The State of Your Estate

**An expert's guidance in the world of estate planning**

By Hella V. Scheuerman, Attorney at Law

Let’s face it: getting your financial affairs in order is painstaking, even in the rosiest of times. Wrapping one’s mind around concepts like preparing an estate, how and whom to appoint to tie up your loose ends, and which legal forms are necessary to get the ball rolling in the first place can all add emotional labor to a task that many would prefer not to think about at all — but absolutely should.

Having a plan provides a clear path forward for your loved ones in the future, and gives you peace of mind today; that’s a win-win. We asked estate expert Hella V. Scheuerman to provide her insight for those unfamiliar with what they need, and what to do next. She’s graciously provided handy tips and terms for beginning planners.

Do I need a large estate before preparing an estate plan?

Everyone should consider an estate plan, regardless of whether you are single or married, have minor or adult children, or are single with no children. You do not have to have a large estate before preparing your estate plan. By providing clear instructions regarding your healthcare decisions and the administration and ultimate transfer of your assets at death, the purpose of the estate plan is to provide peace of mind to you and your family when you are unable to make healthcare decisions for yourself and/or unable to manage your assets due to illness, disability or death. The goal of the estate plan is that your instructions are followed, that the intent of your estate plan is honored, and that the property that you intend to pass to your heirs/beneficiaries does indeed pass to them, rather than to someone else that was unintended. Each state has their own laws regarding estate planning and transfer of assets. If you have an estate plan and you have had it for several years or you had one prepared in another state and have moved to Texas, it is important to review your estate plan, to ensure that it still fits your needs.

Why not let my heirs figure out who will make my healthcare decisions and how to transfer my property at death?

An estate plan helps to prevent disputes among your loved ones regarding who will make your healthcare and financial decisions when you are unable to make them due to aging and other health issues. Additionally, an estate plan prepared to transfer your assets after you die also prevents disputes regarding who will administer your estate after your death and to whom your estate (real and/or personal property) will be transferred. It is a better practice for you to prepare for these life events, according to your wishes, and that your estate plan is carried out by your loved ones, rather than leaving no estate plan.

So, with an estate plan, is litigation eliminated over my person or estate?

Unfortunately, the answer is no. Even with the best intended and written estate plan, litigation can still arise. However, the likelihood of litigation over who will be your agent or guardian of your person and estate, and who should inherit your estate after your death, is higher without an estate plan. The person that does not get designated as your agent, guardian, executor, or administrator, and expected to be designated by you, may file a petition to contest your estate plan. Additionally, when persons that anticipated to inherit from you do not, litigation can arise. Most of the areas of litigation by the contestants are based upon allegations of undue influence, lack of contractual capacity and lack of testamentary capacity.

How do I choose the legal documents that best fit my estate plan?

Consideration of the following mechanisms available is important in your decision of what type of estate plan fits your needs:

Statutory Durable Power of Attorney:

In this legal document, you can designate a person your trust as your agent, to/ make financial decisions for you. The Texas Estates Code provides a form in Chapter §752.051. The form allows you to choose who to designate as your agent and what powers to give the agent, as well as the effective date that the power of attorney begins (immediately or upon your incapacity). Generally, the agent's authority continues until you revoke the power of attorney, you die, your agent resigns or a guardian is appointed for your estate.

Medical Power of Attorney:

In this legal document, you can designate a person your trust as your agent, to make healthcare decisions for you when you become incapacitated. Texas Health and Safety Code, Chapter §166.151, provides a form. The form allows you to choose who to designate as your agent and what powers to give the agent. Generally, this power of attorney exists from the date you execute the document until you revoke it, unless you establish a shorter duration time.

Last Will and Testament:

This legal document allows for the transfer of your property through probate after you die. Probate refers to the process in court where the Will is validated, and the executor administers your estate (the process also includes your executor preparing an inventory of your assets). In preparing a Will, it is important to make a list of your real and personal property (your assets). Examples of lists may include real estate, vehicles, accounts (savings, checking, investment, retirement), businesses, jewelry and other property. Just as important is your decision regarding who will inherit your property. You may wish to leave all of your estate to your spouse, but if your spouse does not survive you, then you should consider contingent beneficiaries i.e. your children. Another key aspect of an estate plan is who you will designate to carry out your estate plan i.e. as executor or administrator. While you may designate your spouse as your first option, it is important to have alternate designations, in case that person is unable to serve in that capacity.

TRUSTS

There are many different types of trusts, including testamentary trusts, revocable trusts and irrevocable trusts. Within each of those general categories, there are many forms of trusts. Regardless of your choice of trust, the grantor (creator of the trust) will designate a Trustee to administer the trust. Regarding the types of trusts available, generally, a testamentary trust is included in your Will, and is not created until after your death. It is common to see a person create a testamentary trust for minor children or young adults, so that the designated trustee can administer the decedent's assets, until those children reach a certain age as adults. On the other hand, a revocable trust is created during the grantor's lifetime, with assets being transferred into the trust during the grantor's lifetime and/or at death through a pour-over will. It becomes irrevocable at the death of the last grantor of the trust (if the revocable trust is created by a married couple, it becomes irrevocable upon the last grantor/spouse's death). During the life of the grantor, the revocable trust can be revoked or dissolved by the grantor. Irrevocable trusts are their own separate legal entity, where the grantor no longer owns those assets placed into the trust. Unlike the revocable trust, the irrevocable trust does not allow revocation of the trust after creation and offers additional benefits that the revocable trust does not.

Can I transfer the money in my accounts without a will?

In Texas, a person can transfer assets outside the probate process. Even if you have a Will, your Will does not control any assets governed by a contract that already has a beneficiary designation by way of signature card. These are called “non-probate assets” such as life insurance policies, financial accounts with rights of survivorship or pay-on-death designations, retirement accounts, etc. It is very important that you check with each financial institution to see if your account has a named beneficiary and/or if your beneficiary designation is up to date. ■

The State of Your Estate

An expert's guidance in the world of estate planning

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