You Need A Plan If…
Potential clients often ask us “do I really need an estate plan?” In almost every instance, the answer to this question is "yes!" Since no one knows when you will die, become incapacitated or have an emergency where you need someone to act on your behalf, estate planning is important at all stages of your life.
While estate planning may seem overwhelming, you don't have to go it alone. We know what it takes to create a comprehensive estate plan tailored to your exact needs. Here are some of the common situations where a comprehensive estate plan is important. And when you are ready to sit down to discuss your specific situation with an estate planning attorney, please give us a call to set up a complementary initial estate planning consultation.
You Need A Plan If...
If you have minor children
Your primary concern will be your children, including who will take care of them and handle their finances if something were to happen to you. Two essential documents to address these concerns would be (1) a declaration of guardianship for a minor child, designating who will care for your child on a day to day basis, and (2) a trust which will designate who will handle your child’s finances and how your assets will be distributed to your child.
If you have a “fur baby”
For many clients, it is equally important to provide for your pets in your estate plan. Similar to an estate plan that cares for minor children, you want to designate a caregiver for your four-legged family members, as well as designate funds to allow the caregiver to provide for their care. This can be written into a trust as a lump sum amount or a formula based on the age of your pet and their expected life expectancy. Bottom line, you want to ensure that your four-legged family members are as well cared for as your loved ones.
If you have health concerns
Having comprehensive medical documents, including a medical power of attorney and living will, will take on a key role in your estate plan. You should have in writing your preferences on the type of care you wish to receive and who will make those decisions, including end of life decisions.
If you are caring for a loved one with special needs
Whether they are your child, sibling, parent, or other loved one, it is important for you to know that they cannot be direct beneficiaries of your estate plan. If you gift or pass on your assets to a loved one with special needs, their need-based government benefits will be terminated. To avoid this, you want to create a special needs trust for your loved one, to ensure that they still continue to qualify for their current government benefits, and instead use the inheritance to subsidize what their government benefits don’t provide for them.
If you have a blended family
You are likely concerned about making a fair distribution to your children from your prior relationship, as well as taking care of your current spouse after you are gone. A well drafted estate plan will help you implement your wishes, and consider your overall assets to make an equitable and fair distribution to all your loved ones.
If you are single
You want to ensure that you have designated the right individuals, whether close family members, friends or other professionals, to make key financial and health decisions during your incapacity and/or death. If you are newly divorced – one of your concerns is to ensure that your ex-spouse is removed from making any financial or health care decisions for you, and that your assets are properly designated to go to new beneficiaries other than your ex-spouse.
If you have significant assets, and are concerned about paying estate taxes
Tax planning will take on a key role in your estate planning. This may include determining if gifting during your life time would make sense, and which type of assets have better tax consequences when left to a beneficiary after your death.
If you have a business
You want to ensure that your business is properly addressed in your estate plan, whether you operate as a one-man show or have employees. Your estate plan should identify a key person in your operation who can take over your business and continue to run it after your passing, or liquidate and close your business, while maximizing the return for your beneficiaries.
If you have an investment property
If you have purchased an investment property or are looking to buy one, it is important for you to protect your other assets from any potential lawsuits or claims. This is a frequent issue if you have renters who can sue you for not properly maintaining the premises that you rent to them. One of the ways to protect yourself and your assets is to own your rental property through a Limited Liability Company (LLC), which can help insulate the rental property from your other assets in case of a lawsuit.
If you have received an inheritance
You should know that your inheritance, even if you are married, is considered your separate property. However, if you take your inheritance and “commingle” it by depositing funds into a joint account or adding the name of a spouse to your inherited real estate, you may have converted the property to a joint asset. Thus, in case of a divorce, your spouse may be treated as half owner of the property and entitled to half of your inheritance. It is imperative to work with an attorney to properly plan for your inheritance, and even consider creating a separate property trust for the inherited assets, which will be separate and apart from a joint trust you may have with your spouse.
If you signed a pre-nuptial agreement
It is important that your estate planning attorney reviews your pre-nuptial (or post-nuptial) agreement, prior to drafting your estate plan. This ensures that your estate distribution does not conflict with what you agreed to in the pre-nup, and your assets are distributed to the proper parties after your passing.
If you want to support a favorite charity, nonprofit organization or cause after your passing
It is vital that you create an estate plan that addresses your wishes. You can even specify what causes your funds could be used for within a specific organization. Since many charitable organizations are tax exempt, your attorney can guide you on how to best make a distribution which will provide the most tax benefit to your estate, as well as the charity who is receiving your funds.
If you own real estate in another state
If you live in Texas, but own real estate in another state, it is especially important for you to create an estate plan and address how all your real estate holdings will be distributed after your passing. Typically, you will create a trust in Texas, and then transfer all your real estate holdings, wherever they are located, into your trust. This will ensure that your estate will not be probated in multiple states, and be distributed in an expeditious and cost-effective way.
If you own property/real estate in another country
It is important that your U.S. estate planning documents refer to those assets. The United States does not have jurisdiction over the distribution of assets in different countries after your death, since each country has its set of laws regarding inheritance. However, your U.S. based estate plan should specifically mention that you have assets in another country and that you will designate in a valid document according to the laws of the foreign country, how your foreign assets should be distributed. You also want to mention that your will in the U.S. will not invalidate your other international estate planning documents that you have created. Working with an attorney both in the United States and the other country will ensure that your assets are properly distributed, no matter where they are located.