In previous blogs, we’ve covered the importance of estate planning and the reasons Texas residents should consider creating a last will and testament, even early in life. Because individuals do die without wills, the Texas Estate Code details procedures for heirship proceedings.

Heirship proceedings are authorized in a number of circumstances. First, if a person dies without an estate plan or will, then heirship can help family members work through the court to administer the estate. The proceedings may also be allowed if some property was left out of a will, no disposition was previously made on the estate in Texas, or the trustee cannot fully execute an estate without determining who the heirs of a decedent may be.

Heirship action can begin any time after a decedent has passed away and can be instituted by family members, trustees, creditors or guardian of the estate. During the heirship process, legal action is taken to seek out and protect all possible heirs of the estate, which means the court will appoint a separate attorney to represent the interests of any unknown heirs. It’s important for family members to understand the full context of heirship proceedings, because it may come as a surprise to learn that other individuals could share in an inheritance.

The best way to avoid surprises during the estate administration process is to work prior to a death to develop wills and other estate documents. In the absence of such planning, however, experienced legal assistance can offer family members some peace of mind during heirship proceedings. Even without a will, the Texas Estate Code offers some protection to certain types of heirs.

Source: Texas Estates Code, “Authorization and Procedures for Commencement of Proceeding to Declare Heirship” Oct. 10, 2014

We’ve all seen the television shows where an unknown heir comes forward to contest a will to claim millions from his or her long-lost relative. However, that really doesn’t happen very often. There are a few challenges to the validity of a will that are recognized in Texas, though. Consider the following:

Fraud: This can be difficult to prove. An heir or beneficiary who wants to contest a will on this point will need to prove that the author of the will signed it because he or she was tricked in some way. An example of fraud would be someone signing a will that he or she believed was another legal document.

Undue influence: This is another reason for contesting a will that can be difficult to prove. This is often used by those who are left out of a will and believe that someone pressured the decedent to change his or her will.

Lack of capacity: A will may be contested if it is believed that the author of the will was not mentally capable of understanding what he or she was creating and signing.

Improper execution: A court could throw a will out if it was not filed or executed properly.

Creating your last will and testament is an important step in the estate planning process. You want to preserve your legacy for your heirs, but you also don’t want to make a difficult time in their lives even more amplified by not having a legally-executable estate plan. The advice of an estate planning attorney can be very beneficial and ensure that your wishes are carried out after your death.

Source: AARP, “Where There’s a Will …” Sep. 24, 2014

The reason for a last will and testament is obvious — to ensure that your fortune or assets go to the person or party you choose. After all, you probably worked hard for what you have, and it is your right to decide who gets it. But if it is not in writing, don’t expect someone’s word that you wanted them to have something to hold any weight.

After almost 20 years, J. Howard Marshall, a Texas billionaire, finally can rest in peace along with his last will and testament. Marshall died in 1995, but was well-known not only as a Texas oil tycoon, but for his marriage at the age of 89 to Anna Nicole Smith, who was only 26 at the time. His death occurred just a year after their marriage.

His estate at the time of his death was worth $1.6 billion. Marshall’s last will and testament left the entire estate to his son. Smith, whose real name after her marriage to Marshall, was Vickie Lynn Marshall, was left nothing, although during their short marriage, he had lavished her with gifts and money.

Smith challenged the validity of the will, saying that Marshall had vowed to leave her in access of $300 million. Even though a jury found Marshall’s will was written under no undue pressure and that he was mentally stable when he wrote his will, a legal battle ensued.

Anna Nicole Smith died in 2007 from an apparent drug overdose, and her estate continued to challenge Marshall’s will and to request a sanction on his estate, which now belonged to his son.

Monday, an Orange county judge finally laid the battle to rest. He denied the request to sanction Marshall’s estate, and claimed that this case had gone on far too long. At this point, Smith’s estate was attempting to obtain $44 million dollars from the Marshall estate. The last will and testament had served its purpose.

Just as important as it is to have a will drawn up so heirs or courts will not have a guessing game when it comes to distribution of your assets, it is just as important to update your will on a regular basis, especially when family members or beneficiaries may have changed.

Source: Texas Chronicle, “Anna Nicole Smith’s estate loses bid for millions” Aug. 19, 2014

For families in Texas — or anywhere in the country — things like funeral arrangements, wills or asset distribution upon a loved one’s death aren’t popular dinner-table topics. While such things can be difficult to talk about, you don’t have to leave family members or heirs in the dark. Taking time to document an estate plan now can lessen frustrations down the road.

Consider creating a file with all estate-related documents enclosed to make it easier on loved ones. Store the file at home, in a safe-deposit box, with an attorney or other estate professional or as a virtual copy on the computer or cloud.

Perhaps obviously, one of the first documents to include in your file is a will. Copies of other legal documents, such as trusts, power of attorney or health-related forms should also be included. Some of these documents would be used by family members prior to your death should you be unable to make financial or health decisions on your own.

