As we struggle alone-together through this 2020 Covid-19 pandemic, it seems many of us have looked our own mortality right in the face. Daily news reports show staggering numbers of hospitalizations and deaths due to the coronavirus. By now most of us have heard of someone we know who has either contracted the virus or has been exposed to it through work or other social contact.
All this, coupled with isolation and economic hardship because of Stay-Home, Work-from-Home orders, leads inevitably to some level of anxiety and depression. Mental health professionals agree that taking control of things we are able to control, while letting go of things we cannot control, is a helpful strategy for dealing with anxiety and depression.
One area of our lives that we CAN control, is the Legacy that we will leave our families when we are no longer able to manage our affairs due to death or incapacity. Planning that legacy is something that an estate planning attorney can assist with. Many estate planning attorneys are using telephone, email and video conferencing, in place of face-to-face meetings, to assist their clients in getting their financial, medical, and personal affairs in order during these unprecedented times.
Some of the issues to consider are:
Who will you nominate to step into your shoes and manage your financial affairs if you become sick or incapacitated? Who will take care of your children?
Who will you nominate to make critical medical decisions for you if you should become unable to speak for yourself due to illness?
What are your wishes for end-of-life, life-sustaining medical treatments, including artificial life support?
Who will you nominate to step into your shoes and wind-up your legal, financial, and family matters after your death?
To Whom do you wish your property to be distributed?
Would a Trust be a good or better option for your family?
These are just some of the issues you should discuss with your family and your trusted legal and financial advisors. There is no time like the present, because “Later” sometimes becomes “Never.”
Stay Safe, Stay Healthy, Take Care of Yourself and your Family. Nothing matters more.
As one year ends, and another begins, many of us are reviewing and setting goals for the future. One of our goals may be to set up an estate plan that will provide ease of transition and peace of mind to our loved ones in the future. One such vehicle is a living trust.
A living trust is legal structure that allows you to manage your assets while you’re alive and pass assets easily to beneficiaries when you die rather going through the courts.
There are several reasons for creating a living trust. One of the primary reasons for having a living trust is that it bypasses probate, or a court process that validates your estate plan and directs the distribution of your assets. Probate can be a complex journey that requires significant time, money and supervision.
Estates that move through probate court automatically become part of the public record. But a trust lets you keep your finances, and the way you distribute them, private. Plus, a trust gives you far more control over how your assets are disseminated when you die. You get to decide who gets which assets, how much and when they get access to them. So, for instance, you can give some of your investments to your child when he turns 18 and the rest when he turns 30.
While a trust and a will both let you designate beneficiaries who will inherit your assets when you die, a living trust might provide lifetime benefits too. Having a trust allows you to choose a trustee to manage your assets if you’re ever incapacitated. This may avoid the need for having a financial power of attorney.
While you’re alive and well, you can simply name yourself as the trustee of your living trust. That way, you’ll retain full power over your assets with the peace of mind that you’ve got a backup plan in place.
HOW TO FUND A TRUST
A trust is simply the legal framework that dictates how you want your assets handled. But those rules apply only to assets held in the trust. If there are assets that aren’t in the trust when you die, those assets will need to go through probate.
Once you complete the process of creating the trust, the next important step is funding the trust. You’ll have to retitle each asset you want included in your trust, and, fortunately, the process is straightforward. Start by contacting the financial institution associated with a given asset. Ask about their procedure for changing the name on your asset from yours to the trust’s. A simple form is sometimes all that’s necessary, though some businesses may require additional information or a certificate of trust.
As the trustee of your own trust, you’re free to move assets into and out of the trust during your lifetime. Don’t worry, moving those assets around won’t trigger any tax events.
WHICH ASSETS BELONG IN A TRUST?
Assets that should be owned in the trust are any assets that would need to pass through probate if not in the trust and assets where the disposition is best done through the trust. In addition to assets in a trust, assets that pass pursuant to legal title (e.g., joint tenants with rights of survivorship) or by contract (e.g., a transfer on death provision) do not pass through probate. As long as the trust is designated as the beneficiary or trustee of such accounts, your assets will be disposed of the way that you want them to.
Plenty of financial accounts are perfect candidates for your trust holdings.
Liquid accounts: These include your savings and checking accounts at a bank or credit union
Traditional investments: Consider assets you own through a regular brokerage account but not those held in your retirement portfolios.
