• Asset complexity: The nature of your assets, such as real estate, businesses, or retirement accounts, can influence what kind of documents we use in your estate plan.
• Family dynamics: Complex family relationships or blended families may require specific estate planning strategies.
• Healthcare wishes: An estate plan includes directives about your medical care preferences, which are crucial regardless of estate size.
• Guardianship: If you have minor children, designating a guardian is essential.
• Avoidance of probate: Probate can be time-consuming and costly, so estate planning can help minimize or avoid it entirely.
• Protection for Loved Ones: An estate plan ensures your wishes are carried out, protecting your family from potential disputes and financial burdens.
• Providing for Minors: If you have minor children, an estate plan designates a guardian and outlines how their financial needs will be met.
• Peace of Mind: Knowing your affairs are in order can provide significant peace of mind for you and your family.

“It depends.”  Some estate planning attorneys will tell everyone that they need a trust.  This really isn’t the case.  There are certainly situations where a trust may be the better choice to accomplish your objectives, but in the end, deciding between a will and a trust comes down to balancing your priorities. 

In general, though, you should consider a trust if any of the following apply to you:

• You have minor children.
• You and your spouse have children from prior relationships (You are a blended family.)
• You want to avoid probate.
• You want your assets to go to a beneficiary who has Special Needs.
• You want to choose when your assets are distributed and how they can be used after you die.

A Trust or strategic gifting is the best way to minimize tax consequences at death. However, very few estates will actually owe estate taxes.  For example, in 2022, 3.2 million people died in the United States.  Of those deaths, only 7,600 estates filed tax returns (0.24%).  Of all returns filed, only 3,900 owed taxes.  So only 0.12% of all deaths resulted in an estate that owed estate tax.

Other important tax information:

• There is no inheritance tax in Texas.
• There is no gift tax in Texas.
• You can gift up to the annual federal gift tax exclusion amount to any individual every year without having to file a gift tax return. This is $18,000 per person for 2024, estimated to be $19,000 in 2025.
  • Under this rule, a married couple can jointly give up to $72,000 to another married couple in one year ($18,000 gift from each spouse, given to each person of the married couple = ($18,000 x 2) x 2 = $72,000)
• You can gift up to the lifetime federal gift tax exclusion amount during your lifetime without having to pay federal gift taxes. This is currently $13.6 million, but due to go down by roughly half at the end of 2025.

The fate of your digital assets after you pass is a growing concern. Unlike physical possessions, digital assets can be complex to manage and inherit. If you do not have documentation giving someone the authority to access them after you die, they will have to go to court to request access.  They may or may not be successful in gaining access.

The Challenges

• Access: Gaining access to your accounts can be difficult without proper planning. Many platforms require passwords and security measures that only you know.
• Ownership: The legal status of digital assets is still evolving in many jurisdictions.
• Privacy: Sharing personal information with a designated person can raise privacy concerns.
• Platform Policies: Different platforms have varying policies regarding account management and inheritance.

What You Can Do

• Create a Digital Inventory: Make a list of your online accounts, including usernames, passwords, and any relevant information.
• Utilize Platform Tools: Many platforms offer features to designate a legacy contact or provide instructions for account management after death.
• Consult an Attorney: An estate planning attorney can provide guidance on the legal aspects of digital asset inheritance.

Remember, the digital landscape is constantly changing. It’s essential to review and update your digital estate plan regularly.

Selecting the right person to serve as your executor or trustee is a crucial decision. This individual will be responsible for managing your estate according to your wishes. Here are some key factors to consider:

Qualities to Look For:

• Trustworthiness: The individual must be honest and reliable.
• Financial acumen: A basic understanding of finance is essential for handling estate matters.
• Organization and time management: The role requires attention to detail and efficiency.
• Good communication skills: Effective communication with beneficiaries and other parties is crucial.
• Willingness to serve: The person should be committed to fulfilling their duties.

Potential Choices:

• Spouse or partner: Often a natural choice, but consider their ability to handle the role if they predecease you.
• Adult children: If mature and responsible, they can be a good option. However, family dynamics can complicate matters.
• Trusted friend or relative: Someone you know well and trust implicitly can be a suitable choice.
• Professional fiduciary: A trust company or attorney can provide expertise but may be more costly. We can provide you with reputable options appropriate for your specific needs.