In addition to specific estate documents, consider including copies of life insurance plans in the file. You might also provide a list of all financial accounts along with some instruction on how the executor of your estate would access those accounts. It’s probably a good idea not to keep a list of passwords in the same file, as that could pose a security risk.

Finally, include any other documents relevant to survivor benefits. This might include pension plans, investment accounts or any account that pays a beneficiary upon your death. Creating a comprehensive record of your assets, along with your wishes for those assets, helps alleviate probate issues for loved ones in the future.

Source: Time, “Want Less Stress? Get Your Estate Plan In Order” Beth Pinsker, Jul. 15, 2014

Texans who are getting ready to do some estate planning, such as having a last will and testament drawn up, may want to consider their heirs. You probably already know who your heirs will be, but by “consider your heirs,” we mean consider their personalities — their strong points and their weak points.

This way, as you plan your last will and testament, you can set your heirs to be winners and not losers. You don’t want to see the inheritance you have built through hard work squandered away, do you? Unfortunately, depending on who your heirs are, that could be just what happens.

There are some common mistakes that heirs make when they receive an inheritance. The most common is careless spending. People who have had little money for most of their life are inexperienced with how to make a windfall of money last and work for them. They buy large items, such as houses, cars or boats. However, as time moves on and the money is gone, they haven’t planned for how they were going to support those assets.

Another common mistake that heirs make is letting an inheritance — theirs or someone else’s — cause problems between them and their families. Inheritances can cause jealousy when everyone doesn’t get the same. It often harbors feelings of “they don’t deserve it.”

Finally, new heirs will probably need some advice from someone who can direct them on what to do with their inheritance. Many heirs just think it is their money now, and they can make their own decisions.

To avoid these problems, do some thorough estate planning with your attorney. When deciding who gets what, know and consider your heirs. Put safeguards in place, such a trust. It may be time-consuming, but it will make a great deal of difference for those you love.

Source: U.S. News and World Report, “5 Inheritance Mistakes for Heirs to Avoid” Susan Johnston, Jul. 15, 2014

If you are an heir or beneficiary of a property owner in Texas, you may not be happy about the possible news of tax relief in the upcoming year.

Political pundits and lawmakers have been tossing around the idea for a while now, having been exacerbated by primary elections and runoffs. One candidate for governor promised to cut Texas property taxes and emphasized the cuts would be particularly beneficial for older voters. The litany has continued on his social media site.

The liberals and independents in the Lone Star State might be happy to hear the potential cuts. While the state property taxes are levied by the local governments, lawmakers have little power to change the rates doled out to unhappy homeowners. The news is not all bad, however, given that the state can prevail over allowing provisions for citizens over 65 as well as for farms.

While the law says some older homeowners are eligible for a freeze in taxes, they can also reduce or eliminate them in favor of liens payable after their deaths. This is not appealing for heirs and beneficiaries but helps older voters to continue to survive financially and keep their homes.

Implicit in state control is the financial repercussions trickling down to school districts and city municipalities that would have to scramble to get funding in other areas. If legal provisions allow for freezing appraisals and tax bills, exemptions could be extended to younger homeowners, who might find the new guidelines unfair and prejudiced according to age.

In Texas, as in other states, it is all about revenue. To keep funds flowing, local governments would have to penalize those not eligible for exemptions. Beneficiaries and heirs to property owners will be affected by this situation. To protect yourself and your financial future, you should contact a legal professional who can assist you in understanding your rights as a beneficiary or heir, and what tax implications might be upon the death of a loved one who has designated you in his or her will.

Source: ;The Texas Tribune, “Analysis: Finding Property Tax Cuts That Taxpayers Feel“, June 27, 2014

Many Texans know that having an estate plan in place is important for protecting their assets and making sure their finances are handled according to their wishes. To many, estate planning simply means drafting a will. While this is certainly an important part of a plan, there are many more documents that should be considered as well. Even if your estate planning is very thorough, it’s important to keep your documents up-to-date, especially after big life changes such as a new child, marriage or divorce.

Aside from a will, some of the most important documents to consider preparing include a power of attorney, a health care proxy and a revocable living trust. A revocable living trust in particular can expedite your property’s transition process after death as well as making sure that your assets are managed correctly should you become incapacitated. These types of trusts also allow for greater privacy than a will.

Being incapacitated can cause just as much mayhem for a family as passing away if a solid estate plan is not in place. With life expectancies continuing to rise, incapacitation is becoming increasingly more likely before death. This is where powers of attorney come in. A durable power of attorney grants a specific person permission to make financial decisions on your behalf. Similarly, a health care power of attorney, or health care proxy, can be established to make medical decisions for you if you are no longer able to.

Once documents like these are in place, they cannot simply be forgotten. Over time, different circumstances might lead you to desire a change in your will’s beneficiaries or an adjustment in the trusts you’ve set up for your children. You might also wish to change the person you’ve established as a power of attorney. Changes in tax laws can also necessitate a review of your estate planning documents. On the whole, Texas residents who want to prevent family chaos after their death should consider the various estate planning strategies as soon as possible and then review them consistently.

