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Estate Planning: Your Family, Your Wealth, Your Legacy.

Wills & Trusts

What is estate planning?  The simple definition is that it is the process of anticipating and arranging for the disposal of your estate.  At The Law Office of Antoinette Bone, we recognize that estate planning is more than just planning for who gets your “stuff” and when.  It is not a process focused on death but on life, because you are actually planning for the living.  We view it as an act of love, which reflects/immortalizes your thoughts, hopes, and dreams you have for yourself and your family. Estate planning can and should be an end in itself.  When you decide to engage in estate planning, you have decided that you want to be the one who controls the destiny of your family — not a judge, not the legislature, and not the IRS/tax man. Those who engage in this process often experience a certain peace of mind for having taken care of everything they own and everyone they love.

There are many legal strategies and documents involved in creating a comprehensive estate plan.  Some of these are addressed below:

Last Will and Testament
A will is your legal declaration concerning the disposition of your property at your death.  If you die without a will you are said to have died intestate.  Since you left no instructions as to who was to get your “stuff” at your death, the state legislature has decided for you.  If you do not like the states scheme, it’s too late for you to take the reigns of control and express your desires.  If you think that a Will is all the estate planning that you need to do you would be wrong.  A will alone is an incomplete estate plan.  Some things you should know about wills:

  • Wills do not take effect until you die.
  • Wills do not allow you to avoid probate.  In fact, if a will is your primary estate planning strategy, it is a one-way ticket to the probate court.
  • If a will is your primary estate planning tool, you can nominate a guardian for minor children in it.  If you fail to nominate a guardian, your children may end up with someone you would not have wanted raising them as well as creating strife within your family.
  • Wills alone do not allow you to plan for disability/incapacity during your lifetime.

Trusts
There are many different types of trusts. They can be simple or complex, and can serve a variety of legal, personal, investment and tax planning purposes.  At the most basic level, a trust is a legal relationship between at least three parties: the trust-maker, the trustee (trust manager), and the trust beneficiary.  A legal entity is created from this relationship among the parties involved.  You can think of a trust like a bucket where you put your “stuff” before it is to be distributed to the people or entities that you designate.  Trusts can be set-up while you are alive (called intervivos) or can come into being upon your death using a will (called testamentary).  The grantor can change revocable trusts during his or her lifetime.  Irrevocable trusts cannot be changed once created.  Trusts are not just for the wealthy.  Trusts can serve the needs of anyone.

Revocable Living Trust
A revocable living trust is a trust established during your lifetime, which you can change or revoke at any time.  You will transfer substantially all of your assets to the trust during your lifetime.  What you transfer into the trust will be determined by what you are trying to achieve.  The living trust is used as the mechanism to manage your property before and after your death, as well as state how those assets, and the income earned by the trust, should be distributed after your death.  If you should become incapacitated or disabled, the trust is there to manage your financial affairs. Reasons why you might want to engage in trust based planning include:

  • If privacy is important to you, a trust can avoid the probate process.
  • If you own property in more than one state, a trust can eliminate the need for probate proceedings in the state where the property is located.
  • You want to protect your beneficiaries from loss of their inheritance from divorce, creditors, and predators.
  • You want to have a mechanism in place to manage your affairs during any periods of disability/incapacity.
  • You want to make it harder for someone to contest how your property is to be distributed upon your death.

A trust is only effective if it is fully funded.

Disability Planning
People often do not give a great deal of thought to what might happen were they to become incapacitated. It is typically not what one associates with estate planning because traditionally estate planning has focused on death and dying rather than life and the living.  However, disability planning is a significant aspect of estate planning. There are several documents that are a part of disability planning:

Powers of Attorney
There are 2 parties involved in creating a power of attorney, the principal (you) and the agent/attorney-in-fact (the person you appoint to take care of things).  A Power of Attorney (POA)can be general or specific, durable or non-durable.  A general POA gives the agent broad powers.  A specific POA only allows the agent to do a few things.  A durable POA will survive your incapacity.  A non-durable POA will cease to be effective upon your incapacity.  A Power of Attorney can be a very powerful document because through it, you are basically giving another person the authority to decide matters on your behalf. Thus, careful consideration must be given to the choice of agent and any successor.

Declaration of Guardian
When you engage in comprehensive estate planning, you take control of what happens at your death as well as during any periods of incapacity. If you should become incapacitated during your life you might find yourself in the situation of needing to have a guardian manage either your person (you) or your estate (finances).  If you failed to make an appointment yourself, a court would be called upon to make the decision for you. Therefore it is wise to decide ahead of time decide who your guardian or guardians should be.  And maybe more importantly, who you do not want your guardian(s) to be.

Healthcare Documents:  Medical Directives

Texas Directive to Physicians aka Advance Directive
This Directive provides direction to do any of the following:

  • Administer life-sustaining treatment
  • Withhold life-sustaining treatment
  • Withdraw life-sustaining treatment

The Directive becomes effective only when it has been determined that you have a terminal or irreversible condition that has been diagnosed and certified in writing by your attending physician.

Texas Medical Power of Attorney
With the Medical Power of Attorney, you (the principal) appoint another person (the agent) to make healthcare decisions for you when you cannot.  This document is called a springing power of attorney.  This means that it only becomes effective when your attending physician certifies in writing that you are incompetent.  Your agent’s authority will continue until his or her power is revoked or you regain competency.

Out-of-Hospital Do Not Resuscitate Order (DNR)
This is an order directing health care professionals acting in an out-of-hospital setting to withhold cardiopulmonary resuscitation and certain other life-sustaining treatment.  Your physician must sign this document.  The physician must also make the fact of the existence of the order and the reasons for execution of the order a part of the declarant’s medical record.  Because a physician must sign this document, it is not normally prepared in the context of estate planning.

HIPPA
The Health Insurance Portability and Accountability Act imposed sweeping privacy rules on your medical information.  It restricts health care providers (doctors and hospitals) and health care plans (insurance companies, Medicare, Medicaid) from disclosing your individually identifiable health information.  It is important to have this document because without it, the person(s) you select as your agent under a Medical Power of Attorney or guardian may not be able to access medical information about you to make informed decisions.  A HIPPA release expires four years after your death unless revoked prior to that.

Agent for Disposition of Remains
A person may provide written directions for the disposition of their remains in a will, a prepaid funeral contract, or a written instrument, which is signed and acknowledged by such person.  The directions may be modified or revoked only by a subsequent writing signed and acknowledged by such person.  The agent designated entitled to handle the disposition of remains has a duty to faithfully carry out the decedent’s directions to the extent that the decedent’s estate or the agent controlling the disposition are financially able to do so.  If the directions are in a will, they must be carried out immediately without the need for probate.

With all these documents and forms, the single most important thing to remember is that a comprehensive estate plan is a customized plan, reflecting the individual’s own wishes. At the Law Office of Antoinette Bone, we understand that no two estate plans are the same, and that it is the client’s wishes which ultimately determines what that plan will be.