If you have put work into creating an estate plan, then you should be commended for having done so. Many of us, even people who work in the field of estate planning, do not take the time to plan for our future the way that we should. If we are being blunt with ourselves, it is more accurate to say that we are planning for the futures of other people since an estate plan only becomes relevant after you pass away. This is the stark reality that we need to come to grips with: the steps you take to protect and plan for how your property will be treated in an estate plan will not impact you, but it could have a profound impact on your family, friends, and potential beneficiaries.
One of the elements of estate planning that you need to be mindful of is the changing direction that your life can and likely will take over many years. If you have an estate plan that was created five years ago you owe it to yourself and those around you to review the document to determine whether your will, trust, or both are still accurate and reflect your wishes and the circumstances that you are basing that will on. It is not altogether impossible to consider that the beneficiaries of the will are no longer living, and the property contained in the will is out of date, as well. For this reason, you need to move towards updating your estate plan when life happens- for better or worse.
As an adult, you have the right to make decisions for yourself in specific areas of your life. For instance, being able to make healthcare-related decisions for yourself is one of the most important rights that you can have as an adult. We take for granted having the wherewithal to consider that the decisions we make regarding our health can be made without ever having had to talk to another person. Certainly, there are times when you may want to ask another person, your spouse for example, about their perspective when it comes to your health or a specific decision regarding healthcare. However, there are other times when having complete control over your own healthcare decisions is what you need. In those scenarios, you being able to talk to a doctor, weigh your options and make a decision is crucial.
If you become incapacitated, you would want to be able to have a power of attorney that allows a person that you trust to make decisions for you in a range of capacities. Healthcare is probably foremost among those capacities but so would be decision-making regarding business or legal matters, as well. Here we see that people that do not have the wherewithal to make these sorts of important decisions for themselves would be in a tough position were it not for the power of attorney that they had drafted. You can consider your options when it comes to developing a power of attorney for yourself and what sort of power you would like to designate for the person who is named as your agent in the power of attorney.
This becomes even more crucial after you have children and have built up a sizeable estate. The stakes of estate planning have been raised in that case. Being able to decide what happens to your property is important. You have worked hard to build up an estate of some size and now can determine where it goes and for what purposes it can serve when you have passed on. To be in this position is one of great power but also a tremendous responsibility. You likely want to know that the decisions that you are making are in the best interests of those around you but also are fair to you as the person who is creating the estate planning document.
However, the most important people in your life are your children and the importance of drafting estate planning documents that are thorough and protective of your kids is sure to be your number one priority. When you are the parent of minor children then ensuring that they will be cared for appropriately should you pass away before they reach adulthood is of the utmost importance? Once your child becomes an adult then they can care for themselves and handle their affairs. However, the added factor that you need to pay close attention to is how the property that you own will be divided and distributed for the benefit of your children if you pass away before they are adults. You should have the responsibility to do this for your children rather than pass the responsibility on to the State of Texas.
Be intentional, have a plan
Not being intentional about your estate planning goals means that you are less likely to have clear objectives in mind. How can you go into something as complex as estate planning with goals and objectives? Doing this will put you in a situation where you can look at the big picture and then plan for those situations where you will need to take into consideration the small steps necessary to build an estate plan that accounts for all of your needs whether that be as a single adult, married adult or parent. As your life changes so will your goals. Re-thinking the plan that you will use to accomplish those goals is wise considering how much you have a stake both in terms of things and people to care for.
What is your "why?" This is a pertinent question for people in your position to ask themselves. What is it that makes you get out of bed and go through the effort of working and in this case planning for an end-of-life situation? Being able to identify your chief motivators will go a long way toward helping you work through the estate planning steps successfully. Why do you even want to go through this process? Many people ignore it until it is too late. Why do you want to be different than them? You can think about what is most important to you and who you want to take care of with your estate planning. While most people consider their ”why” to be a family member(s) that is not necessarily the case with everyone. You may have completely different reasons why you are pursuing an estate plan.
What can happen when you get married?
Have you and your fiancé had conversations about money and finances? Differences of opinion regarding finances and how to handle them as a team is leading causes of divorce. Premarital counseling will focus on this subject more than you would think. I have even heard of people learning how to build a household budget with their spouse to learn how to resolve conflict and problem-solve through difficult circumstances. Why build a budget? It brings together different elements in terms of having a serious discussion about a topic that you may not agree with your spouse on, learning how to resolve conflict amicably, seeing their position, and ultimately arriving at a mutually agreeable outcome. While you may see a budget as something constraining you, what a budget also does is permit you to spend because you will know how your money is being spent. You tell your money where to go.
