Planning for the Long Term

As with so many aspects of planning long-term_planningfor our futures, many people try to hide their head in the sand when it comes to planning for living a long life that might involve a period of time when our expenses are high and our resources are not as robust was we would like.  So take your head out of the sand and think about these planning ideas for the long term.

1. Life Insurance or Annuities.  Life insurance products have changed dramatically over the years.  In addition to protecting our families during our earning years, insurance products can also be used as a resource in later years if an unexpected need arises.  An insurance expert can discuss how one product might be able to change over time to serve different purposes for you.  Long term care can be built in to life insurance policies or separate long term care policies can be purchased.  Medicaid qualifying annuities are also available.  In many of these products any money that’s not spent on care during your life gets passed to heirs as a death benefit.

2. Long-Term Care Insurance.  As noted above, insurance products are available specifically to help cover the cost of long term care.  A large percentage of us will spend at least some time in a facility for which long term care coverage will apply.  This insurance product helps provide for the cost of long-term care. Long term care is not simply for a nursing home at the end of life.  If you have an extended rehab from surgery, you may need qualifying care for several months before returning to your normal life.  Long-term care insurance is for people who can’t perform basic daily activities and need someone to help them. Many people don’t feel comfortable relying on family members financially so start planning now to have money available for your long-term care.

3. Medicaid.  Medicaid covers long-term care costs for people whose income and assets fall below a certain level. It can only be used when you have no other financial resources to cover the cost of your care and your options may be limited by the programs that are available to Medicaid patients. It’s a good idea to save as much money as possible in your younger years so you’re not fully dependent on Medicaid to help you in your later years.  If you think you might eventually need government assistance to pay your medical expenses, you should contact an attorney who specializes in this area.  Many people think they know what they need to do and end up impoverishing themselves unnecessarily.  Through careful and expert planning many assets can be retained for the other spouse or family members.  But don’t wait until the last minute and don’t do planning on your own in this area.

4. Personal Savings and Investments.  Some people will be able to use their own assets for long-term care by calculating an amount of money to set aside to pay for their care, or by savvy investment plans over the years. Just make sure you understand the Medicaid guidelines that might affect your spouse and other family members.  As with Medicaid planning discussed above, it is a good idea to consult with an elder law attorney when doing this planning.

Each option has its advantages and disadvantages and can be very complicated to understand. Make sure you talk to an attorney, insurance agent, and financial advisor to discuss what long-term care plan works best for you and your family.

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Do You Know Your Probate Terminology?

The Dallas Morning News had a great column this week written by Virginia Hammerle on terms heard when talking about probate.  I am reprinting below that entire article.

Cracking the code

The special language of probate


At least 99 percent of you will, at some point, have your life touched by a probate estate.  If you are very unlucky, then you might even be appointed as an executor or administrator. This article is a clip-and-keep for when that time comes.

Here is your key to the mysterious terminology of Texas probate.

Decedent: the person who just passed away.

Estate: the assets and debts of the decedent.

Probate: the court proceeding to handle the decedent’s estate.

Texas Estates Code: the source of all wisdom in the world, according to more than one Texas probate judge.

Will: a written document either signed by a decedent or completely in the decedent’s handwriting and signed by decedent, that disposes of the decedent’s estate upon death. Hopefully not based on an internet form.

Executor: the person appointed by the court to execute the terms of a will in a probate estate.  There are two flavors: independent and dependent.  The independent Executor acts without court supervision.  The Dependent Executor has to obtain court permission before performing any duty or taking any action.  Generally speaking, if the estate is solvent, then it is much better to be an Independent Executor than a Dependent Executor.

Administrator:  the person appointed by the court to handle an estate when there is no valid will.  An Administrator’s life is always more difficult than that of an Executor, simply because there is no will.

Letters Testamentary:  This is a document prepared by the county clerk that states the executor or administrator is authorized to act.  Most third parties demand to see original Letters Testamentary; thus the executor usually orders at least six.  The Letters are technically good for only 60 days, and new Letters may have to be requested when the old ones expire.

Devisee: the person the decedent designated in writing to inherit an asset.

Heir:  This is someone who inherits as a matter of law because the decedent did not leave a will.  Heirs and Administrators go hand-in-hand into the wilderness of “no will.”

Fiduciary:  the executor or administrator.  A fiduciary’s duty is the highest duty in law.  Think of it as the rope used to legally hang a crooked executor or administrator.

Citation: a formal notice issued by the court clerk about the probate.

Notice to Creditors: a formal notice given by an executor or administrator to all secured creditors, and some unsecured creditors.  This is the first of many probate pitfalls, because if notice is not timely given, then the executor or administrator can be held personally liable for damages.

Inventory:  a list of all probate assets, together with values as of the date of death.

Estate Tax Return, Decedent’s Income Tax Return, Federal Fiduciary Tax Return:  the reason every probate estate has a CPA on retainer.

And that should be enough to get you started down the probate path.

hammerleVirginal Hammerle received her J.D. (Juris Doctor) from SMU in 1982.  Find more articles at  To receive the monthly email newsletters, send your request to


The information contained in this article is general information only and does not constitute [legal advice.]

