Jump to Navigation

El Paso Elder Law Blog

Steps Texas residents should take to develop a solid estate plan

There are many reasons why Texans might avoid or delay estate planning, ranging from apprehension about death to busy schedules. Some individuals mistakenly assume that their estates are not large enough to warrant estate planning. However, avoiding or neglecting estate planning and related legal issues can have significant ramifications for individuals and their heirs.

Estate planning is about more than distributing assets after death; it also involves ensuring that an individual's last wishes relative to his or her own health and financial well-being are implemented. For that reason, a solid estate plan will generally include a will, a health care proxy or "living will," and medical and financial powers of attorney. The living will sets forth the individual's wishes relative to end-of-life care while the powers of attorney allow the individual to select and guide the individuals who will make medical and financial decisions for them if they are permanently or temporarily incapacitated.

Estate planning essential for older parents

Careful planning may be helpful for anyone looking to start a family, but Texans nearing or at retirement age might be especially interested in preparing for the future if they are raising young children. First-time and second-time parents in their golden years may want to observe some key issues with regard to financial and end-of-life planning.

Having a will is important to any persons who have assets they wish to pass on, but for older parents of minor children, estate planning is about more than just making sure their heirs are financially stable. In order to prepare for the possibility that their children may need another guardian, a will may name someone to be legally responsible for the children's care if tragedy strikes. Establishing living wills and powers of attorney to execute the wishes of the incapacitated may be necessary if the children are not psychologically able to make decisions for themselves or their parents.

New tax laws present challenges in estate planning

El Paso residents who own trusts may be interested in how new tax laws will affect their assets. New income tax rates are increasing the tax liability for many trusts as is the new tax to support the Affordable Care Act. While the higher income tax rate and Medicare surtax only apply to individuals who make a lot of money, they apply to trusts after $11,950 annual income.

Estate planning attorneys have been taking alternative approaches to minimize the new increased tax liability. One approach is to invest the trust's assets in tax-friendly assets like municipal bonds. These bonds are often issues by state and local governments or non-profit institutions like schools and hospitals. The interest they pay is tax-free. However, yields on municipals are currently low, and proposed legislation could make them taxable in the future.

Estate planning is important for unmarried Texas couples

It is not uncommon today for people to have multiple marriages or unconventional relationships that aren't legally recognized. There also may be minor children from more than one relationship that need to be included in the legal decisions that surround preparing a will and estate plan. Making these types of plans will clearly define the desires of the testator.

The general idea behind estate planning is to preserve wealth for the heirs, reduce family conflict that comes with people trying to guess what the deceased really wanted and to minimize, as much as legally possible, the impact of taxes. Individuals with minor children should also ensure their protection by selecting a legal guardian.

Planning for the cost of long-term care

Residents of Texas have similar issues with America's for-profit healthcare system as the rest of the nation. Nearly 70 percent of all Americans will require long-term care at some point in their lives, but few of them carry long-term care insurance. This can be most important in old age and after major medical issues, when the ability to earn money may be substantially impaired.

Medicaid can be helpful to eligible individuals, but it is usually not available until they near the poverty level. With the median price of a private nursing home at approximately $80,000 a year and home health assistance running around $40,000 a year, it will not take long to deplete savings and spend whatever was meant to be left as an inheritance.

Estate planning ahead of time

For many Texas residents, confronting mortality is a dreaded prospect. Estate planning and the drafting of wills may be especially difficult. However, planning for the distribution of property and other assets after death is important because without a will, courts can decide which heirs inherit what without any consideration of preference or need.

Drafting a will is an important first step in estate planning. In cases where finances are straightforward, a will can be created using online programs that generate legal documents. In more complex cases, hiring a lawyer to draw up a will and estate plan may be a wise choice. This tends to cost between $500 and $2,000, but it's well worth having a reliable and thorough asset division plan. Many studies have confirmed that less than half of Americans, or around 35 and 45 percent, have a will. Writing one will simplify matters for loved ones so they don't have to deal with legal hassles in addition to grief.

Rules for modern estate planning in Texas

Regardless of age or marital status, it is important for everyone to have an estate plan in place. For those who are single, it may be impossible to pass assets on to future generations without a will or a living trust that dictates where possessions go upon passing. Unless it is clearly stated, possessions are divided according to state law. It is also important to know that an IRA or other retirement account may not be able to be passed on regardless of what actions are taken.

Having a medical directive is also important for those who are single or not legally married because federal law may make it impossible for anyone other than immediate family members to visit in a hospital unless they are specifically allowed to in writing. Single people who are in a relationship with another person could also be putting their partner's assets at risk if they have to be put in a long-term care facility that is paid for by Medicaid.

Well-executed wills a part of effective estate planning

Most parents in Texas know that the creation of a will is a solid foundation to an effective and thoughtful estate plan. There are many other important estate planning documents to be filed, but a will is the most popular tool for the naming of beneficiairies, the distribution of certain assets and the appointment of a guardian for young children. All of these tasks require a competently executed will, as a poorly prepared one may cause more problems than it solves.

Advisers warn that there are several missteps some will planners make which can cause strife, court interference or even one's instructions not being followed after death. One of these problems is the use of overly vague language in a will. Because the will speaks for the decedent, it must express that person's wishes clearly and specifically. Any language that can be misunderstood or which is just unclear in a will may make for confusion, argument or resentment among loved ones.

States including Texas considering merger of Medicaid, Medicare

Texas is among the states that are lining up to merge the government health care plans Medicaid and Medicare into one entity, no longer earmarking the former for the poor and the latter for the disabled and the elderly. However, the need for long-term care, growing dissatisfaction over the programs' financial incentives and confusion over the different rules and overlapping benefits have spurred some states to consider merging the two into one all-compassing benefit plan. It would be a huge change in the two programs, which were enacted almost 50 years ago.

A central issue is the existence of more than 10 million Americans termed "dual eligibles," meaning that they qualify for both Medicaid and Medicare. Wasted money and ineffective coordination of health care efforts concerning these benefit recipients have brought to the forefront the idea of melding the programs to cut waste and provide more effective care. The portion of money spent on dual eligibles is much higher than their numbers.

A celebrity lesson in high-asset estate planning

Film fans in Texas who enjoyed the "Fast & Furious" movies will never forget the late star actor Paul Walker. Now, some may want to look to him for an example of an effective high-asset estate plan as well as what could have been done to improve it. Walker had a revocable living trust that named his heir as beneficiary. Fans may remember that Walker, 40, died in November 2013 after a car he was riding in hit a pole at 100 mph.

Walker left behind a 15-year-old daughter and an estate worth approximately $25 million. His mother, not his daughter's mother, was designated as guardian. Walker left a will, which placed all of his assets into the trust upon his death. The estate then had to go through probate. If he had instead funded the trust while alive, probate could likely have been avoided. Probate cases and wills are public information, so it is often best to avoid the courts by setting up the proper trust.

Contact Form

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Privacy Policy | Business Development Solutions by FindLaw, a Thomson Reuters business.