Law Firm and our Katy probate attorneys have been helping people figure out the complexities of probate and estate planning. To learn how to avoid probate, or if you should even try to do so, contact our firm for personalized legal counsel.
estate planning is not exactly the most popular topic around the dinner table. This obscurity has left many Americans in the dark about what estate planning really means and entails. When trying to actually form an estate planning, most people are going to wander somewhat aimlessly, opening the opportunity for making some commonly occurring mistakes.
Here’s the top five mistakes people make when creating an estate plan without legal guidance:
- Too young: Probably the most common mistake someone makes when it comes to estate planning is assuming they are “too young” to need one. The whole point of estate planning is making it easy for loved ones to handle your belongings and distribute your estate after you pass away. It might be a little unnerving but there is no telling when you will pass away, so you cannot be too young to require an estate plan. If you have children or a large estate, you definitely need to start thinking of making a plan, even if you are just in your 20s.
- Too small: Other than thinking you are too young to need an estate plan, another huge mistake is thinking that your estate is too small or valued too low. If you want to distribute certain inheritances to a certain loved one, you need to make a will or trust of some kind, even if you’re just thinking about a single heirloom, like a bracelet.
- One and done: Many people believe that having just a will covers every possible facet of estate planning; others think the same of living trusts. Both groups of people might be wrong, depending on their situation and estate. The wise move is checking with an estate planning attorney to see if there are any gaps in your will that could be improved with a trust, and vice versa.
- No revisions: As your life changes, you may also need to change your estate plan. People who complete one draft and lock it away for the rest of their lives are making a pretty big mistake. For example, imagine going through a divorce, not changing your estate plan, and your loved ones finding out your ex-spouse gets your home after you pass away. Probably not an ideal situation.
- No beneficiaries: People who do not have anyone they want to name as a beneficiary may mistakenly make no estate plan, thinking that no one will get their possessions after they pass away. This is incorrect. The state will distribute assets to relatives, close and distant, based on its laws. If no relatives can be identified, all of the property goes to the state to do as it pleases. If you have no relatives or no one you think deserves your estate, you may want to at least consider donating everything to charity.
Avoiding Those Mistakes, Preparing for the Future
It is understandable if you have made any of the aforementioned estate planning mistakes. As it was stated, they are quite common. If you want to correct or avoid them, all you need to do is contact Adams Law Firm. Our Katy estate planning attorneys can help you sort through your estate, create a functioning plan, and rest easy knowing you have handled something so important.
Unless you are a professional estate planning attorney, you probably have not spent much time thinking about how your estate will be handled when you pass away or become incapacitated. And yet, this is something that essentially everyone will need or should need to do. If estate planning is probably coming up in your near-future, take a look at these smart tips everyone should know about it.
- Sooner than later: First of all, you should really start taking estate planning seriously sooner rather than later. The moment you come into a sizeable estate or start a family is the moment you should consider what will happen with your assets and property when you can no longer care for yourself. Starting soon can really help everyone avoid complications later on.
- Will or trust: Do you need a will to distribute your assets? Or would a trust work just the same and help your loved ones avoid probate? Talk to an estate planning lawyer about the differences and determine what is right for you.
- Healthcare directive: Most people begin to lose mental and physical capacity as they age. To avoid making your loved ones have to guess what you would have preferred when it comes to your medical treatments, use a healthcare directive to tell them specifically in advance.
- Children’s property: If you have decided to give money or property to minor children who legally cannot manage it for themselves, be sure to name an adult you trust who can do it for them. If you have named a personal legal guardian in your will for your children, you can probably save time and troubles by assigning management rights to them as well.
- Say it clearly: When you are stating who should inherit what, why, and for what purpose, use the clearest language possible. Any room for guessing is room for a mistake. You may want to review your will and trusts a few times with your attorney to make certain your wishes are well represented.
- Minimize estate taxes: A shockingly large amount of your estate can be swept away by estate taxes. To minimize how much is removed from your estate and given to the uncle you didn’t know you had – Uncle Sam – you should talk to your lawyer about how to legally avoid estate taxes.
- Don’t forget your funeral: As grim as it may sound, it is important that you do not forget about the cost of your funeral and burial expenses. Setting up a payable-on-death account with your bank is a good way to slowly build up the funds that will be required.
The last tip might be the most crucial to the success of your estate plan: hire an estate planning attorney. At Adams Law Firm, our Katy estate planning lawyers are capable of handling your will, trust, asset distribution, and the like with confidence and compassion. We want to do everything in our power to ensure you know that your loved ones will be comfortable after you are gone. Contact us online and we can discuss how we can make your life easier by assisting you with estate planning.
Creating an estate plan is among the most thoughtful things you can do for your loved ones. However, the most comprehensive estate plans are not static and your strategies for the future should change and evolve along with your situation. With life constantly presenting new opportunities and challenges, you never know what is going to be around the next corner. Our blog outlines four events which may be reasons to take another look at your estate plan.
- Marriage and divorce: Planning for your spouse’s future is often one of the central concerns of clients. Upon a new marriage, ensuring that your partner is correctly written into your estate can help to mitigate future problems down the road such as tax issues or asset disputes. On the other hand, if you do not want your ex-spouse to be included in your will, it is vital to remember to remove their name from all documents.
- The death of a loved one: The loss of a loved one can be difficult to comprehend and you may not be able to revisit the subject of their passing for a long while. However, when you are ready, these changes should be updated in your will, living trust, and powers of attorney. You will also need to name the beneficiaries for any assets which were inherited. When your spouse passes, you should make sure that another person is legally authorized to act in your place.
- A new family member is born: When a person becomes a parent or grandparent, they are often alerted to the importance of creating an estate plan, if they have not made one already. Issues of inheritance and legal guardianships are among the chief issues which should be given attention upon the birth of a child or grandchild.
- Significant financial changes: Between events such as losing a job, starting a new business, and purchasing real estate, your financial situation is sure to go through many changes in your lifetime. The total amount of debt and assets which are under your name can have huge tax implications and affect plans for inheritance. An experienced attorney can consult with you regarding any alterations which need to be made to your plan when your financial situation changes.
While this is far from a comprehensive list of the changes which can affect an estate plan, they are among the most common. The good news is that if you have already put an estate plan in place, the majority of the heavy lifting has already been done. Many changes which result from the situations above can be undertaken with relative ease once the main clauses have been laid out. Every situation is different and specific questions about probate or estate planning should be directed to an attorney.
Ready to Update Your Estate Plan? Call (281) 391-9237
Whether you are making changes to an existing plan or are just beginning to explore your legal options, the Adams Law Firm can provide you with the guidance you need to see that your legacy is protected. Our Katy estate planning attorneys have served the greater Houston area for more than three decades over which time they have built a reputation for exceptional client service. It is never too early or too late to plan for your future and when you are ready, our firm is here to help.
Contact us today and discuss your plans for the future with our attorneys.
Are you facing a family law concern? We understand that this time in your life can be filled with emotion and we aim to provide your clients with valuable representation and peace of mind. Any family law case can be highly stressful and the individuals involved often feel consumed with grief and anxiety. At the Adams Law Firm, our attorneys stand ready to provide you with outstanding legal representation for your case and help you reach an amicable solution in a swift amount of time. Recently, our firm proudly announced the launch of our new user-friendly site and this corresponding blog. This blog will be updated periodically to help provide valuable information to the residents and families of Katy, Texas. Check back soon for updates or contact the Adams Law Firm today to schedule a consultation and see how working with our team can greatly benefit your case. You deserve representation and our dedicated team can help!