The statement might seem difficult for many of us to understand. However, parents should know that after spending thousands of dollars during their divorce to get custody of the children, the ex-spouse can get back the children and all the assets if that parent dies or becomes incapacitated!
We had a client “Paul” who just went through a messy divorce with his ex-wife. At the end of the divorce, he got primary custody of his 3 children, the family house, and most of his retirement. His children were finally safe and in his care. He started to rebuild his life with his children. However, less than six months after the divorce was finalized, Paul got seriously ill and died. His ex-wife got full custody of the children, moved back into the family home, and got access to all of his assets, including his retirement. His children returned to the same position that he had fought so hard to free them from. Paul did not have a will or any kind of estate plan. He did not make provisions for his children in case he was not there to protect them. His worst fear was realized.
Many people believe that estate planning this for the rich or elderly. Many people think that they’re young and healthy and so they have time. Worst yet, they may have never even considered the need for an estate plan at all. However, as Paul now knows, estate planning is for anyone who has anything to lose.
What exactly is Estate Planning?
Estate Planning is the plan that you make to protect your property, things, and loved ones. It is planning for yourself, your children, parents, grandparents, special needs siblings, and even your pet! It can be quite simple. It is just thinking about the possible bad things that could happen to you and your family and then making plans in case those things happen. This may seem very morbid. However, there is at least one thing that we all have in common—we will all die. Estate Planning is done while alive when the person is still competent. It is the way to manage property in case a person becomes incompetent. It then allows for the eventual disposal of that person's property after death. With that in mind, you can see that Estate Planning is for everyone.
So, what could Paul have done to better protect his family? There are 4 tools that he could have used to secure his and his children’s financial future. Paul could have used a:
3. Medical Power of Attorney with a Healthcare Directive, and
4. Financial Power of Attorney.
A Will is one of the most common documents used in Estate Planning. Using a Will, a person can choose who he/she would like to inherit that person’s property. Within the Will, that person can appoint a guardian for minor children and even specify his/her funeral arrangements. The downside of a Will is that it must go through probate for the property to be transferred to the new owners. You usually must hire an attorney, and probate can significantly delay your loved ones getting access to the property or assets. In addition, this can be very expensive. Therefore, a Will is not usually the most efficient way to give property to your loved ones. In addition, if the proper formalities are not perfectly followed, the Will may be no good and that person would have died intestate. This means that the state of Texas would decide who would get the property and assets. In Paul’s situation, his ex-wife would get access to all of the assets, including custody of his children.
A trust is often the best tool to use if you are trying to avoid probate. Probate is the process that the court uses to change the ownership of a deceased person’s property and assets. However, a trust does not need to be probated because the trust itself owns the property for the benefit of another person(s) or thing. A trust is a legally created entity that can hold and own property. This trust is then managed by a trustee for the benefit of another person, the beneficiary. The beneficiary can be the creator of the trust, the trustor, or a third party. The trust would then hold the property or assets for the benefit of the trust store or whoever the Trustor chooses. There are many types of trusts. A trust can also be created while you are alive, or it can be created testamentary or through your Last Will and Testament. Some common types of trust are the revocable family trust, special needs trust, charitable trust, and pet trust. However, the type of trust that is needed depends on the creator of that trust and the reason that the trust is being created.
The advantage of a trust is that it avoids probate since the properties are held by the trust. Therefore, the maker of the trust can just designate who will be the successor beneficiary of the trust when the initial beneficiary dies. Therefore, after the trustor who is usually the initial trustee passes away or becomes incapacitated, the successor trustee would manage the assets and dispose of the property or assets in the trust according to the instructions in the trust document. Therefore, if Paul had a trust, he could have chosen who he wanted to manage. His children returned to the same position that he had fought so hard to free them from. Paul did not have a will or any kind of estate plan. He did not make provisions for his children in case he was not there to protect them. His worst fear
Medical Power of Attorney with a Healthcare Directive
A Medical Power of Attorney with a Healthcare Directive is a way that an individual to choose, and plan for his/her medical wishes. Through a medical power of attorney, an individual can choose the kind of healthcare that person would like to receive when he/she is incapacitated and unable to make a competent decision for himself or herself. In many situations, a healthcare directive allows a person to decide how they would like to pass away and allows that person to die with dignity.
Healthcare directives are often known as living wills because they often contain end-of-life directions. Healthcare directives are usually a part of a medical power of attorney. It gives family members, friends, or whoever the principal chooses, the right to make medical decisions for that person according to the instructions in the medical power of attorney healthcare directive.
In Paul’s situation, he was divorced, and his children were minors. Therefore, he did not have anyone to make medical decisions for him. Therefore, if he becomes incapacitated or is otherwise unable to make medical decisions for himself, no one would be there to help him. Therefore, Paul needed a medical power of attorney, a trusted third party, to act as his agent to assist his physicians and to ensure that Paul’s medical wishes are respected and followed.
Financial Power of Attorney
Financial power of attorney usually comes in two forms. It may be a durable power of attorney or statutory power of attorney. However, regardless of the form, these two documents appoint a third party, called an agent, to handle that person’s financial affairs for that person’s benefit. The person giving the power of attorney is called the principal. The power of attorney can become effective immediately while the principal is alive and well or when the principal is incapacitated. A power of attorney is revocable, meaning that the principal can revoke and cancel or terminate the power of attorney at any time. Further, the power of attorney ends naturally and automatically when the principal dies.
The power of attorney agent can be any trusted person that the principal chooses. This position is very powerful and can be easily abused. Therefore, great care must be taken when choosing who your power of attorney should be. A principal should not be anyone who owes the principal money or to who the principal owes money since the tendency to steal or benefit the agent at the expense of the principal will be too great. In addition, the agent should be someone who has a history of honesty and truthfulness.
In Paul’s situation, since he is divorced and his children are minors, he needs a hoes third party to be his agent who will protect his and his children’s interests and who understands that he would not want his ex-wife controlling his assets. I would not advise that Paul’s financial power of attorney be effective immediately since he was young and otherwise healthy. However, he needed a power of attorney that would become effective when he is incapacitated. However, this power of attorney would end when he passed away.
These a just some of the planning measures that Paul could have used. However, no one plan is for everyone. Each person is an individual and an individual plan is needed that specifically addresses each person’s unique circumstances. Therefore, you should always consult an estate planning attorney to draft your specific estate plan that addresses your needs.
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Law Office of Bryan Fagan, PLLC | Houston, Texas Divorce Lawyers
The Law Office of Bryan Fagan, PLLC routinely handles matters that affect children and families. If you have questions regarding divorce, it's important to speak with one of our Houston, TX Divorce Lawyers right away to protect your rights.
A divorce lawyer in Spring TX is skilled at listening to your goals during this trying process and developing a strategy to meet those goals. Contact the Law Office of Bryan Fagan, PLLC by calling (281) 810-9760 or submit your contact information in our online form. The Law Office of Bryan Fagan, PLLC handles Divorce cases in Spring, Texas, Cypress, Spring, Klein, Humble, Kingwood, Tomball, The Woodlands, Houston, the FM 1960 area, or surrounding areas, including Harris County, Montgomery County, Liberty County, Chambers County, Galveston County, Brazoria County, Fort Bend County, and Waller County.