Have you ever considered having a prenuptial agreement drafted between you and your spouse-to-be? If you are not married yet then it may sound strange to plan out a document that is only relevant if you and your fiancé ever get divorced. However, this is a key method for you to be able to move towards a coherent plan for your finances as well. Keep in mind that a prenuptial agreement can cover only financial matters. Essentially, what the document does is say something along the lines of if you and I ever get divorced here is how the property is going to be split. You can agree to terms with your spouse on alimony as well as how property will be classified- either as community or separate. You can even decide to categorize property in a way that doesn't exactly align with how the Texas Family Code says property needs to be classified based on a strict interpretation of the rules.
On a relational level, one of the great things about a premarital or marital property agreement is that it allows you and your spouse or fiancé to negotiate with one another while you are still on good terms. When you negotiate in a divorce you are necessarily negotiating with a person that is having some significant differences of opinion with you. This means that you can count on there being some trying times during the negotiation of a divorce decree. However, the negotiation of a prenuptial agreement tends to be more laid back and less in the way of acrimony. After all, both of you are entering into these negotiations voluntarily. You both agreed that the premarital agreement was in the best interests of everyone involved or else you wouldn't have made yourself available for the negotiation.
Hire an attorney if you want to make it well-known that you are taking these negotiations seriously. Even though you and your spouse are headed towards marriage or are already married that doesn't mean that the two of you necessarily see eye to eye on every subject under the sun. That is why if you each have an attorney you can make it difficult for the other person to try to argue later on that the negotiation was done under duress or without full knowledge or consent of you or your spouse. Hiring an attorney, negotiating far enough out from your wedding, and putting the agreement into clear and specific writing are two important ways to increase the chances that your agreement hold up under the scrutiny of a family court judge if you all do end up getting married.
You can prepare for the negotiation of a premarital agreement in a few different ways. The first will need to be a plan for the two of you to talk through the issues in your relationship and to determine if a premarital property agreement is even something that the two of you can consider. It is not for everyone. Some people have a relationship that is not suited for these kinds of discussions. You know your fiancé better than anyone. If he will not be receptive to your asking questions like this, then it may be a non-starter for you all. On the other hand, if you have a need to and a desire to walk through a prenuptial agreement with your fiancé then you should do so. It is much better to have discussions like this with your fiancé when you all are on good terms rather than having to do so while you are on bad terms and cannot agree on much of anything- not the least of which are issues having to do with your finances and who is going to wind up with your property after you pass away.
What to do in a situation where you are starting a family
From experience, I can tell you that it is an honor and a privilege to be able to parent children. These kids have no one else in the world to turn to whose primary responsibility is to care for them. As a parent, you know what I am talking about when it comes to doing what is best for your children- no matter how you may feel about any other person in your life. You want to do what is best for your child even if means sucking up some pride and sending money to your ex-spouse in the form of child support. You just need to keep reminding yourself that the money that is being sent to your ex-spouse is for your children and not them. This can make the pain of sending child support a small bit easier to take.
Otherwise, you need to understand that you have a legal and ethical obligation to care for your children while they are under the age of 18. Your failure to do so can find you landing in hot water. Here are some thoughts to close out today’s blog post on how to consider estate planning when you are starting a family. To say that you have a lot of thoughts on your mind regarding your new family at this time in your life may be an understatement. It is normal to be concerned about everything from your immediate financial picture to your relationship with your spouse. However, there are some considerations that you need to make when it comes to your long-term estate planning needs. For instance, have you considered that to care for your children you can take matters into your own hands and plan for that right now?
Additionally, the State of Texas will determine what happens with your children when you and your spouse pass away simultaneously. It is extremely common for parents of minor children to specify in their wills what should happen with their children in the event they pass away before the child turns 18. You can specify in a testamentary trust how money can be handled for the benefit of the children. Additionally, you can list who you would like to care for your children in a situation like that. Remember- if you don't do it then the state of Texas will make a plan for your children.
Do not assume that just because you are young or do not have much in the way of assets at this time you do not need to engage in estate planning. This is a mistake that many people make. Your family can stand to benefit from proper estate planning. Making decisions about what assets should go towards the support of your children and answering basic guardianship-type questions are what estate planning and help figure out for the people closest to your children were you to pass away while they were still under the age of 18.
This is not a theoretical discussion. If you are a parent, then you have an obligation to your children to consider what is in their best interests and then to make decisions that are keyed on this. Estate planning may seem like a far-off goal for a far-off event but the reality is that none of us know what is around the corner. Consider the importance of knocking out this important issue before the end of the year and you can enter into 2023 knowing that you have done something great for your family.
Questions about the material contained in today’s blog post? Contact the Law Office of Bryan Fagan
If you have any questions about the material contained in today's blog post, please do not hesitate to contact the Law Office of Bryan Fagan. Our licensed estate planning attorneys offer free-of-charge consultations six days a week in person, over the phone, and via video. These consultations are a convenient way for you to assess your estate planning needs and move forward to taking the steps necessary to address those needs.