Avoiding A Contest

court-determinationOftentimes when I meet with clients desiring to do estate planning, little thought is given by the client to how smoothly the processing of their estate will go after they are gone.  So here are a few things to keep in mind as you begin the estate planning process.


First, you’ll need to take some common sense measures.

Confirming Your State of Mind.  The most common argument a family member will make when disputing a will or trust is that the writer, or testator, was not of sound mind. Based upon your age or medical condition, consider having your doctor and a psychologist evaluate your physical and mental health just before finalizing your will, so that you can avoid this allegation.

Separate Legal Counsel.  If your family has business affairs or complex legal arrangements, seek your own legal counsel, separate from other family members to protect your interests and the interests of those you wish to give gifts to.

Corporate Fiduciary.  Consider hiring a corporate entity to serve as executor or trustee instead of family members. Corporate executors or trustees are less likely to be seen as abusing their fiduciary powers; whereas a stepparent or favored child may unwittingly cause suspicion or jealousy among your other heirs.  Corporate fiduciaries typically charge a fee, but this can be a small price to pay to avoid disharmony and potential litigation.

Distribution.  Try not to play favorites. The general rule here is to ensure that all of your children and/or your spouse are treated equally. There’s not much room for argument when three children each get 1/3 of the house, business, or other property. If you distribute some of your property while you are still living, have legal documentation reflecting what you gave or sold to your heirs and make it clear whether those are to be offset against any bequests in your will or trust.

Disinheritance.  Make your intentions clear by defining which people will not inherit property, or which will get smaller shares of your estate. Avoid the whys and wherefores – these only encourage bad feelings and potential contests.  I have found that it also helps if you communicate your intentions to those who appear to be receiving less than others while you are living.  Communicating this in a family meeting and on several occasions is ideal, as long as it does not seem to be “rubbing it in.”

Business & Property Contracts.   If you have a business, particularly one that is doing well, you should have a buy-sell agreement prepared that provides for how ownership and management will occur when you die.  This is a critical document that many businesses fail to prepare and often causes the collapse of the business when one of the owners dies.  These documents can also provide how withdrawal of one or more owners will be handled even if death is not involved.

No Contest Clauses.  These clauses provide that beneficiaries or heirs who challenge a will forfeit their inheritance.  Such clauses have been the subject of legal challenges in many jurisdictions and may have limited or no effect in particular states and situations.  However, they may still provide enough question that a beneficiary or heir will think twice before filing a legal challenge to your will or trust.

I hope these thoughts will give you some ideas to think about as you begin your estate planning or think about updating your plans.  If you have questions, contact your estate planning attorney.

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Preparing for College in the Fall

college-move-in-dayWith a new school year about to start, I am reprinting an article I posted several years ago for parents with children going off to college or just moving out of the house.  If you decide you might need to help your children with some planning, please call my office for an appointment.

Are you still the parents of your “adult” children?

In a recent article in the Dallas Bar Association’s “Headnotes” newsletter, Lori Ashmore and Gary Ashmore of The Ashmore Law Firm, PC remind us that while we are biologically still the parents of our adult children, we may not be allowed to act that way.  For example, if your college student is admitted to a hospital, the doctors there may not provide you any information about your child’s condition or injuries.  You may not be able to move your child to a hospital nearer home and your student’s landlord may not allow you to act for your child regarding his or her lease.

Why?  Because in Texas, a person becomes an adult at age 18.  Just as you need estate planning documents to allow others to act for you in certain circumstances, so does your adult child.  “Absent proper estate planning, there is no legal right for parents to make decisions for their children after they attain the legal age of majority.”

So when your child turns 18 and before they move into their own apartment or travel off to college, you should encourage your child to sit down with your estate planning attorney to discuss how to address these concerns.  Documents that should be considered include a Statutory Durable Power of Attorney, a Medical Power of Attorney, a HIPAA Release, and a Directive to Physicians and Family (Living Will).

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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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