Who Needs Estate Planning?
You do — whether your estate is large or small. Either way, you should designate someone to manage your assets and make health care and personal care decisions for you if you ever become unable to do so for yourself. If you are a parent, then naming an alternative guardian for your children is an important part of the estate planning process.
If you fail to plan ahead, a judge will appoint someone to handle your assets and personal care, and your assets will be distributed to your heirs according to a set of rules known as intestate succession, but without a planned estate, they may not be your choice of heirs. An estate plan gives you much greater control over who will inherit your assets after your death.
Important Documents Needed for Estate Planning
When people think about estate planning, they generally think only about a will. Although a will is an important part of an estate plan, it only takes effect after you die. Other documents are needed to carry out your wishes and manage your assets in the event you are temporarily or permanently disabled.
The following is a list of a few basic estate planning documents that you should know about:
Texas Last Will and Testament
A will is a legal document that directs the distribution of your assets upon your death. Also, if you have minor children, a will is a way designate a guardian for them. A will allows you to name a personal representative, also known as an "executor", that will pay final expenses and taxes and oversee the management and distribution of your assets. These wishes are ones that should be documented to avoid the possibility of a judge who does not know you or your family appointing a guardian to care for your children or your assets being divided up based on a statutory formula. In order to be effective, a will must be filed in probate court after your death. Probate is a judicial process that oversees payment of liabilities and the distribution of assets.
A will has no legal authority until after death. So, a will does not help manage a person's affairs when they are incapacitated. This is why it is important to have other estate planning documents, which are discussed below, that become effective if you should become incapacitate.
Texas Durable Power of Attorney
A durable power of attorney gives you the power to appoint a trusted family member or friend as an agent to act on your behalf if you are no longer capable of managing them yourself due to being temporarily or permanently incapacitated. You can give your appointed agent broad or limited management powers. A durable power of attorney will continue during incapacity but terminates upon your death.
If you become incapacitated and do not have a statutory durable power of attorney in place, a court-ordered guardianship may be necessary. Guardianship is time-consuming and expensive, and can be avoided by creating a power of attorney.
An advance directive is a document that specifies the type of medical and personal care you would want should you lose the ability to make and communicate your own decisions. In addition, your advance directive can specify who will make and communicate decisions for you though a Texas Medical Power of Attorney, which lets you name an adult, your "agent", to make medical decisions for you in the event you become unconscious or mentally incapable of making those decisions for yourself.
A document that goes hand-in-hand with your advance directive is a HIPAA Authorization, which is an authorization that allows specified individuals to access your medical information. Without this authorization, your doctor may refuse to communicate with your hand-picked decision maker.
A living will expresses your intentions regarding the use of life-sustaining measures in the event of a terminal illness. It expresses what you want but does not give anyone the authority to speak for you.
All these documents are essential to making sure your wishes are followed and your family is protected in the event of your incapacity or death.
Revocable Living Trust
There are many different types of trusts with different purposes. A living trust is a legal document that, just like a will, contains your instructions for what you want to happen to your assets when you die. However, it differs from a will in that, because this legal entity exists beyond your death, property titled in the trust does not need to pass through probate. Additionally it reduces the chance that personal information will become a part of public records. A revocable living trust has the term 'living' in the title because it is created during your lifetime and 'revocable' due to your ability to change the terms at any time during your life.
There are three important roles involved in every revocable trust – the grantor, a trustee, and the beneficiary. The grantor – generally you – is the person who creates the trust during their lifetime and then once they pass away, the assets in the trust will then be distributed as regulated in the trust. The trustee is the person that will distribute and manage the trust according to the provisions of the document. Lastly, the beneficiaries are the name of those that will receive the assets and benefits in the trust.
Are you ready to start planning your estate? Contact us today!
Having an effective estate plan is one of the most important things you can do for yourself and for your family. Whatever the reason, if you have not began or have not completed planning your estate, the time is now to get started! Our attorneys know the importance of serving. Contact our office and let us serve you today.