For many parents in Odessa, trying to plan for a death can be difficult. Most parents may not think about what will happen to their children if they die, especially when they are young and healthy. Unfortunately, many Texans realize that an accident can happen at any point and strong estate planning is crucial to ensure one’s money is passed on to the right individuals. For the parents of special needs children, however, it is even more important to use the proper estate planning techniques so as to not interfere with federal disability benefits.

Setting up a third-party special needs trust can be a complex way to provide for special needs children after their parents’ death, but it is also an extremely effective way of protecting those children. These trusts will generally not prevent a special needs child from receiving Supplemental Security Income or Medicaid benefits, as the beneficiary does not own the funds, he or she merely receives monetary payments.

Setting these trusts up, however, require a detailed understanding of Texas estate planning law and usually require the assistance of a trust lawyer. Even if parents are familiar with the law, even the slightest error could prevent a child from receiving the money left to him or her, or could seriously change what sorts of state and federal benefits the child is able to receive.

Another benefit of a special needs trust is that the child is not responsible for managing the money and the parents can put specific restrictions on how the money is to be used. It will then be up to a trustee to ensure the terms of the trust are followed.

Source:The Fiscal Times, “Estate Planning Guide for a Special Needs Child,” Sonya Stinson, July 10, 2013

A ruling from the United States Supreme Court that is anticipated this month will have a major impact on estate planning and tax planning for same-sex couples. The case involves a woman who was legally married to her spouse in the state where they lived when her spouse passed away, leaving behind a substantial estate. For opposite-sex couples, marriage means that a surviving spouse can inherit without tax liability. In this case, the woman paid a substantial estate tax because of a federal law that does not provide that tax benefit to legally married same-sex couples.

The woman challenged the Defense of Marriage Act, saying that the federal government deprived her of her property without due process of the law. If she is successful and the court rules in her favor, same-sex couples who are legally married in one of the 12 states that permits it will have access to tax benefits, which will likely have a big impact on their estate plans.

As the ruling approaches many couples are hoping that a favorable ruling will help untangle some of the mass of legal documents and property arrangements that they have needed to share property and other assets.

As it stands, even legally married couples must execute air tight wills and trust documents to insure that their spouse inherits instead of children, siblings, or other family members. Since the tax liability still exists, it is often advisable to take advantage of gift tax exemptions and structure the estate in a way that maximizes those opportunities. All of this can be done with the help of an experienced estate planning attorney.

Source:Wall Street Journal, “Advisers Bolster Same-Sex Estate, Tax Planning,” Arden Dale, May 30, 2013.

In a past post we discussed the challenges of dealing with our digital property like music, photos, and emails in our estate plans. Figuring out what to do with correspondence and other digital belongings is one element of estate planning that is changing with new technology, but it isn’t the only one. In addition to thinking about those issues, Texas residents should also take time to think about another issue: access.

Access to our digital lives is much more difficult to pass along than a pair of keys to a home or the code to safe. This is because we store our information in dozens of different accounts with various passwords and usernames that may or may not be written down anywhere. And while it is a relatively simple process to shut down a loved one’s Facebook account without password access (the site itself can help with that), it is quite another issue altogether to gain access to things like online banking or automatic bill paying.

While many of us have migrated our financial affairs to online platforms rather than paper statements, a recent study showed that 45 percent of high net-worth people who were polled had no organization system for passwords or online account information. This is a problem not only for access purposes, but for finding all of the assets that someone has after they pass away. Many people do not realize that after they pass away, family members, the probate system, and their named executor will all go on a hunt to make sure that there are no secret accounts or properties, or unknown children who are not listed in the a will. Without a paper trail to follow and no account login information to tell them where to look, executors are often at a loss to notify banks or portfolio managers that someone has passed away.

Readers: Do you have your digital life organized as a part of your will

Source:New York Times, “Leaving Behind the Ditigal Keys to Financial Lives,” Paul Sullivan, May 24, 2013.

