Monthly Archives: May 2015

What is an advance directive?

Estate Planning

One thing people can be sure of in life is that we can’t ever be 100 percent sure of what will happen in life. We all have certain hopes and wishes for our futures, and many of us feel a better sense of peace knowing we have planned for it as best we can. An important area of concern that can contribute to that peace of mind is addressing how we wish to be treated if we are incapacitated in some way.

A legal document designed to help communicate a person’s wishes about medical treatment in the event he or she can’t make those decisions because of illness or injury is available. It is known as an advance health care directive. It is also referred to as a living will. Based on personal values, the directive sets out in writing someone’s treatment choices and preferences. It is prepared with professional advice and provided to your physicians, other health care providers, hospitals and family members.

The advance directive may specify that if a physician determines an illness is terminal, it is the signer’s request that all treatments other than those utilized for comfort be stopped. Alternatively, it can direct a health care provider to sustain life by whatever means possible. The same distinctions may be made if injury or other condition is irreversible in the opinion of doctors according to prevailing medical expertise, and treatment decisions for oneself or self-care are no longer possible.

Acceptable, particular treatments to be provided or not to be administered may be included. Physician input as to any additional specifications is helpful. If a separate Medical Power of Attorney doesn’t exist naming someone to make medical decisions on behalf of the signer, the advance directive may include this designation.

As with most other estate planning documents in Texas, the advance directive form is signed before witnesses and follows state guidelines regarding options and content. Advance health care directives are suggested for every adult’s protection, and will ensure to the extent possible that personal wishes are followed.

Source: Texas Government, “Texas Living Will Directive Form,” accessed May. 21, 2015

The risk of borrowing to pay property taxes

Real Estate Transactions

For those who own their own homes and land, one of the largest expenses is simply paying the property taxes. These may come due twice during the year, but they are sometimes just due once, or one payment will be significantly larger than the other. For those who are not paying a mortgage — the property taxes are usually rolled into escrow accounts in a mortgage — this could mean paying thousands out of pocket.

This is exactly what happened to one man, who owed right around $19,000 and had no way to pay that much himself. He then found a lender who would give him the money, and he thought his problems were solved. The lender paid the cost up front so that his real estate was safe.

The catch, though, was that the interest rate was huge, at 18 percent. If he just made the minimum payments for the next 10 years, as the loan was structured, it meant he’d pay around $25,000 in interest on top of the $19,000 that he owed. The interest was higher than the debt itself.

According to the Texas Consumer Credit Commissioner, these types of loans are becoming more and more common. In 2008, there were 12,078 of them, but 2013 saw a jump all the way up to 15,738.

For the lenders, there is little risk, as a foreclosure would mean they got their money back. The risk is all on the homeowners.

It’s very important to know what you have to pay for your real estate and to know all of the legal ramifications of taking out a loan to cover the costs.

Source: Houston Chronicle, “Sandberg: ‘Cooling off’ period would help loan customers — 10-day delay would allow consumers needing to pay property taxes a chance to seek alternatives,” Eric Sandberg, May. 13, 2015

Becoming a guardian

Guardianships

A legal guardian is someone who has been authorized by the courts to care for another individual, such as a child or elderly individual. For elderly individuals, a guardian is usually appointed when the elderly person becomes unable to make his or her own decisions or care for his or her health and well-being, as well as financial matters.

Incapacitated individuals who are married usually have their spouse appointed as their guardian, since they are the closest relative. If the individual is not married or their spouse is unable to be a guardian, the closest relative after is usually the next eligible person. However, if more than one relative exists of equal eligibility, the court will decide which is most qualified.

When there are no eligible family members, a court may appoint a guardianship program, a financial institution or a bank to care for the needs of the ward. In some instances, a state agency, such as the Texas Department of Protective and Regulatory Services could be appointed.

While courts attempt to put an incapacitated individual’s best interest first and foremost when appointing a guardian, it is much better if a guardian is selected by the individual before he or she becomes incapacitated. Individuals should consider having papers drawn up by an attorney to appoint a guardian of their own choice in preparation, just as they should consider having a will drawn up when they are young.

Those who are applying for guardianship should understand the responsibilities they are being assigned. Properly fulfilling a guardianship role is extremely important, and the legal jargon can be quite confusing. If you have been or will be appointed as a guardian, you may need to speak with an attorney to be clear about your role and duties. You may have to make substantial decisions on behalf of your ward and should be well prepared.

Not everyone can be assigned as a legal guardian. For instance, minors cannot be a guardian of another individual. Others who might disqualify include someone who owes a debt to the individual who would be his or her ward, a person who might have a lawsuit against the ward or a person who has shown bad conduct, as well as those convicted of certain crimes.

Source: Texas Guardianship Association, “Guardianship Qualification,” accessed May. 14, 2015

Heirs plan to return ‘stolen’ art

Heirs & Beneficiaries

Families pass a number of items through the generations via estate processes. Common traditional assets passed on to heirs include money, investments, life insurance and real estate. Families might also pass on property such as vehicles or family heirlooms or keepsakes. In some cases, valuables such as jewelry or art are also part of an estate. But what happens if you find out that something you inherited was obtained via illicit means sometime in the past?

One Texas family is dealing with just such a question. The heirs of a World War II tank commander inherited three paintings. The paintings most recently hung in a room in the assisted living facility where the soldier’s widow was living. According to the family, the soldier himself won the paintings in a fair poker game. However, the man’s stepson said that he still considered that the paintings were stolen goods because of how they were originally obtained.

The paintings were part of a German museum collection. During the war, the museum workers hid the paintings in a salt mine. Most of the collection was preserved, but several paintings were looted or found their way home with American soldiers. According to reports, the three paintings inherited by this family, as well as two paintings inherited by others, are being returned to Germany.

While you probably don’t have a looted WWII art piece among items passed down to you through estate processes, it isn’t impossible that estates or inheritances could include stolen or questionable items. In some cases, there are laws governing how these items should be handled. In other cases, it’s a matter of doing what you feel is right. Understanding where those lines are, and managing estate processes from all angles appropriately, can reduce stress and legal issues when such situations arise.

Source: The New York Times, “Returning the Spoils of World War II, Taken by Americans,” May. 05, 2015

3 types of fiduciaries used in Texas

Estate Administration

If you’re not sure what a fiduciary is and you’re thinking about doing some estate planning in Texas, it’s important to look into exactly what this term means and the different types that are used. At its root, a fiduciary is an entity that works for you during this process. It can be a person — this is very common — but it could also be a trust company or a bank. They all perform similar functions in distributing your wealth after you pass away.

The first type of fiduciary is a trustee, and this term can be used with all of the above examples — a bank, an individual or a trust company. The trustee is given your property or wealth and legally owns it, but the trustee is also obligated to do whatever is mandated by the trust. For example, an educational trust for your grandchildren may pay out money to cover their tuition, but nothing else.

The next type is known as an executor. This is similar to a trustee, but an executor will often be used when there is not a trust fund, and the executor is responsible for referring to the will and doing what the will instructs. For instance, the executor may inform the family members of what wealth and property has been left for them and then work to get it into their possession. Often, this all happens at one time, rather than utilizing the long-term distribution of a trust.

A personal representative is virtually identical to an executor; this is simply another term used to describe the same job. The personal representative may also need to sign certain legal documents.

Source: American Bar Association, “Guidelines for Individual Executors & Trustees,” accessed May. 04, 2015