HOUSTON WILLS, TRUSTS & ESTATE PLANNING LAWYERS
HOUSTON WILLS AND TRUSTS ATTORNEYS
Houston Wills & Trusts Lawyers - Safeguarding Your Estate
If you have children, or the desire to leave your estate to a certain person or organization, a will is necessary to effectively achieve your goals. Even if you have no children or are unmarried, a properly drafted will is able to allocate your property as you see fit without having the State dictate the distribution pattern. Without a will, your property is distributed based upon a decent and distribution scheme adopted by the State; and, in the event you leave no heirs or your heirs are not able to be located, your property will go to the State. The Houston Texas Wills & Trusts Attorneys and the North Houston Wills, Trusts, and Estate Planning Lawyers at the Law Offices of Steven Tuan Pham are experienced in designing a comprehensive estate planning package to fit your needs. Our Attorneys will attentively listen to your needs and counsel you on the various estate planning instruments available to you thereby creating an estate planning package unique to your needs. Please feel free to contact our Houston Wills Attorneys and our Northchase Houston Trusts Lawyers at 713-517-6645 should you have any questions or to schedule a personal consultation.
Wills and Trusts
By having a valid will in place at your death, you will be able to designate who gets your property, along with other wishes like guardianship for minor children or final disposition of your remains. A valid will also allows you to designate who will administrate your estate. Texas law allows a testator to designate an “independent executor” who administers your estate independent of most court oversight and can be much less expensive and time consuming than a “dependent administration” whereby the court must approve all decisions relative to administering your estate.
Another benefit of having a will in Texas is being able to attach to the will a “self-proving affidavit.” This document allows your executor to admit your will to probate without having to find the witnesses to the will and have them testify in court. By having a self-proved will, the probate process is streamlined.
Wills and trusts can be used in concert to accomplish your estate planning goals. However, you may not need both. Generally, a trust is put in place to protect assets from liabilities such as creditor claims (during your lifetime or after death) or to govern the distribution of assets held by the trust, while a will simply designates who gets your property upon your death. A will can also include a trust. This type of trust is called a testamentary trust and springs into existence only upon the death of the testator. A testamentary trust is used oftentimes where there are children or disabled individuals who are left assets. A testamentary trust will hold the beneficiary’s assets until a triggering event occurs like reaching the age of majority, graduation from college, or getting married. The specific triggering event can be whatever or whenever the testator chooses. Wills and trusts have provisions for the distribution of property; but, a will only takes effect upon the testator’s death and has no power to distribute property during the testator’s lifetime. A trust, on the other hand, can be drafted to distribute property to beneficiaries while the settlor is still living. This is called an inter vivos trust or a “living trust.”
A trust is an estate-planning vehicle whereby one entity holds and/or distributes property for the benefit of another. The person or entity responsible for distributing the trust assets is called a trustee. The person(s) or entity receiving the trust property is called the beneficiary, while the person creating the trust is called the grantor. A trust can be irrevocable or revocable. An irrevocable trust cannot be revoked and can only be altered through the provisions contained in the trust. A revocable trust can be revoked by the grantor in any manner consistent with the trust language. A revocable trust is oftentimes used when the grantors are a married couple.
Trustees have a special duty called a “fiduciary duty” to the trust beneficiaries. The fiduciary duty is one created by the special relationship between trustee and beneficiary and is not formed by any agreement between them. Fiduciaries are held to a higher standard of conduct and can be criminally prosecuted in the event of breach. Beneficiaries of a trust can demand an accounting of the trust assets from the trustee. By law, a trustee must give an annual accounting of the trust upon demand.
A “pour-over” will is used in conjunction with a living trust whereby the testator’s property is left to the trust or “poured over” into the trust. This type of will can also be drafted to leave specific property to specific individuals outside of the trust. The main purposes of a pour-over will are to make sure that any newly acquired property not in the name of the Trust makes it into the trust even if not specifically accounted for and to avoid certain taxes. Whether you need a pour-over will should be a decision made with the advice of counsel.
