When planning for the future of your estate and your assets, there can be many considerations that you have to factor into your thinking to feel like you are truly prepared and have performed your due diligence. Consider that it is true that for many people the hard work that they have performed over many years can go to waste because of poor planning and an inability to consider the possible ramifications of their poor planning. Not wanting to leave their family in a position where they are not able to receive the fruits of their labor drives many people into a position where it becomes essential for them to dig deep and find out what they can do to create an estate plan for themselves and their family's benefit.
However, what I should add to this discussion here is to mention that it does not have to be only your family who benefits from years of labor, good planning, and discipline. Rather, it can be anyone or any entity that you choose which can derive many benefits from your estate planning. For instance, suppose that you do not have any close relatives. You never got married, you don't have any brothers or sisters and your parents are no longer living. You have no extended family that you are aware of, either. This has put you in a position where you have had to think long and hard about what you want to do with your wealth and who should benefit primarily from your estate after you have passed away. While many people default into putting this estate plan in the names of relatives that is not an option for you.
Some would argue that you may as well not have a will in that case. The State of Texas has laws in place that determine where the property should end up if you die without a will. These are known as the laws on intestacy and indicate that a probate court judge should be aware of property primarily to your spouse and children were you to pass away without a will. Because of this, it is the opinion of some people that you may as well not have a will if you want to pass property to your immediate family. May as well just not spend the time and money on drafting a will if the intestacy laws will distribute property to these same people anyways. However, there are certain situations where you may not want your family to receive your property of yours after you pass away. Or, you may not have a family to pass the property on like in the example that we laid out in the prior paragraph. Either way, you should consider that other entities or people can stand to benefit from diligent estate planning.
Two of the most common ways to plan for end-of-life scenarios are to create a will or to simply list a beneficiary in a retirement plan account. A will is a legal document that names an executor- someone who is duty-bound under the law and a specific probate court to follow through and execute the terms contained in the document. A will is the most prevalent and widely used form of estate planning in Texas. While it is a far from exciting experience, drafting a will sets your family up for success in the future if you draft the will correctly and make it known to your family what your wishes are after you pass away. This way your family can focus its time and energy on grieving one another when you pass away.
Until you pass away, the will has no authority to impact any of your property. The executor does not need to do much of anything during this stage of your divorce. Once you do pass away the executor would need to determine whether your estate needs to be probated. This is an important question since if probate is necessary then this can greatly delay the distribution of assets. Many times, probate is necessary if you owe creditors money. In that case, you would see a situation where your estate must pay those creditors first before being able to distribute any property to beneficiaries under the will. If you own a business, for example, then it is probable that you also owe money to someone for something. You should consider your relationship with debt before you pass away to determine the extent to which you are able or willing to pay off loans before you die to better ensure that your beneficiaries can receive the property that you say in your will that person or entity should receive.
Remember- by having a will you do not have to list your closest family members as your beneficiaries. As opposed to the example that we listed above, you may be in a situation where you do have a close family but that family is not a part of your life. Families can grow apart and that may be the reality for your family. There are many reasons for this. Not having strong relationships growing up with your brothers and sisters may make it so that it becomes easier for you to think elsewhere when it comes to leaving the property after you pass away. While you may not have anything against your siblings it could also be the case where you simply believe that there are other people or entities out there who could stand to benefit more from your assets than your immediate family.
Another reason why you may want to not list your family as a potential beneficiary under your will is due to your family having displayed an inability to care for themselves and money. For example, do you have family members who have addictions? While it is true that addictions are usually multi-factorial as far as where they come from and what they mean for the person with the addiction it is true that as of that moment in time a person who has an addiction to some substance would not make a great person be the recipient of a lot of money under your will. The money or assets that you give to him or her under your will could be the straw that broke the camel's back. That addiction that had your relative teetering on the brink of completely losing track of themselves and their lives could be pushed over the edge because of being a beneficiary under the will.
For that reason, listing other people, businesses, or not-for-profit organizations as a beneficiary under your will may be something that appeals to you a great deal. If you have any questions or would like to see some potential plans for you and your estate, then you should reach out to the Law Office of Bryan Fagan and contact us today. We offer free-of-charge consultations six days a week in person, over the phone, and via video. We understand that every person is different, and we want you to know that we will take the time to sit with you, listen to your situation, ask questions, listen patiently and then help you to make decisions that are in line with your objectives and goals.
What is trust and why could one be right for you?
