What are the essentials when it comes to estate planning?
Your estate is comprised of all the assets you own at the time of your death. This means all the financial, physical, real estate, legal, and other items- that you have ownership of at that time. When you engage in estate planning during your life you are working to protect and then distribute the property in anticipation of the end of your life. In a perfect world, your estate plan will be thought out well with careful planning on behalf of those who could benefit the most from your estate planning.
The trust is a tool to create a legacy
For first responders and military members, a trust can be a terrific option to consider when it comes to estate planning. A legal tool that allows a grantor (person who creates the trust) to hold property during their life while providing a trustee with instructions on how to distribute that property after their death, a trust is a tried-and-true method of property ownership and distribution.
What a trust can offer you as an individual is flexibility. You may be in a situation where it makes sense for your estate to pay a person a certain amount of money periodically even during your life. For instance- do you have a child or other relative who could benefit from some property in your estate but you do not want that person to receive the property as a lump sum “payout?” If so, then a trust allows you both the control and flexibility that you may have been missing when it comes to using other methods of estate planning. You can provide specific instructions to the trustee who legally must follow those terms when it comes to distributing property.
A factor that you need to be aware of, however, is that you are transferring ownership of your property when you create a trust. What this means is that you taking property that you previously owned (money, property, investments, real property, etc.) and transferring ownership of them to the trustee of the trust. Therefore, you would not technically own that property any longer. Your son, daughter, cousin, niece, etc. would have a beneficial interest in the property as the beneficiary under the trust. If you wanted to sell property in the trust or perform any other action, you would need to go through the trustee. It can be more cumbersome to do this than to simply sell property that you own so this is a consideration for you as you decide upon your preferred method of estate planning.
Let’s take a hypothetical situation to better illustrate what it means to estate plan using a trust. Suppose that you can put $10,000 of your own money in a trust for the benefit of your nephew, Tom, to help pay for his college expenses. You could create a trust and name Tammy as the trustee of this trust. Tammy would become the legal owner of the $10,000- not you- once the money is placed into the trust. Tammy would have the right to invest the money, write checks as payouts of the money (according to the terms of the trust that you create), and perform other actions in line with the trust. Tammy cannot spend the money on herself or for any purpose not outlined in the trust documents. That $10,000 can only be used for your nephew Tom’s college expenses, in this case.
To be sure, a trust can be an important part of your estate planning as a first responder or military member. What makes a trust so impactful from an estate planning perspective is that they are malleable and flexible. You can create a trust and then utilize the trust in a way that best suits your estate and the people whom you wish to become your beneficiaries. You can use the trust to fund a program to help teach children in the community first aid techniques. Another thought is that you can create a scholarship program for children who qualify academically, and behaviorally and using other criteria which you create.
A trust does not have to last infinitely, either. You can create your trust with the understanding that it would last only ten, twenty, or fifty years. The trust could be used to benefit your family, a single family member, a group of people, or anyone whom you choose. Businesses, charities, churches, and other organizations could be the primary beneficiary. The possibilities are nearly endless when it comes to trust as far as options are concerned with how to utilize one. When creating a trust, making sure that enough money is in the trust to fund your objectives could be the first item that you need to cross off your “to-do” list.
Why a will could work best for your first responder family
Simply put, a will is a legal document that will determine how your property is transferred at the time of your death. Creating a will means that your wishes are going to be honored instead of a probate court judge following state law on transferring property for a deceased person. Make no mistake, although a trust is a useful and effective document in and of itself when it comes to handling estate planning matters, a will is the most basic estate planning document for most individuals. Therefore, you may want to consider they will first and foremost when it comes to creating an estate plan.
When you create a will, know in advance that you can only pass assets that are owned only in your name. You can’t pass assets in a will that you own in combination with another person. Dying without a will in Texas is not a good idea. It’s not that dying in Texas without a will is any worse than dying in another state without a will but as we have just seen, allowing A probate court judge to determine how your property will be divided upon your death gives you no authority or autonomy after you die when it comes to this situation.
For the most part, dying without a will means that your immediate family is subject to receive most of your property. If you are married, your spouse would receive much of your community property, and your spouse and children would divide any separate property owned by you at the time of your passing. This requires a family court judge to look at your situation and apply the laws of Texas to it. This does not necessarily mean that an outcome will be unfair or not desirable. However, it is a much better situation for you to have control over your estate rather than leaving it subject to a judge’s discretion.
You can take into consideration the needs of your family and your circumstances when you have a will. For instance, if you have one child who has a disability and is unable to work then you may have spent the better part of your life caring for that child in a particular way. That could mean providing him or her with an allowance of sorts, paying bills, and generally helping him or her stay on their feet financially. When you die without a will you lose the ability to have any autonomy when it comes to how much of your estate goes to that person. A judge is legally not able to consider the individual needs of your family when it comes to deciding on how your property is divided. Quite the opposite, he or she will apply the laws of Texas when it comes to dying without a will for better or for worse.