Real estate: Moving your home into a trust can save your heirs significant probate costs. Generally, you need just a deed transferring ownership to the trust. If the house has a mortgage, check with the lender to determine whether their approval or consent is required to transfer the property.
Personal property: There’s no title for most of the possessions in your home, but you can still move them to your trust. It can be as basic as a schedule attached to the trust when it’s executed that lists the property that’s being transferred to it.
Business interests: If you have at least partial ownership of a business, consider allocating that to your trust.
Intellectual property: This includes patents, published works and trademarks.
Money you’re owed: If a debt is owed to you, you can add that to your trust as well.
Safe deposit boxes: Be sure the trustee can obtain access to it without a problem.
WHICH ASSETS SHOULD YOU KEEP OUT OF A TRUST?
While a trust works beautifully for many assets you might own, it may not be the best fit for all of them. Before transferring any assets to the living trust, confirm with an attorney that the transfer doesn’t affect any liability protection that the asset might be entitled to based on how it’s owned (e.g., as tenants by entirety for spouses).
Here are a few assets you can keep out of your trust.
Retirement plans and accounts:IRAs, Roth IRAs, and 401(k) plans only belong to individuals — not to trusts. Lubar, however, says you can designate your trust as the beneficiary on those accounts. “That will ensure that the assets pass pursuant to the person’s wishes as laid out in the trust,” she says. Note that having a trust as a beneficiary of a retirement account may result in distributions from the trust occurring faster than if an individual were designated as the beneficiary of the account.
Tax-advantaged savings accounts: These include accounts like Health Savings Accounts (HSAs), Flexible Spending Accounts (FSAs), and Dependent Care FSAs. As with retirement accounts, however, just list your trust as a beneficiary for these accounts.
Certificates of Deposit (CDs): You might be able to move CDs into trusts but check first with your financial institution. Retitling the CD could be considered an early withdrawal that subjects you to fees.
Life insurance: There isn’t really a benefit to putting life insurance in living trust. Since the death benefit transfers by the beneficiary designation, there isn’t a probate process that’s applicable. You’ll can still designate the trust as a beneficiary, however.
THE BOTTOM LINE
For many people, creating a trust is a great way to manage your assets while you’re healthy and ensure they’re taken care of as you intend. And, while plenty of your assets work beautifully in a trust, it’s not right for everything you own.
At the end of the day, what’s important is that the individual’s assets go to whom they want them to go to and when they want them to. The trust is just one of the ‘hows’ for accomplishing that.
After a divorce is filed in Texas, a period of at least 60 days must pass before a final decree may be entered. This is referred to as the “waiting period.” In many, but not all, cases, Temporary Orders are requested in order to set the rights and responsibilities of the parties during the divorce litigation process.
Some of the issues involved may be: temporary spousal support for either party, exclusive use and possession of the marital residence by either party during the pendency of the case, exclusive use and possession of motor vehicles, credit cards, etc. For the most part, during this time both parties are prohibited from using or diverting funds for anything other than reasonable living expenses, business expenses, or attorney fees. (Sometimes referred to as “Temporary Restraining Orders.) There may also be temporary injunctions involving harassment, threatening language or posting on social media. There is not a final division of marital property at this stage.
If children are
involved, there will be temporary orders regarding child support, custody and
visitation (parenting plan). However, in
most counties, mediation will be required prior to a temporary orders hearing
if children are involved.
In some cases, the Temporary Orders are agreed to by the parties with the assistance of the attorneys and/ or a mediator. In others, the temporary orders hearing is like a trial. Testimony of the parties, under oath, will be taken on issues relevant to temporary orders, but not necessarily to the final division of property or parenting plan. There may be additional witnesses, depending on the nature of the case. In most cases, the court will make a ruling on Temporary Orders the same day. The attorneys will then prepare a formal version of the TO’s for submission to the court for signature and entry. These orders will be the “law” of the case until the final trial, (or Agreed Final Decree), which will encompass a final disposition of all issues concerning division of marital property and debts, and a final parenting plan. The final disposition, or decree, may take several months, or even years, to complete. Therefore, temporary orders may be a necessity in some cases.
These days many people choose a revocable living trust instead of relying on a will or joint ownership in their estate plan. They like the cost and time savings, plus the added control over assets that a living trust can provide.