If you die without a will, you are considered to have died intestate. That means that the State governs how your property will be distributed and not you. Texas statutory law provides the basis for the decent and distribution for property left by one with no will. In short, Texas makes the distribution decisions based upon what it thinks you would have wanted without any input by relatives or close friends. It has been estimated that a large number of persons die without a will every day, as much as 65%.
Perhaps the main reason people have for not getting a will is that they have little or no property. While property distribution may be the prime consideration in a will, there are other important issues that are addressed in a will. For example, in the event a person has minor children, a will can designate a guardian thereby keeping this issue from having to be litigated. Arguably, we cannot predict when and how we will die. If one was to die in a manner that his estate could recover money (defective product or at the hands of a drunk driver), the estate would be distributed per the statue and not per the deceased’s desire.
People have many different reasons for not having a will other than having no property like cost, not knowing the importance of a will, not wanting to invest the time and effort into getting a will drafted, not wanting to contemplate their own mortality, not wanting to deal with a perceived complex issue and some people simply do not want the facts of their life to be revealed. In any event, most of these reasons are not sufficient reasons to die intestate. In any event, it is not the deceased who benefits from a will, but his or her loved ones who are left behind.
A valid holographic will is one written entirely in the testator’s own handwriting. This type of will is recognized by Texas courts if all statutory requirements are met. One of the essential requirements of a holographic will is that the testator had the mental capacity to understand the nature and bounty of the devise. Additionally, the testator must have drafted the will free from duress or undue influence and free from fraud. A holographic will is invalid if any portion of the will is not drafted solely in the testator’s own handwriting. A holographic will need not be witnessed to be valid. A self-proving affidavit can be attached to a holographic will thereby dispensing with the need for testimony proving the testator’s signature. In the event the holographic will is not self-proved, testimony from two witnesses as to whether the will is in the testator’s handwriting will be considered by the court.
While holographic wills are recognized by Texas courts, there is no need to incur the risk that the will won’t meet legal muster. A will drafted by someone unfamiliar with the law can be filled with error sufficient to defeat the testator’s intentions. A Houston Texas Wills & Trusts Attorney or a West Houston Wills, Trusts, and Estate Planning Lawyer at the Law Offices of Steven Tuan Pham can help you craft a valid will that is able to convey your property and wishes in a manner acceptable by a Texas court.
Texas recognizes two kinds of probate allowing for the administration of an estate – Independent and Dependent Administration. An Independent Administration begins with a designation of an executor in a valid will that has been admitted to probate. If the will does not name an executor, it is up to the court to name an administrator.
Once the will designating an executor has been admitted to probate through the filing of an Application for Probate of a Will, the clerk will publish notice of the Application. After the expiration of ten days after the notice has been filed, a hearing is had to establish the facts of the testator’s death. If the will is a self-proved will, only the executor has to give testimony pertaining to the will. A self-proved will has an affidavit attached establishing the authenticity of the testator’s signature.
Once it is shown to the court that the executor is “qualified,” the court will issue Letters Testamentary that give notice to third parties of the executor’s right to act on behalf of the estate. The executor must then file and Inventory and Appraisement and List of Claims with the court before the expiration of ninety days from issuance of the Letters Testamentary. The Inventory should contain the estate assets and any claims against the estate. The executor is responsible for paying or rejecting claims on the estate and filing a final tax return by April 15 of the year following the testator’s death. The executor must give all secured creditors who have recorded claims (mortgages) notice.
Per the testator’s wishes contained in the will, the executor must distribute the property left by the deceased including filing the necessary paperwork transferring probate assets to the individuals named by the testator. After all claims have been paid and property disbursed, the executor should request the court discharge him from further obligation and request the estate be closed. Because Texas has a relatively straightforward and streamlined probate process, the entire process, if there are no contests, should take only a few months depending on the size of the estate and difficulty finding devisees.
A Dependant Administration requires the court oversee each and every aspect of estate administration. This type of administration is costly and time consuming and can be easily avoided by having a valid will that contains executor designation provisions.
In most Dependent Administration cases, the court will require that the administrator or executor post a bond, file an annual inventory, ask the court for permission to sell or distribute any assets and hire appraisers. It is difficult to gauge how much a Dependant Administration will cost or how long it will take given that the court must be involved in every decision. Unless you simply do not trust any of your heir or friends to carry out your wishes in the capacity of an executor, a Dependant Administration should be avoided.