On the other hand, if you can have a will in place before you pass away then you can properly account for the needs of your disabled child and create a framework for caring for him or her after you have passed on. Do not discount the importance of this type of arrangement in your estate planning. You need to be able to think about these sorts of scenarios and plan for them while you have time. There is no second chance if you do not account for them by the time you pass away.
You can also think about the autonomy provided to you when drafting a will when it comes to being able to pass along specific items to particular people. For instance, if you have a photograph, heirloom, or other item that you would particularly like to leave to a certain person then doing so via a will is the best way to go about this. Again, there is no telling how a probate court judge would view the situation or apply the law.
Not only will your will create a situation where you can determine where and to whom your properties are distributed after your passing, but you can also address other challenges that are inherent in the estate planning process. For instance, if you have minor children, you can then designate who becomes their guardian if you or your spouse are unable to do so. This is important especially since you have a greater than average risk of harm in the life that you lead in the profession that you are engaged in.
If your will needs to be probated, then that court will review the document and and trust the executor named in your will to not only represent your estate but to distribute property when the time comes. However, bear in mind that any debts that you owe must be paid before the property can be distributed to your beneficiaries. The probate process can take a handful of months to complete and some costs are a part of the process. However, those costs will be paid out of your state and the executor will not be personally responsible for them.
You may have heard about how property can get tied up in the probate process. This means that during the probate process property that otherwise could have been distributed to your beneficiaries cannot be done until the court gives your executor the authority to move ahead with doing so. This may not seem like a big deal but depending upon the circumstances of your family you can change the trajectory of someone’s life. Consider, for a moment, a situation involving a family member who could seriously benefit from the property you are leaving to him or her in your will. Rather than being able to access those funds immediately, he or she would need to wait for the probate process to wrap up before being able to do so. This is a major disadvantage of having to go through probate.
Have you heard enough about how avoiding probate is a good thing when it comes to estate planning? If so, we would recommend that you reach out and contact the estate planning attorneys with the Law Office of Bryan Fagan. When you work with one of our experienced state planning attorneys, you can find yourself better positioned to be able to take on the challenges of creating an estate plan that works best for your family. Without a doubt, all of us find ourselves in unique circumstances when it comes to our family composition, relevant scenarios in the family as well and structuring the property distribution from our estate in a way that works best for our loved ones. An estate planning attorney with the Law Office of Bryan Fagan has the experience to be able to help you test plan your estate and structure your property division in a way that suits you all for the best now and in the future.
What is a power of attorney?
Not only does estate planning involve matters for after you pass away, but also accounts for the possibility of you losing your mental capacity to make decisions for yourself. When this happens, a power of attorney document may be best for you to consider having drafted. When you designate someone as your power of attorney, you provide the legal right to him or her to begin to make decisions and execute them for you. A power of attorney document can either be very broad or very narrowly tailored.
For instance, you could designate someone to have medical power of attorney over you to be able to make decisions on your behalf when it comes to your medical treatment and health. Or, you could create a very narrowly tailored power of attorney document that allows for a person to close on a piece of real estate if you were going to be out of town. That way the closing date for your property would not have to be changed. Therefore, you should consider your circumstances before deciding to create a specific kind of power of attorney.
Bear in mind that there are two different sorts of power of attorney documents that you can create in Texas. What is known as a durable power of attorney is a document where the power of attorney creates this power now rather than at some point in the future. As soon as the document is signed the power of attorney goes into place and will last until you either revoke that power or pass away. On the other hand, a springing power of attorney would provide the other person with the authority to make decisions on your behalf only if you become incapacitated in the future. Working with an experienced estate planning attorney with the Law Office of Bryan Fagan is a great way for you to learn what those conditions are in Texas as far as determining incapacity.
The importance of working with an experienced estate planning attorney Currently, we are all looking for opportunities to save money and time. With budgets tight, it may seem like any additional costs that we take on in our lives should be cut out to save our budgets. In many ways and many circumstances, this is a worthwhile goal. However, when it comes to planning your estate, this is not necessarily an area of your life that you should consider first and foremost from your budget perspective. Rather, you should consider the needs of your family as well as what sort of help you will need when it comes to this situation.
Saving money on not working with an attorney during this stage of your life could harm you and your family. Ultimately, it is your legacy that is at stake when it comes to planning your will or building a trust. As a result, you should speak with an experienced estate planning attorney with the Law Office of Bryan Fagan before deciding about whether to work with an attorney when planning your estate.
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 how your family’s circumstances may be impacted by the filing of a probate case.