For example, when properly prepared, a living trust can avoid the public, costly and time-consuming court processes at death (probate) and incapacity (conservatorship or guardianship). It can let you provide for your spouse without disinheriting your children, which can be important in second marriages. It can save estate taxes. And it can protect inheritances for children and grandchildren from the courts, creditors, spouses, divorce proceedings, and irresponsible spending.
Still, many people make a big mistake that sends their assets right into the court system: they don’t fund their trusts.
What is “funding” my trust?
Funding your trust is the process of transferring your assets from you to your trust. To do this, you physically change the titles of your assets from your individual name (or joint names, if married) to the name of your trust. You will also change most beneficiary designations to your trust.
Who controls the assets in my trust?
The trustee you name will control the assets in your trust. Most likely, you have named yourself as trustee, so you will still have complete control. One of the key benefits of a revocable living trust is that you can continue to buy and sell assets just as you do now. You can also remove assets from your living trust should you ever decide to do so.
Why is funding my trust so important?
If you have signed your living trust document but haven’t changed titles and beneficiary designations, you will not avoid probate. Your living trust can only control the assets you put into it. You may have a great trust, but until you fund it (transfer your assets to it by changing titles), it doesn’t control anything. If your goal in having a living trust is to avoid probate at death and court intervention at incapacity, then you must fund it now, while you are able to do so.
What happens if I forget to transfer an asset?
Along with your trust, your attorney will prepare a “pour over will” that acts like a safety net. When you die, the will “catches” any forgotten asset and sends it to your trust. The asset will probably go through probate first, but then it can be distributed according to the instructions in your trust.
Who is responsible for funding my trust?
You are ultimately responsible for making sure all of your appropriate assets are transferred to your trust.
Won’t my attorney do this?
Typically, you will transfer some assets and your attorney will handle some. Most attorneys will transfer your real estate, then provide you with instructions and sample letters for your other assets. Ideally, your attorney should review each asset with you, explain the procedure, and help you decide who will be responsible for transferring each asset. Once you understand the process, you may decide to transfer many of your assets yourself and save on legal fees.
How difficult is the funding process?
It’s not difficult, but it will take some time. Because living trusts are now so widely used, you should meet with little or no resistance when transferring your assets. For some assets, a short assignment document will be used. Others will require written instructions from you. Most can be handled by mail or telephone.
Some institutions will want to see proof that your trust exists. To satisfy them, your attorney will prepare what is often called a certificate of trust. This is a shortened version of your trust that verifies your trust’s existence, explains the powers given to the trustee and identifies the trustees, but it does not reveal any information about your assets, your beneficiaries and their inheritances.
While the process isn’t difficult, it’s easy to get sidetracked or procrastinate. Just make funding your trust a priority and keep going until you’re finished. Make a list of your assets, their values and locations, then start with the most valuable ones and work your way down. Remember why you are doing this, and look forward to the peace of mind you’ll have when the funding of your trust is complete.
Which assets should I put in my trust?
The general idea is that all of your assets should be in your trust. However, as we’ll explain, there are a few assets you may not want in, or that cannot be put into, your trust. Also, your attorney may have a valid reason (like avoiding a potential lawsuit) for leaving a certain asset out of your trust.
Generally, assets you want in your trust include real estate, bank/saving accounts, investments, business interests and notes payable to you. You will also want to change most beneficiary designations to your trust so those assets will flow into your trust and be part of your overall plan. IRAs, retirement plans and other exceptions are addressed later.
Will putting real estate in my trust cause any inconveniences?
In most cases, you will notice little difference. You may even find it easy to transfer real estate you own to your living trust, and to purchase new real estate in the name of your trust. Refinancing may not be as easy. Some lending institutions require you to conduct the business in your personal name and then transfer the property to your trust. While this can be annoying, it is a minor inconvenience that is easily satisfied.
Because your living trust is revocable, transferring real estate to your trust should not disturb your current mortgage in any way. Even if the mortgage contains a “due on sale or transfer” clause, retitling the property in the name of your trust should not activate the clause. There should be no effect on your property taxes because the transfer does not cause your property to be reappraised. Also, having your home in your trust will have no effect on your being able to use the capital gains tax exemption when you sell it.
Also, having your trust as the owner on your homeowner, liability and title insurance may make it easier for a successor trustee to conduct business for you. Check with your agent.
What about out-of-state property?
If you own property in another state, transferring it to your living trust will prevent a conservatorship and/or probate in that state. Your attorney can contact a title company or an attorney in that state to handle the transfer for you.
