Do I Need a Trust?
Frequently, my clients ask, “Do I need a trust?” and wonder how to avoid probate. My answer is that it depends but there is a good chance that a trust is not what you need. There are times when a revocable living trust is an effective estate planning tool, but for many clients, it is a waste of money. Trusts are promoted by many websites and literature that the public receives. Trusts are not a solution for all. To determine if a trust is a good idea for you, it should be discussed with an estate planning attorney. Please call our office to set up a free consultation. What Is a Trust? A trust is a legal arrangement where one party (the trustee) holds and manages assets for the benefit of another party (the beneficiary). Trusts are often used in estate planning to ensure the assets are distributed according to your wishes, both during your lifetime and after death. Trusts can also be used to manage assets in the event you become incapacitated. There are different types of trusts, such as: Revocable trust: Can be changed or revoked during your lifetime. Irrevocable trust: Cannot be altered after it is created. Testamentary trust: Created through your will and takes effect after your death. Reasons A Living Trust Might Not Be Necessary 1. Probate is Not Complicated or Expensive with Proper Planning The price for creating a revocable living trust, funding it, making transfers into the trust, and related documents may exceed the cost of probate for a will that is properly drawn up to provide for independent administration. 2. Probate Under a Well-Drafted Will is Timely and Efficient Texas law streamlines the probate process, and there are rarely long delays when there is a properly drafted will. An independent administration under a valid will requires only one hearing and minimal court involvement in the process. A competent and conscientious executor will move the process along quickly unless there are unusual complications. 3. Avoiding Probate Without a Trust You can avoid probate of many assets by placing them in a transfer on death deed or account with the right of survivorship, beneficiary designation, or payable on death designations. This may be a simpler way of passing on many assets upon death rather than spending the money to place assets in a living trust. If beneficiaries are minors or have special needs, you may require a trust, but maybe a will can also accomplish these desires. 4. Estate Tax Planning is Not Needed for Most People Under current estate tax regulations, unless you have an estate worth well more than $12 million per person, you have no need for a living trust to avoid estate taxes. This could change in the future if Congress changes the estate tax laws. 5. A Trust Is Only Effective If Properly Funded If assets are not properly funded to the trust, the value of the trust is void, and probate is still required. When a person has a revocable living trust, all assets must be properly titled. If this is not done, there may still be a […]
Read moreWhat is a Texas Medical Power of Attorney?
A Texas medical power of attorney is a document that allows a person to select someone else to make health decisions on their behalf. The principal can limit or give unrestricted powers to the agent to make any type of decision, including ending the principal’s life. Alternate agents may also be selected in the event that the primary agent cannot perform. The person you designate to make medical decisions for you is called an agent. The medical power of attorney gives your agent broad power to make any health care decisions you could have made if you were not incapacitated, unless you specifically restrict his or her authority. Medical powers of attorney are not just for the elderly. Unexpected injuries or illness can occur at any age, so all adults should have one in place. Texas Medical Power of Attorney Requirements To be valid in Texas, a medical power of attorney must either be: signed by you in the presence of a notary public OR signed by you in the presence of two witnesses, who also sign the document. Who Can Witness a Power of Attorney? In Texas, a witness to a medical power of attorney must be a competent adult. However, they cannot be: The person you have designated as your agent; A person related to you by blood or marriage; A person entitled to any part of your estate after your death under a will or codicil executed by you or by operation of law; Your attending physician; An employee of your attending physician; An employee of a health care facility in which you are a patient, if the employee is providing direct patient care to you or is an officer, director, partner, or business office employee of the health care facility or of any parent organization of the health care facility; or A person who, at the time this medical power of attorney is executed, has a claim against any part of your estate after your death. How to Get a Medical Power of Attorney in Texas Here are the basic steps: 1. Choose Someone You Trust to Make Healthcare Decisions Select a person to make medical decisions who understands your values. You may also name an alternate agent to step in if your primary agent is unavailable. 2. Complete the Texas Medical Power of Attorney Form Use the official form provided by Texas Health and Human Services or have one drafted by a Texas estate planning attorney. This form is often paired with an advance directive or living will. While the medical power of attorney focuses on healthcare, many clients also create a durable power of attorney to manage financial decisions if they become incapacitated. 3. Sign in Front of a Notary or Two Competent Adults Follow the required protocol. Improper signing can render the document invalid under Texas law. 4. Distribute Copies Give copies to: Your agent and alternate Your doctor(s) Your estate planning attorney Keep a copy in a safe, easily accessible place at home 5. Review Periodically Revisit your power of attorney form after major life changes like divorce, a new diagnosis, or […]
Read moreElder Law: Documents Every Adult Needs, Probate and More
The following transcript was excerpted from a June 22, 2020 virtual presentation on elder law, wills and probate in Texas by attorney Cynthia Fronterhouse. The event was organized and sponsored by CarePartners, whose vision is to be the leader in caregiving resources in Texas. You can click the image above or watch the recorded presentation on YouTube. My name is Cynthia Fronterhouse and I am an attorney in Houston. I actually practice law with my father. He is semi-retired, but he has over 50 years of experience. He has always focused his practice on construction litigation, representing small companies, so when I joined him, so he could go enjoy his life, I really enjoyed meeting with the clients and their families, preparing for the inevitable as well as when they lost a loved one. I grew up in the Spring Branch/Memorial area. I did go away to college to Smith College in Massachusetts and then I came back to Texas and went to the University of Texas Law School. I am married, and I have one daughter, age nine years old. Really helping families before they lose someone and then when they lose a loved one is really my passion and walking them through that process. It’s so difficult when you’re trying to process and grieve, and then having to deal with a lot of the probate aspects is tough. So that’s really what I’m going to focus on. Most people know what a will is and why it’s important, but then what happens when you do lose a loved one? A will is a document that determines where your assets are going to go when you die. It doesn’t take effect until you’ve passed away, so once you pass away is when your will goes into effect. And one of the big cases that we had when I first started with my dad was one where one of his clients lost a brother, who didn’t have a will. When he died, he had two minor children. Watching the family go through that grieving process, and then having to see how difficult it was because the man didn’t have a will was what really inspired me to help people and educate people. That’s so important. You can use a will to determine where your assets are going to go and to whom you want them to go. Also in your will, you can appoint a guardian to your children. Also in your will you can appoint an executor. The executor is only responsible for determining and following your wishes that are outlined in your will. So what happens when you lose someone if they have what’s called probate? Probate is the process of authenticating the will. You file an application to probate a will with the court. You file the original will with the court and normally do it in the county where the person resided. You have to do that within four years. Then you file with the County Clerk. You have to wait 10 days because the will is posted at the County Courthouse and then, after 10 […]
Read moreWhat Is Probate?