When Texas couples take their marriage vows, they promise to love and honor each other until death. When we get married, we are focused largely on the here and now and the exiting future for the family, but at some point it is also important to start thinking about what will happen if or when one spouse passes away before the other. This is a very sad thing to think about and plan for, but since it will be a reality for many people, it must be considered.

In addition to having the important conversations with a spouse about who will inherit what and how it should be passed down to friends or family members, spouses should also think about their individual estate plans. A lot of couples choose to execute the same or corresponding wills with the same attorney. This approach can have advantages and disadvantages, so it’s helpful to consider seeking individual counsel during the estate planning process as well.

There are both practical and ethical considerations to doing coordinated but separate estate plans with a spouse. For example, one spouse may have valuables or other assets that their partner does not know about that they would like to leave to a friend or relative instead of including in the entire joint estate. Or, a couple could choose to write their wills together using the attorney they work with on other issues, but that could give rise to a conflict of interest in the event of a disagreement between the spouses. In these sorts of situations, having an independent and unbaised advocate for each spouse can be helpful.

Source:Forbes, “Ethics in Estate Planning for a Married Couple,” Stephen J. Dunn, April 26, 2013.

When Texas couples take their marriage vows, they promise to love and honor each other until death. When we get married, we are focused largely on the here and now and the exiting future for the family, but at some point it is also important to start thinking about what will happen if or when one spouse passes away before the other. This is a very sad thing to think about and plan for, but since it will be a reality for many people, it must be considered.

In addition to having the important conversations with a spouse about who will inherit what and how it should be passed down to friends or family members, spouses should also think about their individual estate plans. A lot of couples choose to execute the same or corresponding wills with the same attorney. This approach can have advantages and disadvantages, so it’s helpful to consider seeking individual counsel during the estate planning process as well.

There are both practical and ethical considerations to doing coordinated but separate estate plans with a spouse. For example, one spouse may have valuables or other assets that their partner does not know about that they would like to leave to a friend or relative instead of including in the entire joint estate. Or, a couple could choose to write their wills together using the attorney they work with on other issues, but that could give rise to a conflict of interest in the event of a disagreement between the spouses. In these sorts of situations, having an independent and unbaised advocate for each spouse can be helpful.

Source:Forbes, “Ethics in Estate Planning for a Married Couple,” Stephen J. Dunn, April 26, 2013.

Many Texas families have collections of some kind, like antique holiday decorations or specialty cocktail glasses. While these collections often hold a special place in our hearts and within our families, they may not hold a lot of monetary value. This is just one reason why considering this type of issue during the estate planning process is so important.

As with other sentimental items, family members often struggle to know what to do with collections after a loved one is gone. It is important to honor the memory and respect the person’s wishes, but with larger masses of items it can be difficult to strike the right balance. To save some of this emotional difficulty and possibly financial struggle, Texas residents should include some basic instructions on how to handle a large collection, including alternatives for when families want to either keep or not keep the items.

For example, perhaps the ideal situation would be for younger generations to keep the antique tea sets, but they are not interested at the moment. In the event that they are unwilling or unable to maintain the collection, consider whether a friend or fellow enthusiast might be a worthwhile recipient of the items.

For invaluable collections, the challenge is often finding a creative way to keep the sentimental value of the items while still dealing with the physical mass that can accompany large collections. As we’ve discussed in a previous post, smaller homes and more modest lifestyles brought on by the recession makes it more difficult for younger generations to hold onto heirlooms the way that they used to.

Source: New York Times, “The 700-Doll Question,” Jo Maeder, May 8, 2013.

We often make the mistake of thinking that estate planning is for someone else. Someone with more money, someone older, someone with more children, or someone with a more complicated family situation.