We get it: Nobody wants to contemplate his or her own mortality. And you may even feel that, in the context of death, questions about who gets which of your assets seem trivial. That might explain why numerous recent studies have found that only between 35% and 45% of Americans have a will.
But the fact is your loved ones will have to address those questions when you’re gone. And by executing a will and signing a couple other basic documents you can save them loads of aggravation and unnecessary expense — and grant them the ability to focus on their loss.
So to make this relatively painless, we’ll break it down into ten steps.
Understand why you need a will.A will lets you tell the world whom you want to get your assets. Die without one — which is known as dying “intestate” — and the state decides who gets what without regard to your wishes or your heirs’ needs. The laws about this process vary by state, but if you die and leave a spouse and kids, your assets will generally be split between your surviving mate and children. If you’re single with no children, then the state is likely to decide who among your blood relatives will inherit your estate.
Finally, making a will is especially important for people with young children, because wills are the best way to nominate guardianship of minors.
Take inventory and pick your team.Start by creating a comprehensive list of your assets, including investments, retirement savings, insurance policies, real estate or business interests, and collectible and sentimental items.
Then spend some time thinking about the following questions:
Whom do you want to inherit your assets?
• Whom do you want to name as guardians for your children in the event that you and their other parent dies?
• Whom do you want responsible for executing your will?
• Whom do you want handling your financial affairs if you’re ever incapacitated?
• Whom do you want making medical decisions for you if you become unable to make them yourself?
Draft your will.If your finances and wishes are simple, you may find that you can craft a quick and inexpensive will using a Web-based legal document service such as LegalZoom.comor Nolo.com. Otherwise, you’ll want to hire an attorney to draw up a will and other documents for you. The cost of having an attorney draw up a basic estate plan can range from $500 to $2,000, and more if you determine together that you should create a trust. (More on that below.)
Name an executor.A will also allows you to name your executor, the person who will be in charge of distributing your property, filing tax returns on behalf of your estate, and processing claims from creditors. Your executor can be a friend or relative, or a professional like an accountant or lawyer, but it should be someone you trust and who is willing and able to take on the responsibility.
If you name a professional, the executor will be paid from assets in your estate. You should negotiate the amount or rate in advance; compensation can range from hourly fees to a percentage of your assets paid annually.
Assign power of attorney.No one is immune from the loss of mental clarity that may come with aging or from a health crisis. Granting someone you trust the power of attorney allows that person — known as your “agent” or “attorney in fact” — to pay bills, manage investments, or make key financial decisions if you are unable to do so. Your agent is empowered to sign your name and is obligated to be your fiduciary — meaning they must act in your best financial interest at all times and in accordance with your wishes.
There are different kinds of powers of attorney. “Durable” power of attorney goes into effect immediately. Instead, most people building an estate plan will want what’s often called a “springing” power of attorney, which only goes into effect under circumstances that you specify, the most typical being when you become incapacitated.
Create a living will.A living will (also known as an advance medical directive) is a statement of your wishes for the kind of life-sustaining medical intervention you want, or don’t want, in the event that you become terminally ill and unable to communicate.
Most states have statutes that define when a living will goes into effect, and that sometimes restrict the medical interventions. Your condition and the terms of your directive also will be subject to interpretation. But a patient’s wishes are taken very seriously, so an advance medical directive is one of the best ways to have a say in your medical care when you can’t otherwise express yourself.
Assign healthcare power of attorney. You increase your chances that your directives will be enforced if you have a trusted health-care agent — sometimes called a health-care proxy — advocating on your behalf. You can name such an agent by signing what’s known as a durable power of attorney for healthcare. Your health-care agent should be able to do three key things: understand important medical information regarding your treatment, handle the stress of making tough decisions, and keep your best interests and wishes in mind when making those decisions.
Update your will.Review your will about once every year. You’ll also want to update it after a major life change such a birth, death, or marriage, or if you buy some real estate or receive an inheritance. When you do this, also make sure your beneficiary designations on financial accounts, insurance policies and other assets are up-to-date and coordinated with your will.
Communicate with your heirs.Inheritance can be a loaded issue, so be sure to discuss your plans and expectations with your family and friends. The sooner and more distinctly you outline your intentions, the less chance there will be for disagreements when you’re gone.
Decide if you need a trust. Contrary to popular belief, trusts aren’t just for rich people. (Though if you do have significant assets, or young children, you’ll definitely want to think seriously about creating one.)