Source: MainStreet, “Estate Plan Overhaul: Time to Shape Up Your Strategy” Bruce W. Fraser, Jun. 10, 2014

Historically in Texas, surviving spouses only received half of community property assets. The other half would go into probate to be divided according to state law. After numerous attempts to change the law, a 1987 legislation that amended the state constitution finally passed. The legislation modified estate law, providing spouses with more control over distribution of assets when it comes to community property.

The law provides spouses an opportunity to enter into a Community Property Survivorship Agreement. The agreement lets spouses indicate that any portion of the community property goes to a surviving spouse — including a designation of 100 percent of the property, if so chosen.

The Community Property Survivorship Agreement doesn’t cover all property. For example, if a wife inherits a home from her sister, the property belongs to her as an individual. In order to leave the home to her husband in the event of death, she would have to make it community property or transfer it to him in a trust or will.

Estate planning documents should also be used if a spouse doesn’t want 100 percent of assets to go to a surviving spouse. For example, if a couple has a bank account considered community property, half of the assets in that account belong to the husband and half to the wife. The husband may want his half split between all heirs — including his wife and children — if he dies. In this case, a trust or will can ensure his wishes are carried out despite the community property arrangements.

In Texas, as in any state, estate planning can be a complex affair. You don’t have to be wealthy to have an interest in protecting the future of those you love. Planning ahead can reduce stress and duress for your family.

Source: My San Antonio, “When to Avoid using Community Property Survivorship” Paul Premack, Jun. 04, 2014

Texas residents whose spouses predecease them and leave them an individual retirement account may be confused about the best way to protect the asset from penalties. The key to deciding what to do with the money depends on the age of the deceased and that of the surviving spouse.

There are two basic decisions to be made — to shift the money into an inherited IRA and keep it as a tax shelter or to roll the funds into a separate individual IRA.

According to a technical consultant, when deciding what to do, consider age. If the survivor is younger than 59 1/2 and the deceased spouse died before making 70 1/2, and the money is needed, it is better to remain a named beneficiary. Rolling the money into his or her own IRA and making any withdrawals will incur 10 percent penalties until the age of 59 1/2. Remaining a named beneficiary will allow the survivor to make withdrawals as needed without penalty, but the IRA must be retitled as an inherited IRA.

The decision made can impact the next generation of heirs. When the surviving spouse rolls the IRA into his or her own, beneficiaries can factor in their own life expectancies when taking distributions as they, in turn, inherit the money. Beneficiaries are able to stretch out the distributions over the period of their remaining lives if it is kept as an inherited IRA.

A Georgia consultant stresses that the surviving spouse is “not locked into that option,” and may roll the funds into a separate account at a later date.

If the survivor is younger than 70½ with no pressing need to access the money, it’s generally a good idea to go ahead and make the IRA solely his or hers. The minimum distributions won’t begin until the minimum age requirement of 70½ is met.

If the original owner of the IRA died prior to having to take the minimum distributions, spouses who are named beneficiaries won’t have to begin taking disbursements until the time the late spouse would meet that age criteria had he or she lived. April 1 is the “required beginning date” in the year after the owner reaches the 70 1/2 milestone.

Don’t wait until the death of a spouse to sort this out. An estate administration attorney can explain your options to you at a time when you are not under stress and grieving.

Source:DailyFinance.com, “When a Spouse Inherits an IRA” Rachel L. Sheedy, Apr. 22, 2014

In the U.S., farming and agriculture play a dominant role in the economy. Frequently farms and ranches are passed down from one generation to another. The assistant director for agriculture, resources and community for neighboring Kansas State research spoke at a Women in Agriculture Conference for Seward County. He stated that, as in many facets of life, communication skills go a long way, especially in succession planning and estate planning.

Ensuring a successful transition from one generation to the next involves several key steps. First, senior members of the family business should provide clear goals, along with the transition of how assets will be passed along to heirs.

While estate planning is key, succession planning must be examined in order to ascertain whether the next generation will be compatible with business and management philosophies. These issues require the input and consideration of heirs and family managers, along with individuals that might be outside the family nucleus.

Recommendations included prioritizing values including strategic planning, maintaining a sense of trust in all stakeholders, and the ability to perform objectively in the conflict resolution and building consensus skills.

Business philosophies and financial risks need to be assessed, along with outlining the responsibilities of labor and management. Multiple iterations of the plan might be crafted and approved by an informed estate planner, along with an honest appraisal of any awkward family secrets.

All meetings would involve multiple specialists, including counselors, mediators, financial mediators and legal advisors. Facilitators should also be allowed to pull in other resources such as communication specialists, conflict management specialists, counselors, mediators, financial managers and lawyers.

It is never too early to start planning for the future. Especially in cases of passing down a family business, all involved parties should spend quality time with planned periods of rest. This should include a variety of experts in various fields that can provide support and assistance to develop and maintain a plan to provide for continuing sound business planning and provisions for heirs and beneficiaries in years to come.

SourceLeader & Times, “Passing on the family farm” Robert Pierce, Feb. 01, 2014