What is estate planning?

A will sets out how you want the things you own at your death distributed.  But an estate plan is part of how you carry out your life.  It is part of your personal planning to meet your responsibilities or your goals, or both.

Here are some examples of the primary purpose you may have for your estate plan in different circumstances.

  • A person with young children:  To make sure the children are cared for and able to pursue the education or life goals you would help them with if you were around
  • A person who owns a business: to make sure the business continues to thrive in your absence and can be sold or taken over by family members and give them value
  • A person nearing retirement age: to make sure that any disability in old age does not leave you destitute
  • A person who has a child with a disability: to make sure that your child who cannot support or care for him or herself has resources to live a good life
  • A person with no children: to contribute to the care of other family members, or to support causes of importance to you

These are just a few examples of the types of goals that may important to people in different stages of life.  An estate plan, which includes a will but may include other documents as well, can do far more than merely state who gets your things after you die.  It can fulfill your obligations and further your life legacy.

Estate planning also includes planning that will ease the immediate problems associated with a temporary disability, such as a serious illness or extended hospitalization for injuries from an accident.

What is a HIPAA release?

While a Medical Power of Attorney gives your named person the right to receive and discuss your private medical information with doctors and other treatment providers as a necessary part of making medical decisions for you, the HIPPA release is your permission for the named person(s) to receive and discuss medical information with any person or company, but does NOT give any medical decision making power.

The HIPAA Release can give others designated by you the right to talk to your doctors,  your health insurance provider, pharmacies, and social services that may be needed in the event of a medical emergency.

If you suffer a serious injury or illness, there will undoubtedly be issues that need to be handled with your insurance provider and others.  A helpful friend or family member can be a lifesaver, but unless you sign a HIPAA waiver that allows the agencies to deal with them, they won’t be able to help you much.

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What is a Medical Power of Attorney?

Only you can consent to your own medical treatments – but what happens if you are injured so badly you can’t do so?  The person the doctors turn to may not be the one you trust with your life, or worse yet, two close family members may fight over the right to decide your fate.

A medical power of attorney lets you designate in advance of an emergency who you want to make these important medical decisions on your behalf.  It is effective ONLY if you are not competent to make your own decisions.

Contact our office if you’d like to create a Medical Power of Attorney for yourself.

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What is a Durable Power of Attorney?

A Durable Power of Attorney is a way for you to designate someone other than yourself to handle your business and financial affairs.

A Durable Power of Attorney is most likely to be used when:

  • You are temporarily disabled due to a serious injury or illness
  • Due to travel, you are unavailable to conduct time sensitive business

You can designate a person you trust, and alternates if you wish, to handle things for you such as banking, paying bills, signing or breaking leases and contracts, and other business that requires your decisions and signatures.  The Power of Attorney can be written to cover almost everything possible that may come up, or you can limit the power to a smaller universe.

The word “durable” means that if you create the power of attorney while you are healthy and competent, it will continue in effect even if you become mentally incompetent to make a power of attorney. So, for example, if you are unconscious due to an accident,  the designated person can step in and handle your affairs.

The Power of Attorney can be used when you specifically direct your designated person to use it; for example if you are out of the country and your apartment lease needs to be renewed, or when the designated person sees a need to step in, as in the example of being injured in an accident.

This power ends at your death, however. Only the executor of your will can handle your estate.

Contact our office if you’d like to create a durable power of attorney for yourself.

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The Basics of Guardians for Minors

Guardians: If you have children under 18, you will want to name guardians for them.  There are several different scenarios.

  • If there is another parent alive, they will be put into the physical care of the parent, even if you name a different person.  If there are unusual circumstances, such as a parent who is incarcerated, has a history of abuse, or is mentally incapacitated, you should talk to your attorney about options for your children.
  • If there is another parent, but you are divorced or have never married the parent, that parent will get physical custody of your children, but you can create a trust for any money you may leave your children.  You can then name a trustee who will have discretion to distribute the money for the care of your child, and to distribute the money to the child as you instruct after the child reaches 18 or an older age.  You will want to name a trustee who is organized, trustworthy, and, preferably, knows you or your child.  However, if there is a large amount of money, you can name a bank or corporate trustee and appoint a family member or friend to act as consultant to the trustee in deciding how to use the money for your child.
  • If there is no other parent, you will name a guardian to take care of your child.  This person will be responsible for caring for and bringing up your child, and will have all the abilities that you as the parent have.  You can name an individual or a couple. If you name a couple, you must specify whether the guardianship changes if the couple is no longer married.  For example, you want your sister to raise your child, and so you name “Mr. and Mrs. Smith” as your guardians.  But suppose sister dies?  Did you really want her husband to raise your child even if your sister was no longer around?  Be clear about your wishes.
  • If there is no other parent, you will also have to name someone to take care of your child’s money.  This can be the same person you named as guardian to raise the child, but often it is not.  You may have one sibling who would be a wonderful parent, but is not very good at handling money.  You can name another sibling to act as trustee for your child.
  • You do not need to name a family member as guardian or trustee.
  • If you fail to name a guardian for your children, the court will appoint one.  Guardians in this case are usually close family members.

Naming guardians can be an emotional process.  If you are having difficulty, check out this video for more information on what to do when you can’t decide.

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What is an executor?