A trust is a legal structure that lets you put conditions on how and when your assets will be distributed upon your death. Placing assets into a trust may allow you to reduce your estate and gift taxes and to distribute assets to your heirs without the cost, delay and publicity of probate court, which administers wills. Some also offer greater protection of your assets from creditors and lawsuits. If these benefits sound appealing — and they should — you can learn more about trusts on the next stage of the road to wealth.
Probate court proceedings (during which a deceased person’s assets are transferred to the people who inherit them) can be long, costly, and confusing. It’s no wonder so many people take steps to spare their families the hassle. Different states, however, offer different ways to avoid probate. Here are your options in Texas.
In Texas, you can make a living trust to avoid probate for virtually any asset you own — real estate, bank accounts, vehicles, and so on. You need to create a trust document (it’s similar to a will), naming someone to take over as trustee after your death (called a successor trustee). Then — and this is crucial — you must transfer ownership of your property to yourself as the trustee of the trust. Once all that’s done, the property will be controlled by the terms of the trust. At your death, your named successor trustee will be able to transfer it to the trust beneficiaries without probate court proceedings.
If you own property jointly with someone else, and this ownership includes the “right of survivorship,” then the surviving owner automatically owns the property when the other owner dies. No probate will be necessary to transfer the property, although of course it will take some paperwork to show that title to the property is held solely by the surviving owner.
In Texas, two forms of joint ownership have the right of survivorship:
Joint tenancy. Property owned in joint tenancy automatically passes to the surviving owners when one owner dies. (The survivor must, however, live at least five days longer than the deceased co-owner. Tex. Estates Code sec. 121.152.) No probate is necessary. Joint tenancy often works well when couples (married or not) acquire real estate, vehicles, bank accounts or other valuable property together. In Texas, each owner, called a joint tenant, must own an equal share. To establish joint tenancy, owners must sign a joint tenancy agreement.
Survivorship community property. Married couples can sign an agreement to own property together as “survivorship community property.” Owning property this way avoid probate when one spouse dies and the other becomes sole owner. (Tex. Estates Code sec. 112.051 and following.)
Payable-on-death designations for bank accounts
In Texas, you can add a “payable-on-death” (POD) designation to bank accounts such as savings accounts or certificates of deposit. You still control all the money in the account — your POD beneficiary has no rights to the money, and you can spend it all if you want. At your death, the beneficiary can claim the money directly from the bank, without probate court proceedings.
Transfer-on-death registration for securities- Texas does not let you register stocks and bonds in transfer-on-death (TOD) form.
Transfer-on-death deeds for real estate
Texas allows you to leave real estate with transfer-on-death deeds. These deeds are sometimes called beneficiary deeds. You sign and record the deed now, but it doesn’t take effect until your death. You can revoke the deed or sell the property at any time; the beneficiary you name on the deed has no rights until your death.
As the laws change, and as your family situation changes, (marriage, divorce, birth of a child, death of a named agent), it is crucial that you have an estate planning attorney review your current documents to make sure your goals for your hard-earned assets are fulfilled in the event the unthinkable happens.
This article does not constitute legal advice. Please seek the advice of a competent lawyer in your state. Margie Connolly is a practicing attorney in Sugar Land, TX. To schedule a free consultation, call 281-433-9488, or visit www.mmconnollylaw.com
All adults have the right to be informed, before medical treatment, of certain things:
1. The proposed treatment
2. The possible outcomes and risks of the proposed treatment
3. The risks of refusing treatment
4. Other possible methods of treatment
This is called “Informed Consent.”
But, what happens if you are unable to consent or to understand the nature of the proposed treatment due to a physical or mental impairment?
A MEDICAL POWER OF ATTORNEY allows you to appoint or name an “agent” (usually a relative or trusted friend) to make informed health care decisions on your behalf if you are unable to do so. This person can speak for you ONLY if you are unable. This document MAY give them the authority to make “end of life” decisions, such as discontinuing life support, but only in the absence of an ADVANCE DIRECTIVE.
An ADVANCE DIRECTIVE is a document which allows you to decide, for yourself, and while you are able, your preference as to artificial life support, in the event you are diagnosed as terminal. This document states your wishes as to continuing or discontinuing artificial life support, and saves your family from the agonizing decision, and/ or litigation.
Contact an Estate Planning Attorney for more information.