Frequently Asked Questions
about Estate Planning in Texas
What is Probate?
Probate is the court and process that looks after people who cannot make their own personal, health care and financial decisions. These people fall into three general categories: Minor Children (under age 18 in most states); Incapacitated Adults; and People who have died with or without a Will. Probate proceedings in Texas, to admit a Will to probate, are relatively simple and inexpensive, unlike many states. There is no reason to fear probate or believe it will add unnecessary complication after a death. Occasionally there are reasons to avoid probate, but whether it is necessary to avoid probate is a very individual decision based on each person or family's unique situation. There is never a one answer that fits all. Some people may consider using a "Living Trust," and these can be very helpful and appropriate in some circumstances, and in some circumstances these can be an unnecessary expense and complication. The advice of an attorney who understands your particular needs can advise you regarding the advantages and disadvantages.
What is Joint Tenancy with Rights of Survivorship?
(in some states "Tenancy by the Entirety" when between spouses)
This is the most common form of asset ownership between spouses. Joint tenancy causes the assets to belong to the survivor at the death of the first joint tenant. However, the surviving spouse should not add the names of other relatives to their assets. Doing so may subject their assets to loss through the debts, bankruptcies, divorces and/or lawsuits of any additional joint tenants. Joint tenancy planning also may result in unnecessary death taxes on the estate of a married couple. Joint Tenancy should never be used as a substitute for a Will. Many complications occur when a child who is a joint tenant unexpectedly predeceases the parent. Then at the parent’s death, if the intent was for that child’s children to inherit, this likely will not happen.
What is a Will?
The document a person signs to provide for the orderly disposition of assets after death. Wills have no legal authority until the willmaker dies and the original will is delivered to the Probate Court. Certainly, everyone with minor children needs a will. It is the only way to appoint the new "parent" of an orphaned child. Special testamentary trust provisions in a will can provide for the management and distribution of assets for your beneficiaries. Additionally, assets can be arranged and coordinated with provisions of the testamentary trusts to manage estate tax liability.
What is a Living Will?
In Texas, the Living Will is called a Directive to Physicians and Family or Surrogates. It allows you to state your wishes in advance regarding what types of medical life support measures you prefer to have, or have withheld/withdrawn if you are in a terminal condition (without reasonable hope of recovery) and cannot express your wishes yourself. Oftentimes a living will is executed along with a Durable Power of Attorney for Health care, which gives someone legal authority to make your health care decisions when you are unable to do so yourself.
What does Intestacy mean?
If you die without even a Will (intestate), the legislature of your state has already determined who will inherit your assets and when they will inherit them. You may not agree with their plan, but roughly 70 percent of Americans currently use it.
What are Beneficiary Designations?
You may avoid probate on the transfer of some assets at your death through the use of beneficiary designations. Laws regarding what assets may be transferred without probate (non-probate transfer laws) vary from state to state. Some common examples include life insurance death benefits and bank accounts.
What is a Durable Power of Attorney and when do I need one?
These allow you to appoint someone you know and trust to make your personal health care and financial decisions even when you cannot. If you are incapacitated without these legal documents, then you and your family will be involved in a probate proceeding known as a guardianship and conservatorship. This is the court proceeding where a judge determines who should make these decisions for you under the ongoing supervision of the court.
What is a Revocable Living Trust?
This is an agreement with three parties: the Trust-makers, the Trustees (or Trust Managers), and the Trust Beneficiaries. For example, a husband and wife may name themselves all three parties to create their trust, manage all the assets transferred to the trust, and have full use and enjoyment of all the trust assets as beneficiaries. Further "back-up" managers can step in under the terms of the trust to manage the assets should the couple become incapacitated or die. Special provisions in the trust also control the management and distribution of assets to heirs in the event of the trustmaker's death. With proper planning, the couple also can avoid or eliminate death taxes on their estate. The Revocable Living Trust may allow them to accomplish all this outside of any court proceeding.
Who Should Have a Revocable Living Trust?
The answer to this question is very individual and depends on a person’s or couple’s assets and unique family situation. For example, if planning for incapacity is a concern, a living trust can be very useful, as it is easier for a successor trustee to step in to manage complicated assets than simply relying on an agent with a power of attorney. Also, although probate in Texas is relatively inexpensive and quick, if you have assets in other states, you should know that probate in some states is enormously expensive and can take years. Obviously there are advantages and disadvantages and you should consult with an attorney to help you make this decision. A revocable living trust is never the automatic answer and they are often overused and recommended too often. Creating one can cost as much or more than probate in Texas would cost and must be paid for immediately, unlike probate costs which will not occur until a death.