Several years ago (2002), the estate tax exemption (the amount of assets not subject to tax) increased from $675,000.00 to $1 million with a tax rate of 55% applied to assets in excess of the exemption limit. In 2007, the exemption was raised to $2 million and the overage rate was lowered to 45%. In 2009, the exemption rate is expected to rise to $3.5 million with the overage rate steady at 45%. This is where the law gets a little tricky; in 2010 the estate tax will be 0%. However, in 2011, the estate tax and overage rates revert back to 2002 levels.
As you can see, if you have a sizeable estate, long term estate tax planning needs to be made in light of the expected changes in the tax laws. Having an estate tax planning team in place can help you eliminate costly estate planning errors. For a consultation, contact the Houston Texas Wills & Trusts Attorneys and the West Houston Wills, Trusts, and Estate Planning Lawyers at the Law Offices of Steven Tuan Pham to discuss your specific circumstance.
Comprehensive Estate Planning
Comprehensive estate planning involves more than simply making a will. Estate planning also involves planning for incapacity. A will governs how your property is to be distributed after your death while advance directives (a directive to physician is sometimes referred to as “Living Wills”) allow a designated agent to handle your personal, business and legal affairs while you are still living, but not able to handle them yourself. Situations where advance directives are useful are when you are incapacitated, like being unable to speak or communicate effectively with medical professionals or unable to travel to take care of business. By designating an agent to act on your behalf, you have effectively reduced the chance of not being able to handle your personal affairs.
Some of the advance directives you should consider having drafted are: Directive to Physician and Family or Surrogate; Statutory Durable Power of Attorney; Medical Power of Attorney; Declaration of Guardian; HIPAA Release/Authorization; and Do Not Resuscitate Order (DNR). The benefit of these types of directives is that questions about what to do in the event of your incapacity are answered ahead of time leaving no guesswork for family or friends as to what you actually want.
By way of example, a Directive to Physician and Family or Surrogate provides those who are responsible for your medical care in the event of your incapacity with specific instructions as to how to care for you. Specifically, this directive spells out what to do in the event you have a terminal medical condition – engage life support or not. This is a particularly devastating decision to be made if the decision maker has no insight into the desires of the one dying.
Durable Power of Attorney
A Statutory Durable Power of Attorney gives your designate agent(s) the power to act on your behalf to handle your business affairs in the event of your incapacity. This directive can be as broad or specific as you choose. Care should go into naming your agent since the powers given to him/her are intended to bind you legally.
A Declaration of Guardian is designed to designate who will be the guardian of your person and estate in the event of the need. As important as designating who will be your guardian is who will not be your guardian. This directive allows for both.
HIPAA Release & Compliances
A HIPAA Release/Authorization allows for your medical information to be relayed to designated third parties. This is particularly important when family or loved ones want information on your condition. In ordinary circumstances, medical care professionals cannot give out status on your medical condition. By designating who can receive your medical information, you allow those who love you to obtain current information on your medical condition.
Do Not Resuscitate Order
A Do Not Resuscitate Order (DNR) dictates to medical professionals which kind of medical procedure is not allowed. Specifically, a Do Not Resuscitate order disallows any medical professional to use heroic measures to save your life or “bring you back.” A DNR Order can be directed to in-hospital care or care administered outside of a hospital environment.
Medical Power of Attorney
A Medical Power of Attorney gives your designated agent the power to make medical care decisions on your behalf in the event you are unable to make those decision for yourself. For example, if you are in a car wreck and are rendered unconscious, yet a decision on treatment needs to be made; your agent can make that decision for you. This advance directive is not used for end of life medical care decisions, but for those decisions involving sustaining life.
Every will and trust is unique and requires a personal consultation to customize an estate plan to suit your needs. Information contained on this website is NOT intended to be legal advice, but for information purposes only. Always consult an attorney before making out a will or advance directive in order to fully understand your legal alternatives and rights. You are invited to contact the Houston Wills & Trusts Attorneys at the Law Offices of Steven Tuan Pham today at 713-517-6645 or complete our Online Contact Form and let us assist you with your estate planning needs or to review your existing will or trust.