A trust is a legal document that governs your wishes for how and when to transfer assets including personal property and other types of property to beneficiaries, non-profit organizations, and other entities that you choose from and can list within the trust. Trusts are a common example of estate planning and are frequently used in situations where a person such as yourself is willing to turn over some degree of control of the properties or to list themselves as trustee of the trust. The trustee is the person who has the legal authority to distribute property according to the terms of the trust. The trust will contain instructions for how and when to release or distribute funds to other people.
You can create trust when you want to ensure that your assets are being planned for with the benefit of your loved ones, family, friends, and/or beneficiaries in mind. Rather than leaving your property with a financial broker, investment house, or other entity, a trustee must act by the terms and structures of the trust itself. As we just finished talking about you can even select yourself as the trustee for the trust so you can create the terms of the trust and then be the one to execute its terms. We will talk now about how a trust can benefit you specifically in terms of asset protection, legal liability, and tax implications.
Another consideration has to do with who you plan on leaving your estate to after you pass away. For instance, if you have a family member who suffers from a disability or impairment then you know how critical it is for that person to have resources available to him or her that allow them to receive medical care, vocational assistance, and the occasional support for household bills and services. If you are contributing to their well-being now it is probably a concern of yours that you be able to do so even after you are gone. A special needs trust may be exactly what the doctor ordered when it comes to leaving money to him or her without that money pushing the person past certain income limits that would otherwise jeopardize their ability to receive government benefits. When creating a special needs trust it is critical that the person you name as trustee will think about that person's needs and look out for their best interests.
We also see that trusts are effective and helpful if you have children that you would like to provide for and protect. Putting money into a trust on behalf of your children is a tried-and-true method of helping to ensure that money from your estate is maintained over a long period and not something that can be wasted quickly by children who may not be entirely ready to receive large amounts of money. One thing to keep in mind is that you may want all your accounts and plans to list the same beneficiaries as your trust does. There are vehicles like retirement plans and life insurance that allow you to list beneficiaries. In that case, you should keep in mind that the people who are listed as beneficiaries in these accounts may not match up with your trust depending on the timing of their creation in your circumstances. You should verify their beneficiaries and make sure that they match up with your desires and plans.
The creation of trust- how does it fit into estate planning as a whole?
Everyone who engages in estate planning wants to have peace of mind for themselves. This peace of mind extends to the people that you want to benefit because of the estate planning. You will not be around to experience an impact on your estate planning efforts. As a result, you will be focused on what you can do for those around you to extent that you can do so. One piece of information that I think is relevant is that there is only so much you can do to prepare for a future that you cannot see with one hundred percent accuracy. Therefore, you should not try to be perfect with what you do. Simply prepare for what you can and do the best that you can do with the information available to you at the time you are setting up an estate plan. While you cannot guarantee that you will have the ability to update or change your estate plan in the future, that is always an option, as well.
If you are not concerned about estate planning and think that this is something for only the (insert category of people that you do not consider yourself to be a part of) you need to rethink that idea. What I hear from people with frequency is that estate planning is for older people who have a lot of money. The thought here is that older people are closer (statistically speaking) to passing away than younger people and wealthier people have more to lose when it comes to not planning well financially. All that hard work that the person put into their career could be down the tubes if he or she does not begin to take seriously the need to plan for end-of-life events including those related to wills and trusts. All of this is true, I should add, for people who do not have a great amount of wealth and are younger than a person in their golden years. If that describes you then I hope you continue reading today's blog post to hear more about how estate planning is important for people of all ages.
Your life is unlike anyone else's – for better or worse. When we are kids, we sometimes think of the life that we want to lead in the future. The job that we will have. The school or college that we will have attended. The car we drive, and the house we live in- all of these are thoughts and goals that are reasonable to have. However, as we get older one thing begins to take root in our minds- that these thoughts we had when we were kids may not match up with what our life turned out as. This can be true for many reasons, not the least of which is that the opportunities that we encounter in life are not the same as those around us. Sometimes we will have better opportunities than others. The only thing that we can say is that there is nobody out there who is exactly like you or exactly like me. The point is- we need to consider how specific and unique our estate planning must be. We can't just copy and paste our best friend's estate plan into our own lives.
It is said that nobility is when you plant a tree a shade that you will never be able to enjoy. While your hard work and the wealth that has grown from it may not be something that you can never enjoy, the majority of what you have grown over time is something that you will hopefully never be able to spend through in your lifetime. As a result, all that hard work is something that you have built for others. Creating an estate plan that protects and grows the fruits of your labor for the next generation is certainly noble.
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 great way for you to learn more about the world of Texas estate planning as well as about how your family may be impacted by the filing of a probate case.