Estate planning? How to make the most of your money

The Dallas Morning News published the following article in its Seniors section several years ago.  I thought it was good and worth reprinting here.

family_discussion(ARA) – When it comes to financial planning, making smart investments and planning for the future aren’t your only fiduciary considerations. You also want to be sure you’re getting the most out of the money you spend on the process.

Estate planning is an important component of your overall financial plan, regardless of your age, income or size of your estate. If you own property and have heirs, you need to think about estate planning. To do the job well, you’ll need the help of a team of professional accredited estate planners such as a certified public accountant, a lawyer, insurance professionals and financial planners, and trust officers.

Professional fees can add up if you don’t manage time well, so it’s important to prepare for every meeting with your estate planning team members. It’s a great time to think about how you can maximize the value of the time you spend with your estate planning team.

The National Association of Estate Planners & Councils (NAEPC) offers this advice on how to have productive working relationships with your planners:

* Before meeting with a professional, gather all your personal and financial information, make lists of your current financial advisers, assets and liabilities, collect financial documents such as retirement plans, life insurance policies, property deeds, partnership and business agreements and your income tax returns for the past two years.

* Write out your own personal goals, concerns and ideas. Identify people whom you would like to have inherit your property when you die, and specify what you would like to leave each. Make note of any special needs or situations, such as a dependent child or a spouse whose disability will prevent him or her from working. Identify people you would like to name as guardian for minor children, as well as an executor for your will.

* Seek out the right professionals. You’ll find any number of people who profess to be estate planners, but NAEPC designees complete rigorous educational requirements for estate planning and adhere to a strict code of ethics. To find an accredited estate planner, visit the association’s website,

* Bring your notes and all the information you’ve gathered with you to your meeting. Being prepared can save you hours of billable time. Discuss your overall goals and find out how each professional can help you meet them. Ask for a list of the specific documents he or she will prepare for you.

* Realize that estate planning is an ongoing process. You should update your estate plan every few years or any time you experience a major life change, such as the birth of a child, marriage, divorce or death of a spouse or parent.

* Finally, once you’ve prepared for your loved ones’ financial future, don’t forget to take care of their emotional well-being. Estate plan documents are dry and technical, and they won’t communicate your emotions to those you leave behind. Consider writing a letter to your spouse and family expressing your final thoughts and feelings. Keep the letter with key financial paperwork and make sure your loved ones know where to locate these items.

Common mistakes to avoid in estate planning:

1. Lack of planning.
2. Unorganized finances.
3. Not having a will, trusts and durable powers of attorney or advanced health care directive.
4. Having out-of-date estate plan documents.
5. Not coordinating life insurance and retirement plan beneficiaries and ownerships with estate plans.
6. Not coordinating property title holdings with estate plans.
7. Not having enough life insurance.
8. Procrastination.
9. Not telling people where your planning paperwork can be found.

If you need to update your estate plan, please feel free to call my office for an appointment.

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Trusts – Do They Work?

trusts2You bet.  But what work do they do?  Not much if they are not properly drafted and if you don’t use them properly.  I speak with many attorneys who, like me, do some or a lot of their legal work in estate planning.  Seldom do I run into one of them who does not have a story about a person coming into their office with a trust they did not understand.

Why is the lack of understanding of trusts so prevalent?  I suspect it is a client’s expectation that trusts are just like wills – don’t we just make it and forget it?  Well the answer to that question regarding wills is “not necessarily” (you should review your will on your own and with your estate planning attorney every few years).  But the answer to that question with regard to trusts is “most assuredly not.”

Trusts are living documents.  They need regular attention.  You need to keep it funded properly.  Your trustee may need to send periodic notices, review investments regularly, maintain books of account, and provide information to or respond to requests from beneficiaries.

Usually when a trust is set up the drafting attorney supplies detailed instructions to the client, either verbally or in writing.  The client’s duty is to understand these instructions, ask questions if they don’t understand, and implement the instructions or return to his or her attorney for clarification or assistance.  Main idea – follow the instructions.

Trusts do work when understood and when proper attention is paid to them.  Without such follow up, a trust might not work as expected.

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Care for Your Pets After You Are Gone

petsMany of us who own pets consider them to be more than just pets, but a part of the family.  Some people are now acting to plan for their pets in case the pet outlives the owner.  Pet owners can now not only determine who is to care for their animal, but also can leave specific instructions regarding a variety of areas of care.  These might include who is to care for the pet, who back-up selections are for that position, what veterinarian should be used, specific medical care instructions, food and nutrition instructions, grooming instructions and what is to happen to the pet’s remains upon its death.  Monies can be set aside to provide funds for this care.

The legal vehicle for such planning is referred to as a pet trust.  Texas now has specific laws authorizing the creation and enforceability of a trust to provide for the care of an animal.  These trusts can be set up as part of a person’s will to take effect when that person dies, or they can be set up during a person’s lifetime.  The latter form of trust is called a living trust.  The living trust is generally more expensive to create, but since it takes effect right away, it can provides protection against a circumstance where you are disabled and unable to care for your pet.

If you would like to discuss creating a trust to care for your pets in case they outlive you, I’d be happy to meet with you.

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Are You Still the Parents of Your “Adult” Children?

parents_of_adult_childrenIn an 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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Thoughts on Selecting an Executor

This is the second post in a series on what to think about when determining who you want to designate in your will to serve as executor of your estate.

First of all, you should consider that selecting a beneficiary as your executor might lead to a conflict of interest if there is more than one beneficiary.  If the executor seeks compensation for his work, which they are often entitled to, the other beneficiaries might object or raise concerns about the amount sought because they think the executor is trying to get more than his fair share of the estate.  Similar suspicions among beneficiaries occur more often than one might expect.  And the executor might also be faced with issues requiring her to choose between awarding assets to herself or to another beneficiary. This situation is often best avoided from the beginning by selecting an executor who is not a beneficiary, if possible.

In addition, if your assets include a business, you should be cautious about selecting an executor who is also a partner in your business. Once again, this situation can create conflicts of interest because the executor/business partner may have motivation to continue running the business, while it may be in your beneficiaries’ best interest to sell it.

probate_court_doorIf your assets are primarily marketable securities, you do not need to be quite so concerned with your executor’s business or financial knowledge. However, if you own a wide range of complex assets, you should select an individual with experience in those types of assets. If you don’t have a friend or family member with the necessary expertise, consider hiring an accountant or similar type of professional to act as your executor for a fee, or hiring a corporate executor.

Finally, some people believe that if it is possible, you should consider selecting someone who knows your beneficiaries and can carry on a healthy working relationship with them. This may help avoid conflicts with the beneficiaries and contentious lawsuits over how the estate should be distributed.  Other people believe an outside party with no connection to the beneficiaries may appear to be more impartial and thus, raise fewer concerns among the beneficiaries.  In any case, you need to consider these issues when deciding who you will designate as your executor.

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