The truth is that estate planning is for everyone, and all Texas residents should take the time to consider what they want to have happen to their belongings and other assets when they pass away. Young people in particular often believe that estate planning is not for them, forgetting that they should plan for their pets, their retirement accounts, their cars, homes, and collectible items, even if this things hold little monetary value.

Another important element to estate planning for young people is healthcare planning. No one wants to think about what will happen after a car accident or other incident leaves them incapacitated, but for unmarried young adults, this is a crucial matter to consider. Without designating a friend, parent, or signficant other to make healthcare decisions, no one will have access to medical records or be able to discuss the next steps with doctors.

For these and other sensitive issues, it is important to understand the exact legal implications of filing out a particular form or completing certain documents. For example, HIPPA forms allow access to medical records, but do not provide for someone to make decisions in the event that the patient is unable to make them. As such, it is important to also designate someone as a healthcare proxy, which requires a different set of paperwork and different formalities.

Source:ABC News, “Even young adults should start estate planning,” Sheyna Steiner, May 6, 2013.

With the estate and gift tax stabilized at $5.25 million for individuals, Texas readers might think that estate planning is only for the very rich. However, the reality is that tax planning and gift planning is only one portion of the full estate planning picture, and that there are many other elements that are important to consider.

For example, people at every income level who have children need to take the time to choose and designate a guardian in the event that they die or are otherwise unable to care for their kids. This is a truly unpleasant thing to think about, but it is even concerning to avoid planning for it and to leave relatives or the state with the responsibility of choosing a guardian.

Another important thing to consider is will revisions. Often once we’ve drafted a will we believe that the job is done and we can stop thinking about it. However, with family members getting married or divorced, having more children or changing careers, the original plan for disbursing assets may not suit the new situation.

There is also the matter of changing estate tax laws. While the current exemption has stabilized for the foreseeable future, Congress could choose to alter it or enact additional laws that modify estate planning and tax liabilities considerably. When that happens, it is crucial to take another look at the previously made plan and making sure it still works given the new laws.

Acquiring new property or opening a new investment or retirement account can also impact estate planning. Many people don’t realize this, but if a will instructs the executor to give all investments to your only child, but the investment account lists your spouse as the beneficiary, the money will go to the spouse when the beneficiary designation form overrides the will. Revisiting these issues to iron out conflicting choices can help simplify the process in the long run and avoid conflict.

Source: New York Times, “Estate Planning Remains a Moving Target Under the New Tax Law,” Paul Sullivan, April 26, 2013.

A major element of estate planning, along with planning for financial assets, is planning for the distribution of personal items. From art collections to antique tea sets, many Texas families have amassed significant collections of personal items that have both monetary and sentimental value. However, younger generations are increasingly turning these items down or eventually selling them, citing a lack of space or disinterest in the items themselves.

The problem of orphaned heirlooms also grows out of changing tastes and changing lifestyles. Where it was once expected and perfectly reasonable to have a basement or attic filled with family artifacts, smaller homes and more modest lifestyles have caused people to have to prioritize between saving things and saving money and space. The economic recession has also lead to an increased need for mobility among working-aged people who may have to move to another city or state to find work and cannot continually transport valuables like grandma’s china or antique military swords.

The change is also generational in many ways. Grandparents who are passing down their belongings now came from the Great Depression generation, where it would be unthinkable to discard a perfectly good piece of furniture or divest of items that held value. Not only have items like furniture become less expensive, but less emotional emphasis is placed on having the right sorts of things.

Figuring out what to do with all of these items is very important both to preserve essential parts of a family legacy and in terms of creating a realistic estate plan. In some cases, grandparents or parents may not want to admit that their family would discard their beloved crystal animal collection, but know deep down that it is not practical to keep. This is where estate planning can help facilitate practical discussions and come to an agreement while the owner of the belongings is still around.

Source: The Star Tribune, “No longer saved for generations, family heirlooms are being shed” Kim Palmer, April 22, 2013

Information about estate planning for Texas families can be found on our website.