Additional Considerations:

• Successors: You should name a primary agent and at least two successor agents for all documents in case your primary choice is unable to serve.
• Co-agents: Sharing the responsibility seems helpful, and often a parent does not want to choose between their children. But co-agents can lead to disagreements and additional work when both are required to sign off on decisions and paperwork.  We strongly discourage the use of co-agents.

Ultimately, the best choice depends on your specific circumstances and preferences. It’s often helpful to discuss your options with an estate planning attorney to determine the most suitable person for your situation

Planning for incapacity is a crucial component of estate planning. It ensures that your wishes are respected and that your affairs are managed effectively if you’re unable to make decisions for yourself.

Key Legal Documents:

• Durable Power of Attorney: This document appoints someone you trust (your agent) to handle your financial matters if you become incapacitated.
• Healthcare Power of Attorney (also known as a Medical Power of Attorney or Healthcare Proxy): This document designates someone to make medical decisions on your behalf if you’re unable to do so.
• Advanced Directive to Physician (also known as a “Living Will”): This document outlines your preferences for end-of-life care, such as whether you want life-sustaining treatment.
• Living Trust: A Living Trust can give immediate access to your assets upon your incapacity, and can detail specific rules regarding how you want your assets managed during your incapacity. It can provide for distributions to your dependents or others during your incapacity, as well as give your Trustee the authority to pay your medical bills or other on-going expenses.

By creating these documents, you can potentially avoid guardianship proceedings, which can be time-consuming, costly, and stressful for your family.

Important Considerations:

• Choose your agents carefully: Select individuals who understand your values and are capable of handling the responsibilities.
• Review and update your documents regularly: Life circumstances change, and it’s important to ensure your documents reflect your current wishes.
• Communicate your wishes: Talk to your agents about your preferences and values.

Unfortunately there is not much a person receiving an inheritance can do to protect it from creditors, other than to put those funds into an irrevocable trust that they no longer control or disclaim the funds so that someone else inherits them.  The best plan is for the person who is leaving an inheritance to someone to take proactive steps to create an estate plan that will protect their beneficiaries.

The best way to plan for minor children is to have your estate planning documents in place.  Both a will and a trust have mechanisms to protect and take care of your minor children upon your death, but only a trust allows for incapacity planning as well. 

Inheritance Issues with Minors

Minors are considered incapacitated and cannot directly inherit property. This means that if a minor is named as a beneficiary or inherits property from someone who did not have their estate planning documents in place, special arrangements must be made to manage the inheritance until the child turns 18. 

Options for Managing a Minor’s Inheritance:

1. Guardianship of the Estate: A court-appointed guardian is responsible for managing the minor’s property. This can be a complex and time-consuming process.
2. 1301 Management Trust: This is a less restrictive alternative to guardianship. A trustee is appointed to manage the assets for the minor’s benefit, but the court’s involvement is limited.
3. Court Registry: Inheritance is deposited into an account with the court and held for the child until they turn 18, at which point they get the entirety of the inheritance outright.
4. Custodianship Under the Texas Uniform Transfers to Minors Act (UTMA): This allows for a designated custodian to manage the assets for the minor’s benefit until they reach the age of majority.

The only way to be sure that your wishes are known is to communicate and document them.  Communication alone is not enough; the laws of the state may interfere with how you would want your assets distributed or may cause unintended consequences.  You must document your wishes in a legally enforceable manner, i.e. writing a will or creating a trust.

Many clients have multiple children that they intend to leave their assets to.  In order to avoid probate, they may put one child (typically the child who takes on primary caregiving responsibilities) on their bank account with them as a joint owner, trusting that child to distribute the balance of that account equally amongst their siblings after the parent’s death.  Unfortunately, this situation is ripe for conflict.  The child on the bank account becomes the legal full owner of all funds upon their parent’s death, and is under no legal obligation to split the funds.  Further, even if they do divide the money, the IRS will see that as a gift to those siblings, and a gift tax return may be required.  This is not what the parent intended at all, and proper estate planning would have avoided these issues.

It is important to consult with an estate planning attorney to ensure whatever method of documentation you choose conforms to state law and will be valid and enforceable upon your death.  There has been a drastic increase in the number of wills and trusts sold online.  These documents rarely properly conform to state law or are executed correctly.  A large number of incoming probate matters are from incorrectly executed online wills or fill-in-the-blank wills.