When a loved one passes away, families often find themselves facing unfamiliar legal steps, and one of the first questions they ask is “What is probate?” Probating a will in Texas is the legal process through which a deceased person’s will is validated and the estate is administered. This process involves proving the will is valid through a court hearing, resolving debts and distributing the assets to the beneficiaries listed in the will. In Texas, probate proceedings are often necessary. Luckily, probate in Texas is typically simple, relatively quick and inexpensive. Does a Will Need to Be Probated? Not always. There are times when assets pass directly to beneficiaries without a formal probate process. Assets held in a revocable living trust, those with rights of survivorship, or those with a designated beneficiary (such as IRAs or life insurance policies) are typically not subject to probate. When is Probate Necessary in Texas? Probate is typically required when: There is real property held in the deceased person’s name. If there is sole or joint ownership of real property, probate will clarify the title transfer. There are significant debts. If there are large amounts of debt, probate provides a process for resolving them. Financial accounts do not have a beneficiary designation, such as bank accounts, retirement accounts, or life insurance policies. If there are bank accounts and investments that are not payable-on-death (POD) or transfer-on-death (TOD) or missing beneficiaries, probate ensures that these assets pass to heirs or beneficiaries under a Will. Why Would Probate Be Required Even if There Is a Will? A will is a legal document that states a person’s final wishes and where the property should be distributed. The property is not transferred until the person dies, and the Court must determine that the will is valid and legal. This process ensures the will is authentic and legally enforceable. The Probate Process in Texas In Texas, probate unfolds through a series of required legal steps. While the details can vary by county, Houston-area families can expect the process to follow a clear sequence, from filing the will to closing the estate. 1. File a Probate Application The process starts by filing paperwork with the probate court in the county where the decedent lived. If there’s a will, it must be included. Having the original will is very important. If the decedent died intestate (without a will), the court will distribute assets according to Texas law. 2. Wait for Court Review After filing, there’s a 10-day public notice period. Then, the court holds a short hearing to officially appoint the executor (if there’s a will) or administrator (if there is no will). 3. Notify Creditors A notice to creditors will be published in a local newspaper, giving debt holders time to make claims against the estate. 4. Gather and Distribute Assets After debts are paid, the executor collects and distributes the remaining assets to the beneficiaries or heirs. If the estate includes a business entity, probate may be necessary to transfer ownership interests. 5. Close the Estate Once all necessary steps are complete, the […]
Read moreWhat You Need to Know about Wills and Probate in Texas
Attorney Cynthia Fronterhouse shares the key things you need to know about wills and probate in Texas. There are four estate planning documents that every adult in Texas needs to know. Those include: A last will and testament appoints a guardian and establishes a trust. A durable power of attorney appoints an agent to manage your finances. A medical power of attorney appoints an agent to make healthcare decisions on your behalf, if you become unable to do so on your own. A directive to physicians instructs physicians not to use artificial methods to prolong your life. If you have a will and die in Texas, probate is a simple process to distribute your assets. Most Texas wills direct the named executor to pursue independent administration. Independent administration in Texas allows executors and administrators to serve largely independent of court supervision. This means that the executor does not have to post a bond and does not have to ask court permission before taking many steps to settle the estate. Is your will valid? To make a valid will in Texas, you must have a legal capacity testamentary capacity, testamentary intent and certain formalities must be followed. If a will does not meet all the requirements set forth by the statutes, your will unfortunately will be declared invalid, meaning that your estate could be distributed according to statutory formula, rather than the way you would have preferred. What should you do if you are the surviving spouse? In order to ensure that all estate property is fully and efficiently distributed, it is recommended that the surviving spouse probate the will when first spouse dies. Community property residences are generally owned as tenants-in-common. Thus, if the surviving spouse later attempts to sell the home, some form of probate or estate administration must be initiated to transfer the full title on the house to the surviving spouse’s name. If you die without a will, Texas law lays out how the state will be distributed. The disadvantages of dying without a will are many. You don’t determine how your property is distributed. The court will decide who will be the guardian of your children. Your pets may not get the care that they deserve or that you wish for them. It’s a more expensive proceeding if there is no will. You may not get the funeral that you wanted. Remember: The law provides four years to probate a will. After four years, it is costly and timely to do so. Handling of Your Executed Estate Documents Copies: Except for your will, it is always a good idea to have several copies of these documents and keep them at various locations. This ensures that those persons who are helping you will have easy access to the documents they will need, if your health deteriorates. Please note: If you are making additional copies of these documents, please do not unstable the original. Instead, use a copy to make additional copies. Medical power of attorney: Please give a copy of this document to your physician to be included in your medical records. If you are an outpatient at […]
Read more