Involving Your Entire Family in Planning

extended-familyAs our families grow, the change can be exciting but it should also be a reminder to keep plans updated. As we age, whether we are grandparents, parents, aunts, uncles or parents with small children, we should create or update our estate plans and long-term care plans.

Many people are resistant to having a conversation about estate planning or long term care plans but it’s important to talk to your loved ones so they will know what to do when the time comes. Follow the five steps below to help avoid any conflicts and to make the conversation go smoothly.

Step 1

Set a time. Sometimes the most difficult part is scheduling the family meeting. If everyone lives in different cities, find an event or occasion where you will all be together and schedule the time then.

Step 2

Set an agenda—even if it’s informal. The conversation can change directions so it’s a good idea to try and follow an outline to keep the discussion on topic. It can be helpful if one person prepares notes so everyone knows what has already been discussed and what is still to come.

Step 3

Not everyone will agree or might be surprised that a family member has expectations for them so be prepared for issues that may arise. Once the plan has been laid out and modified if necessary, then go around the table and ask each person for their verbal commitment to support the plan.

Step 4

Your plan will most likely require some interim steps to prepare for future events.  Be sure you create action steps, a timeline for completion and assign them to specific persons to complete.

Step 5

It could be years before this plan goes into effect so make sure and put it in writing and provide everyone with a copy of it.  As action steps are completed or things change be sure the plan is modified accordingly and again distributed to everyone.  If necessary, have another family meeting.  Be sure all relevant advisors such as attorneys, insurance agents and financial planners are consulted to update the plan accordingly.

No one enjoys thinking about long-term care and our declining years but it’s important that we all have a plan in place.


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Why Do People Want to Avoid Probate?

courthouse-w-columnsWhen a loved one passes away, people react differently.  This is obvious from attending any funeral; some are stoic, some are very emotional, and many are in between.  But beyond the emotional and grieving process, people also react differently addressing probate.

First, many people have no idea what probate really is.  Some think because the decedent had a will, the probate process is simply the appointed executor distributing whatever assets they can find.  Others know it has something to do with the legal system, but want to avoid it at any cost because of the mystical, mythical horror stories they have heard alluded to.

In reality, probate is an organized legal process for gathering the assets owned by the decedent, paying debts, determining beneficiaries or heirs, and distributing the gathered property in accordance with the decedent’s will or state law.  Because of the nature of the decedent’s estate, some family members don’t need to utilize probate.  But many others are well advised to do so even if it doesn’t appear necessary immediately.

Even with all this knowledge, some people still want to avoid probate for various reasons.  Privacy is a concern for some.  They are afraid all their personal information will be on display to every nefarious character.  Generally, detailed personal information is not included in probate filings.  Even the inventory, which lists property within the probate estate (which often is only a small fraction of a decedent’s entire estate), often doesn’t need to be filed in Texas.

Others are afraid that filing probate will result in a will contest or the filing of claims by creditors (legitimate or otherwise).  This concern can often be avoided by an individual using probate avoidance techniques in their estate planning.  But sometimes those techniques result in complexity and pitfalls that are more serious than the risk of a will contest.

So, there are a few conclusions one can reach from these concerns.  First, if you are concerned about probate, the time to address it is before the individual in question passes away.  Most issues people fear about probate can be minimized through proper estate planning.

Once the individual passes away, with or without a will, we must deal with the facts as they stand.  To properly accomplish the wishes of the decedent, it may be necessary to use the probate process.  The wisest course is to engage an attorney focusing their practice on handling probate matters.  They can advise on whether problems are likely to arise, what alternatives exist to minimize the problems, and whether any other alternatives exist to pass title to the property to rightful beneficiaries and heirs.  The wrong course is to simply do nothing.  You may discover too late that what might have easily been resolved is now a much larger or impossible problem.

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Uncle Harry Was Single When He Died Without a Will

In my last post, we discussed what happens to a person’s estate when they die without a will.  That post focused on the decedent being a married person at the time of death.  This post will consider what happens to the estate of a single person.single-parent

The easiest situation to address is when the single person did not have any children.  In that case, the state looks to parents, siblings or other relatives on either side of the family to find a qualifying heir. So, if parents survive, they inherit.  The process continues until heirs living at the time of decedent’s death can be located.

If decedent died with children (or other descendants), they gain priority over the heirs listed above.  If someone dies and leaves behind no surviving heir, the estate would go to the State of Texas.

If all a decedent’s heirs are of the same level of relationship (for example, all are cousins or all are grandchildren), they will divide the estate in equal shares.  However, if the heirs have different levels of relationship (for example, if some of decedent’s children predecease, leaving children or grandchildren of their own), then the younger generations would be entitled to only the share the older generation would have received had they survived.

As you can tell by this description, the state has very specific laws defining who inherits in various circumstances.  Even the foregoing description is fairly generalized.  In some circumstances, the laws can be ­­­­­­­­complex and not what one might expect.

For example, stepchildren are treated quite differently from adopted children.  The decedent may have served as parent to a stepchild for many years and may have dearly loved the stepchild.  However, without a will a stepchild is unlikely to inherit from the decedent’s estate.

The foregoing is not to say that it is always difficult to deal with the estates of people who die without a will.  But generally, it is more complex than administering the estate of a person who has a will.  The level of difficulty depends in large part on how large the family is, how easily family members can be identified and located, and how amenable all family members are to accept the distribution provided under the laws of Texas or to agree to a different distribution.

Bottom line – you are better off having a will to ensure your objectives are fulfilled.  Regardless of how small you think your estate is, how simple your desired distribution, or how agreeable your heirs, you should speak with an estate planning attorney to get a professional review of your plans.

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What Happens to My Estate If I Die Without a Will?

If you die without a Will, the result is largely controlled by the state where you resided at the time of your death.  However, if you own real property, the state in which that real property is located will control its disposition.

I should also note that most personal property has no title document associated with it, so it is important that family members secure the decedent’s personal property as soon as they learn of the death.  Otherwise, valuable personal property may disappear before the rightful owner finds it.

It is also important to note that even though Uncle Harry told you and the entire family many times that his valuable coin collection was to be yours when he dies, if Uncle Harry was a resident of Texas and died without a valid Will, his property will be distributed to his heirs as determined by Texas law.  That law doesn’t take into account Uncle Harry’s wishes.  Depending on Uncle Harry’s situation, you may very well not receive that coin collection … or anything else from Uncle Harry’s estate.

So, without that Will, the State of Texas handles the distribution of Uncle Harry’s estate in a variety of ways.

old-coupleThe Deceased is Married

You would think that if you are married and die without a Will, that your spouse inherits your entire estate. That may not always be the case. The division of property at that point is dependent on whether it is community  or separate property.

Community property refers to most property owned by married people and acquired during marriage.  If you are survived by a spouse and children, your surviving spouse in most cases will receive the community property if all your children are also of your surviving spouse.  But if you have children from someone other than your surviving spouse, your children will receive your half of the community property while your spouse will only retain their own half.

Separate property is typically property acquired before marriage. It can also be property acquired during marriage by gift or inheritance. If your property is characterized as separate and you have a surviving spouse and children, your spouse could receive 1/3 of your separate property and a life estate. A life estate is an estate limited in duration by life. In other words, they would have the right to use your separate property until his or her own death. If you are survived by parents and siblings, they can receive half of your half of your separate property, while the other half could go to your spouse. However, if you have no children or other descendants, your surviving spouse is usually entitled to all your separate property.

In a future post I’ll look at the situation if Uncle Harry is single when he dies, and some special circumstances.

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