The number of marriages in Texas has been in steady decline for years. The reasons for this vary, but it hardly means love or romance is dead. Most young couples choose instead to cohabitate, effectively acting as a married couple without the formality of a ceremony or even creating a common law marriage. Yet, these unmarried couples in a long-term committed relationship will need a proper estate plan to ensure the other partner is provided for after the first partner’s death.
Unless you plan properly, your partner will not receive any of your money or property when you pass away or could be unable to care for you when you most need it. Instead of your partner, Texas laws will empower your family members to be in charge of your financial and medical decisions. Additionally, those same laws will allow your family members (parents and siblings) to receive your money and property upon your death. To ensure you give money, property, and decision-making authority to those people you want to have them, your estate planning tool kit must be properly stocked. In particular there are eight important documents you should consider when discussing your plans with an experienced estate planning attorney.
Planning Tools for Estate Planning Documents
Last Will and Testament
You can use this document, also known as a will, to leave money and property to anyone you choose. A will names an executor or personal representative to wind up your affairs and lists what should happen with your money and property. However, a will must still go through the time-consuming, expensive, and public probate court process. If you want someone such as your partner or a minor child to receive money over a period of time, the court may stay involved until the last amount is paid. Be aware, this could take years. Though court oversight may not be ideal for every situation, it can be beneficial, especially if you leave your family members less than they would have been entitled to under state law or if you have substantial claims from creditors.
Revocable Living Trust (RLT)
A revocable living trust (RLT) is a trust you create during your lifetime that can be changed at any time before your incapacity or death. This planning tool enables you to name yourself as the current trustee (the person or entity who manages, invests, and hands out the money and property) and to designate a co-trustee or alternate trustee if you are unable, for whatever reason, to act as trustee. You can allow your partner to manage the trust with you or to step in when you cannot. On the other hand, if you prefer, you can select another trusted individual or professional entity to manage the trust on your behalf.
An RLT allows you to continue enjoying your money and property during your lifetime and to designate what will happen to them upon your death or incapacity. If you are financially contributing to both your and your partner’s day-to-day expenses, an RLT may be an effective way to ensure that your partner can continue to meet any financial obligations regardless of what happens to you. Also, we can include special language in your RLT to make sure that any money or property you leave to your partner is both protected from your partner’s creditors and out of a new significant other’s reach.
If your partner is not the only loved one you would like to provide for, an RLT can provide money and property to your partner for your partner’s lifetime, and any remaining amounts can be given to someone else, such as children from a previous relationship or marriage. Because an RLT can exist for many years, the fact that it will not have to go through probate is a valuable benefit. Instead of having court oversight for years or even decades, these matters can be handled privately by your chosen decision makers.
This special type of will specifically lists your RLT as the beneficiary. Although the intent of having an RLT is to avoid probate, there’s no crystal ball to foresee every possible situation that could occur. If we come across accounts or property that was not transferred to your trust during your lifetime (thus making probate necessary) a pour-over will ensures those accounts or pieces of property transfer to your trust at your death and go to those individuals or charities you have named in your trust document.
Financial Power of Attorney
This document allows you to choose a trusted person (an agent or attorney-in-fact), such as your partner, to handle financial matters for you. The scope of your agent’s authority is determined by the type of financial power of attorney that is prepared. The power can be as limited or as broad as you like.
Another important consideration for a financial power of attorney is the specific time when your agent can act. You can have your agent act either immediately or only after you have been deemed unable to manage your affairs. The process for making this determination can be outlined in the document. In addition, consider making the financial power of attorney durable so that your agent’s authority can continue even if you become incapacitated. You have the right to choose who handles financial transactions on your behalf. If you do not choose and someone needs to step in, a judge will decide for you. Meaning, depending on your state’s statute, the judge could choose a family member over your partner.
Medical Power of Attorney
This document allows you to appoint a trusted person, such as your partner, as your decision maker to communicate or make your healthcare decisions if you cannot. If you do not formally select a decision maker, your loved ones will face going to court to have a judge appoint someone to make these decisions. Depending on your state’s statute, the judge may have to select one of your blood relatives instead of your partner.
Directive to Physicians
This document (sometimes known as a Living Will) allows you to convey your wishes regarding end-of-life decisions. Because these topics can be very sensitive, it is important that you carefully consider your wishes. Although it may take some soul-searching, you must know what you want to happen in certain situations so your wishes can be properly documented and communicated to your partner as the medical decision maker and to your other loved ones if you wish. Absent specific instructions from you, your partner, as decision maker, will be left trying to figure out what you want. This difficult situation can not only cause additional grief, it may also breed disagreement between your partner and your other loved ones if opinions differ about how to best care for you.
HIPAA Authorization Form
This form allows you to grant specific individuals access to your medical information (e.g., to get a status update on your condition or receive your test results) without giving those individuals the authority to make decisions on your behalf. By providing information to your loved ones, you can help quiet the anxieties and uncertainties that often arise during times of emergency. This document can also help alleviate tensions between your partner as the medical decision maker and the rest of your loved ones. Although only your partner will be making medical decisions, your other loved ones will understand the reasons for those decisions.
Pre-Designation of Guardianship
While the power of the attorney documents allow for the agent to make decisions on your behalf, you can also sign a pre-designation of guardianship. This document comes into effect when it is determined you need to have a guardian appointed for your person, your estate or both. It also allows you to name people you definitely do not want serving as the guardian for either you or your estate. Otherwise, state statute will determine who is appointed as your guardian, and could wind up being someone you would prefer not serve.
Let Us Build Your Tool Kit Today
The future is always uncertain. Now is the perfect time to meet with us so we can build or upgrade your estate planning tool kit. Give us a call today to schedule a virtual consultation, whichever is most convenient for you.
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Nielsen Law PLLC provides family focused estate planning to individuals and families in Austin, Round Rock, Cedar Park, and the Central Texas area. For more information and to learn about our firm, please contact us.