An executor is named in your will.  This is the person responsible for winding up your worldly affairs and carrying out the instructions in your will.  This person will pay your final bills, find and contact your creditors, close your accounts, take care of your possessions and business until they can be sold or handed over to your heirs, and make decisions about how and when to distribute your estate.  The executor can hire people to help, such as an attorney, a tax accountant, a financial consultant, etc., but all the decisions are made by the executor.

You should name two or more executors who can serve if the first person you name cannot serve.  You can also name co-executors, but that can be tricky as the two people will have to be able to cooperate with each other.

If you don’t name an executor, or if no one you named can serve, the court will appoint one. However, a court appointed executor must post bond.

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Do you need to worry about estate or inheritance tax?

Few people are impacted by estate tax these days.  For many years,  there was a federal tax on estates that were valued over $600,000, which meant that a relatively large number of people, including those of modest income but  who had owned property for a very long time in appreciating markets, were impacted.  Fortunately, that has changed for the foreseeable future.

The federal estate tax now attaches to estates of more than 5 million dollars.  Because of exemptions, married couples are generally impacted only if their marital estate is 10 million dollars or more.

In Texas, there is no tax on estates or inheritance.

This is good news, because it means that the majority of people will not have to plan with tax minimization specifically in mind.  There may, however, still be tax planning considerations near the end of life.  For example, while a house that passes after death would not be taxed on it value, if the house is sold prior to death then capital gains tax may reduce the profit gained from the sale.  Any major property and financial changes being considered late in life should be reviewed by a legal or financial professional to be sure the goal is achieved with the best outcome.

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What is a trust?

A trust is a form of holding property.  There are many, many different types of trusts and many different reasons why trusts are created, but they all share these traits:

  • They are an independent entity, much like a business is an entity, with their own taxpayer ID.
  • They can hold cash, stocks, real property, or personal property
  • They are created by individuals
  • They each have a Trustee whose job is to manage the holdings of the trust and distribute the money in accordance with the document that created the trust
  • They cannot exist forever, but the length of time each can exist depends on the type of trust it is

Some of the reasons trusts are created are:

  • protect property from creditors
  • provide money for people with disabilities without losing their eligibility for public benefits
  • manage the money of a minor
  • manage the money of someone who is poor at handling their own money
  • reduce tax liability
  • protect the privacy of individuals who own the property

If you need help creating or managing a trust in Texas, call or email for an appointment.

 

 

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Estate Planning Services

The Law Office of Pamela Parker provides wills and estate planning to clients throughout the state of Texas.  Need a  lawyer who will get to know your situation and work closely with you to design your plan the way you want it?  Your attorney is Pamela Parker.

We are based in Austin.  Phone and video chat appointments are available for clients outside of Austin – or inside of Austin if you prefer.

Request a consultation:     pparker@parkercounsel.com   or     (512) 804-9934

Wills – Durable Power of Attorney – Special Needs Trust – Medical Power of Attorney – Minor’s Trusts – Designation of Guardian for a Minor – Medicaid Planning – Living Trusts – Family Partnerships – Beneficiary Designations

Austin – San Antonio – Bastrop – Houston – Smithville – Abilene – Waco – Killeen – San Marcos – Dripping Springs – Taylor and all other Texas cities.

If you just have  a quick question, Ask-A-Lawyer is for you. Low cost, fast response, answer served.   Click here to Ask-A-Lawyer

 

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The Basics of Estate Planning

What exactly is “estate planning?”  Basically, it is a plan for what happens when a person dies or becomes disabled. It  answers the following questions:

Who Will Wind Up the Person’s Earthly Affairs?

In other words, what person do you trust to carry out your wishes, make sure things are wrapped up properly, and that your heirs are properly taken care of?

Who Will Care For Your Young Children And Adult Disabled Children?

You designate the person or people you want to raise your children and take care of them if you and their other parent both die. If you are the guardian of an adult disabled child, you can also name the person you think should take over that role if you die.

Where Will Happen To Your Money and Things?

An estate plan will have a basic distribution plan for the things left behind, including money, retirement plans,  personal property, family heirlooms .  You can  be sure that things will go to the people you want to have them only if you write a will, which can be enforced by a court if necessary.

Who Will Manage Money You Leave to Your Children?

The person you want to manage the money you leave your children may be different than the person you want to be their guardian and care for them.  You can name trustees to manage anything you leave for your minor or disabled children.

 

Estate Planning also includes naming people to help take care of your own affairs if you become disabled.

Once these questions have been answered, documents will  be created that ensure your wishes are carried out and that your plan works the way want it to.

The family and friends you leave behind appreciate it when everything is in order.

Texas residents can contact us to start your own estate plan.

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How young is too young to need a will?

That’s a great question.

If you are under the age of 18, most of what you own is legally the property of your parents, not you.  But once you turn 18, the things you acquire belong to you, and you have the legal ability to write a will.  If you’re relatively young, you may not need a will yet.  However, here are a few circumstances which mean it is a good idea for you to have a will, even if you don’t own very much:

  • you are a parent
  • you want your personal things to go to people other than your parents
  • you own anything that has a title with your name on it, such as  a car, land, or savings bonds
  • you live with a girlfriend 0r boyfriend who you want to have some or all of your money

These are a few examples of when you should write a will.

Read more here. 

If you’re a Texas resident and interested in writing a will, contact us here.

 

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