What Is Estate Planning And Why Do We Need It In Texas?
In this article, you will discover:
- The purpose of estate planning
- The purpose of a will in Texas
The basics of estate planning is about deciding who gets your assets upon your death. Therefore, you need to know what you own to plan for its proper distribution when you die. Your beneficiaries are the people to whom you choose to leave your property. Most people know who their heirs are and have no problem creating a plan for those beneficiaries. Distribution plans can be simple, like leaving everything to your spouse. Alternatively, distribution plans can be elaborate, such as using trusts to pass property to family members over several generations.
If you do not have an estate plan, Texas law has one for you based on something called the Law of Descent and Distribution. The state’s plan determines who gets your property based on their relationship to you and the type of property you own.
For example, Bill and Julia have been married for twenty years. Together they have a son and a daughter. Bill also has two children from a prior relationship. Bill and Julia have approximately one million dollars in community assets. They each want their community property to go to the other upon the death of the first. They believe Texas law automatically gives the community property share of each of them to the other at death without them having to do anything. Because of this belief, Bill and Julia never get around to creating an estate plan. Bill dies without even a simple will. What happens to Bill’s half of the community property he owns with Julia? Does it automatically go to Julia, as he expected it would under Texas law? It does not. Bill’s half of the community property he owns with Julia goes to all four of his children in equal shares. Each of his children gets one-fourth of his one-half of the community property ($125,000 for each child). Julia keeps her one-half of the community estate ($500,000) but gets none of Bill’s community half ($500,000).
Bill and Julia’s failure to create an estate plan results in a division of their assets in a way they did not anticipate. They could have easily changed this result by having an estate plan that includes, at a minimum, a simple will or, for better protection, a Family Trust.
- Can My Estate Planning Documents Protect My Family From Business Debts/Lawsuits During My Lifetime Or After My Death In Texas?
Is Estate Planning Just For What Happens After I Die? Or Can Estate Planning Benefit Me During My Lifetime?
A common misconception about estate planning is that you are only preparing for what happens after you die. The fact is that estate planning encompasses much more than that. I prefer to refer to the process as Asset Protection Planning. You want to create a plan that provides for distribution of your assets after death. Additionally, you also want to create a plan that provides benefits to you while you are still alive.
For example, what happens if you become incapacitated? Incapacitation comes in many forms. You could be involved in an accident that leaves you in a coma. You could develop Alzheimer’s, Parkinson’s, or a host of other conditions that leave you unable to take care of yourself and your assets. Asset Protection Planning takes all of those situations into consideration so that you have a plan that benefits you during your lifetime, not just at death.
What Is A Will And Is A Will Enough On Its Own In Texas?
A will is a written document that specifies who you want to handle your estate at your death and who gets your assets at your death.
There are five problems I see with wills.
- A will does not provide for you.
- A will does nothing for you.
- You have to die for it to take effect.
- A will does not help you if you become disabled in an accident, illness or old age.
- A will does not provide for your loved ones.
- A will should allow for you to efficiently leave property to your loved ones, but it rarely does that.
- Leaving property through a will is like pouring a pitcher of water into cupped hands to take a drink. Most of the water falls on the floor and disappears before it can be properly used.
- Lawyers have a vested interest in probate, because the most significant expense is the attorney fees. Attorneys also charge for what amounts to clerical work.
- The average time to close a probate case is 18-24 months, so you are not properly providing for your loved ones if you expose them to the probate process.
- A will takes your family public.
- Wills guarantee probate, which is a public process, meaning that anyone can see the property that you own, debts that you owe, and to whom you leave your property
- Probate is a time-consuming process, also making it expensive. Attorney fees, court costs, appraiser fees, tax return preparation fees, etc. add to the cost.
- The lawyers involved will be paid first, followed by taxes and creditors. Finally, your loved ones are paid the last.
- A will may not work.
- The term “simple will” is a misnomer, because there really is no such thing.
- Any will is fraught with complex legal rules, most of which have been around for hundreds of years.
- Many rules and legal requirements make it easy for disgruntled beneficiaries to file a will contest, and probate court is the perfect place for that.
- The beneficiaries lose out, and nobody actually wins.
- A will can be easily changed.
- The survivor wins.
- This is particularly problematic in second marriages with children from previous marriages.
For more information on Need For Estate Planning In The State Of Texas, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (254) 233-7779 today.