Posted in Debts, Estate Tax, Income Tax, Inheritance, Probate, Tax, Wills | Tagged , , , , , , | Comments Off

Do You Know Where Your Will is Located?

I will often have people call to safety-deposit-boxupdate their will.  When I meet with them they usually have a copy of the will to show me.  I will usually ask them if they know where their original will is located.  Most know – or think they know – but it always amazes me how many people aren’t sure where it is.

In these times, photocopies and digital copies are very common and generally accepted as “legal” for most purposes.  However, in some circumstances the original is required.  An individual’s will is one such circumstance.  Upon the death of an individual, in order to probate a will, the original document must be presented to the Clerk of Superior Court.  Copies of the will are generally not accepted, or at the very least require more complex and costly procedures be followed to establish the terms of the will.  At first glance, this may seem like a harsh result, but when you consider the rationale, this law actually does make sense.  There is a presumption that when the original will cannot be located, it was intentionally destroyed for purposes of revoking the will.  It is too great a burden to expect the maker of a will to locate all photocopies and to destroy them as well.  Therefore, the original must be produced.

So, do you know where your original will is?  And if you do, will your family know where to find it once you pass away?  The best places to keep your will is someplace “safe.”  Opinions vary on just where that is and to some extent it depends on how an individual handles their own affairs.  Some people prefer a fireproof safe kept in their home, a safety deposit box at a bank, or in the vault of the County Clerk.  There are advantages and disadvantages to each of these options.  The main thing is to make sure your executor knows where you are keeping the will or at least make it easy to find upon your death.  And if you are using a safety deposit box at a bank, make sure your executor will have access to it upon your death by adding them to the signature card at the bank and providing them with a key or letting them know where to find a key.

This may seem like basic recordkeeping to many people, but you would be surprised at how often family members know their loved one had a will, but they just cannot locate it.  There have even been situations where years after the decedent’s death a family member stumbles upon the will, after the property has already been divided up according to intestate succession (the law for estate distributions for individuals who die without a will).  Don’t let this happen to you!  Put your will in a safe place where your loved ones can locate it when the time comes.

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Basics of a Texas Will

A Will is a legal document that has several old willfunctions.  It typically allows you to identify your beneficiaries, designate the way in which your property will be distributed, nominate an executor to manage your estate and distribute it according to the wishes expressed in the Will.  It can also disinherit people, nominate a legal guardian for any minor children, provide for trusts to hold your gifts to some or all of the beneficiaries and describe special terms and definitions to be used in construing the Will.

To make a valid Will in Texas, you must have legal capacity, testamentary capacity, and testamentary intent, and follow certain formalities.

  • Legal capacity.  In Texas, legal capacity is defined as the person being 18 years of age or older, being or has been married, or being a member of the armed forces of the United States.
  • Testamentary capacity.  To have testamentary capacity one must be of “sound mind.”  This means that at the time the person makes their Will they have the mental ability to understand:
    • they are making a will;
    • the effect of making a will;
    • the general nature and extent of their property;
    • their next of kin and the natural objects of their bounty (e.g. their relatives and loved ones);
    • the fact that they are disposing of their assets;
    • have sufficient memory to collect in their mind the elements of the business transacted and hold them long enough to form a reasonable judgment about them.
    • Testamentary intent.  Closely aligned with testamentary capacity is testamentary intent.  That is, the person making the Will must intend that the document they are signing is making a revocable disposition of their property to take effect at their death.  The actual wording in the Will is often looked to as evidence of such intent.
    • Formalities.
      • Texas recognizes two types of written Wills.  Texas does not recognize oral wills.
        • An attested Will is the most common type of Will. To be valid, it must be in writing, signed by the person making the Will, or another person at the direction of the person making the Will and in their presence, and attested by at least two credible witnesses over the age of 14.  The person making the Will must be present when the two witnesses sign their names to the Will.
        • A holographic or handwritten Will is a Will that must be written entirely by the person making the Will, and it must be signed and dated. The Will does not need to be witnessed by anyone else.  But it is important to note that no writing by others or typing may be part of the Will.
  • Self-proving Affidavit.  The Texas Estates Code provides the person making a Will with the option of adding a self-proving affidavit to the Will.  This is an affidavit containing certain representations that is signed before a notary public by the person making the Will and the two witnesses to the signing of the Will.  When a Will is probated, the self-proving affidavit substitutes for in-court testimony of witnesses as to the validity of the Will, which saves considerable time and expense.

If a Will does not meet all the requirements set forth by the Estates Code, it will be declared invalid, meaning that your estate could be distributed according to a statutory formula rather than the way you would have preferred.  Preparing a Will may seem rather simple, but if not prepared by an attorney focusing his or her practice on estate planning, mistakes can easily occur and misleading statements can be included without proper explanation or definition.  To save your estate additional expenses of probate and to ensure that your wishes are carried out as you intend it is best to consult with an estate planning attorney in preparing and executing your Will.

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