Having an estate plan is not only something that you should do for yourself and those around you, but it should be something that you aim to update regularly. Having an estate plan is necessary. That is where I would like to start with you all in today's blog post. Having an estate plan is a must for any person over the age of 18. If you are an adult, then you need to have an estate plan. Purposeful planning is key to this discussion. Think through your situation and where you anticipate being in a few years. That is what estate planning is all about.
Of course, there are a handful of caveats that apply to this. For one, nobody knows when the moment in time will take place when you are set to pass away. Most people think about passing away as an event that will almost surely take place in old age. Meaning that unless you are already of advanced age, you will have some time before you need to plan for your future and that of your family. This sounds good in theory and statistically, you may be right about the time that you have available to you for estate planning purposes.
On the other hand, nobody knows exactly the circumstances that you will need to face in your life and what the future has in store for you. We would like to think that we are going to have an unlimited amount of time on our hands as far as estate planning and the other important things in life. However, I’m sure we all know at least one person who passed away earlier than we would have ever expected. Whether that person was a close relative or someone we barely knew, their passing could have and should be a lesson to us about the importance of taking care of matters when we can. Tomorrow is not promised, so take advantage of the time on our hands to care for those around us.
What is estate planning?
With all of that said, what is estate planning? Estate planning is when you make a plan and think ahead toward the end of your life. We have already established that the end of your life could come at any moment. I realize that this is not the most pleasant thought in the world, but it is the absolute truth. Once you understand this and take seriously the responsibility that you have on your hands as far as estate planning is concerned because we don’t know when the end of our lives will come, this is when we will be able to plan and stick to it. What are you going to do about your estate planning situation and what do you need to do to work up the gumption to build a plan that suits you and your family?
Estate planning can come in different shapes and sizes depending on who you are and what your circumstances are. Estate planning is not something for certain people. Rather, estate planning is something that we should all strive to take part in as adults. It does not matter if you are rich, poor, or in the middle. It does not matter what your political beliefs are nor how much property you own. All that matters is that if you are over the age of 18 you should engage in the estate planning of some kind. This is not for you, remember. This is for the people in your life that stand to benefit from your having engaged in proper estate planning.
Estate planning can take on different shapes and sizes depending on your needs. A will or a trust is the most common result of estate planning for most people. A will names an executor and then gives that person authority to carry out your wishes when it comes to paying creditors money owed to them and most importantly distributing property to whomever you name as a beneficiary. Property can only be distributed, however, once all debts are paid. So, it is incumbent on the executor to be able to notify any creditors and then allow them to make a claim on your estate to be paid a portion of the property that will be made available.
The other type of estate planning vehicle that you may choose to utilize is a trust. A trust can be arranged with a trustee overseeing and administering the property to be included in the trust. When it comes to naming a trustee you should consider someone who is responsible, who has good judgment, and a person who can follow the law and the terms of the trust. A trust can allow you to not have to pay taxes on certain items in the trust. Additionally, you may be able to avoid having your estate go through probate due to the protections afforded by a trust.
Once you determine what vehicle is best for you to use when it comes to estate planning you can be in the process of actually planning the steps that you are going to take in your estate planning involvement. I think most people end up choosing a will as their main method of estate planning, but you may choose to go the trust route due to its ability to bypass probate and save you all some time and money when it comes time to administer the trust and distribute property at the time of your passing.
If you end up creating a will, this cannot and should not be something where you end up creating the will one time and then never think of it again. Rather, a will should be something that you continually work to refine and come back to especially after major life events occur. Everyone throughout their life will have some events take place that causes them to shift their mindset and change how they were planning on attending to matters regarding your estate.
The power of having a will (or a trust)
In life, options mean that we have power. People think that power means money, influence, prestige, and things of that nature. In some ways, they may be right, but I'm here to argue that options give us power. When we feel helpless or that our backs are against the wall it is us looking for options to take advantage of. When we lack options, we lack power. We lack the feeling that what we decide to do is in our best interests because we chose it from several options that were available to us.
In the world of estate planning, we have plenty of options available to us, fortunately. However, the most likely option that you are going to take advantage of is that of a will. When you are creating an estate plan you need to become comfortable with the idea of setting aside your property in the form of a will and making sure that you have thought through your options when it comes to how you want your property to be distributed upon your passing. There are an endless number of options available to you so you can think through what you want to see happen with your belongings after your passing.
The most direct way to plan for what you will have in store when you pass away is to think about what the law in Texas says will happen to your property upon your passing if you do not have a will. Dying without a will is known as dying intestate. When you die intestate that shifts power away from you and towards the State of Texas, whose law will determine how your property will be divided. Your wishes will not be honored as far as how your property will be divided unless you have a will. You could have taken a great deal of time to walk through your wishes as far as property is concerned with your spouse before your passing. However, unless you have a valid will in place those wishes cannot be honored by a court. You still would have died intestate which means that the state of Texas will determine how your property is divided up.
The cash value of the intestacy laws of Texas is that your immediate family stands to be able to inherit the vast majority of your property from you after you pass away. Your spouse and your children will be the ones who receive all your property. Anyone else that you were close to or that you wanted to receive your property will not be able to. A probate court judge will apply the law directly in your situation and you will not be able to speak up for yourself because you will no longer be with us. All that can apply is the laws of Texas as interpreted by a judge who did not know you, your family, or your circumstances. Remember what we said about options a few moments ago? Your options are being taken away by things like this.
Rather than give a judge all the decision-making power in your case, please consider retaining all the options that you can and creating a will while you still can. This is not something that will take multiple days to complete. The planning process should be deliberate, but it does not need to be something that you need to spend an inordinate amount of time on. Be considerate of your situation and what you can do to improve the lives and circumstances of others after you pass away. It does not have to be that you think only of your family in a situation like this. Rather, having a will allows you to see to it that your options for planning your estate can extend out to people who are not in your immediate family.
Friends, charities, your church, and things of this nature are what I have in mind when it comes to being able to extend your generosity beyond your immediate family. You can consider the needs of the people and things that mean the most to you and extend your generosity toward those groups of people. You can be deliberate and generous by having a will in ways that cannot necessarily be when you do not have a will. If you have someone else in your life outside your immediate family that you would like to see receive property from you after your passing, then that is ok. The validity of a will notwithstanding, if your will lists people outside your family as who would receive property upon your passing then that is perfectly legal.
The trouble with not having a will at all is that the law does not treat your property as having any kind of predetermined outcome as far as who will receive it upon your passing. Family members cannot write a letter to a judge to say that they had always talked about your nephew receiving the grandfather clock or your niece being able to receive some money to take care of her children since she is a single mom. Rather, the judge will make decisions based on the Texas Estates Code and that will be that. You will not be able to exert the control that you otherwise would have had you drafted a completed will before your passing.
Other than keeping up with the changes in your life and considering them when you pass, having a will is really where you need to start. We can't have a good discussion about updating your estate plan when you don't have an estate plan, to begin with. Consider the information in this blog post, your specific circumstances as well as the goals that you have for your property when coming up with a plan. Finally, you can and should consider that you do not have an unlimited amount of time on your hands when it comes to planning in these areas. All these factors should motivate you to come up with an estate plan if you do not have one already. Once you check this item off your list then you can be in a position where you can focus on updating your estate plan when it comes time to do so.
Why should you update your estate plan?
An estate plan should be something that you review regularly. At the beginning or end of every year, you should look at your will, trust, or other estate planning vehicle and determine if the plan in place still reflects your circumstances and desires as far as dividing property is concerned. If it does, then you can leave it alone and move on to other matters. However, if you will need to be updated then you should attend to that as quickly as you attended to the creation of the will in the first place. Remember- you don't have an unlimited amount of time to update the will.
First, look at your beneficiaries and make sure that the people who are set to receive your property are going to receive your property after you pass away. Sometimes you will have to experience life changes that make it so you will no longer be in line with the rest of your life. For example, consider that if you go through a divorce then you probably do not want your ex-wife to receive all or most of your property upon your passing. If this is the case with your family, then you should remove him or her from your will and change the beneficiaries. The last thing you want is to have an ex-spouse inherit property from you instead of a family member or your children. This can complicate things even if your ex-spouse would be willing to pass along the property to other members of your family.
There may also be situations that develop in your life where leaving property to a person is a bad idea for their well-being. I have seen people develop addictions or otherwise start to lead lives that are not healthy, to begin with. If your will has a great deal of property being left to a person in this type of situation, then you may be putting that person in a spot where the property that you hoped would be a blessing has turned out to be something of a curse. That person can and probably would use the property to fuel their addiction. Consider this as a warning for you to think hard about each person who stands to receive property under your estate plan. You can update the plan, even if you just hope that it is a temporary update, to make sure that you are not harming people inadvertently due to your generosity.
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 to learn about estate planning in Texas and how the law can impact your life and the lives of those around you.