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Areas of Practice - Wills & estates

Table of Contents

Frequently Asked Questions	Frequently Asked Questions
Skip to Frequently Asked Questions	Skip to Frequently Asked Questions
Whose Estate is it Anyway? What Happens When You Die Without a Will? How can a Will Help? What are Non-probate Assets? Can a Will Minimize Taxes? Important Decisions What is a Living Will? What is a Power of Attorney? Do I need a Will? What exactly is a will?	If I write my wishes down on a piece of paper and sign it, will that qualify as a will? I do not have many assets, so I think a will is unnecessary for me. Am I right? I set up all of my assets so that they pass by beneficiary designation, or are payable on death to certain persons so I can avoid the hassle and expense of doing a will. Is this a good plan? I have been diagnosed with a terminal illness, should I make a will now? I just married for the second time. I have children from a prior marriage. I would like to make sure that a portion of my assets go to my children. Would having a will help me in this situation? How do I go about doing a will? I heard that a living trust is better than a will. Is this true?

Frequently Asked Questions - Wills
Table of Contents

Whose Estate is it Anyway?
Your estate consists of all the property that you own upon your death. This can be either real or personal property. Real property will include land and improvements, plus any mineral interests. Personal property will include cash, bank accounts, clothing, household furnishings, motor vehicles, stocks and bonds, life insurance and retirement or employee benefits.

When you die the title to the property must pass to your beneficiaries. If you die with a will you will determine who your beneficiaries will be. If you die without a will, the State of Texas will determine who your beneficiaries will be. A court action, or probate, will usually be necessary in either case, but if you die with a will it is almost always much simpler and less expensive.

What Happens When You Die Without a Will?
If you die without a will the state will designate your heirs for you. The assets will be divided in predetermined ways depending on whether they are community or separate property. Separate property is property that you owned prior to your marriage, or that you acquired via gift or inheritance during your marriage. Separate property will also include personal injury settlements, except any portion that is for loss of earning capacity.

If you die without a will there can be some undesired results in the distribution of your estate that go beyond the question of "Who gets what?". Take a look at the following example. Husband (H) and Wife (W) have 2 kids. When H dies without a will his estate will go to W who can use it to raise the kids. Suppose however that H had a child from a prior marriage. When he dies his half of the community property will go 1/2 to W and the remaining 1/2 will be divided among all 3 kids. Once this is done, W will have to file annual court reports showing how the money is being protected for the kids. W will not even be able to use any of "the children's money" to provide for their support, unless she gets court approval. All of this can end up costing a lot of money in unnecessary legal fees.

How can a Will Help?
A will can provide numerous benefits to you and your family. First of all it lets you determine who will receive your property upon your death. It also permits you to determine who will be responsible for your children and their property and give that person the ability to manage the kids' estate without court intervention. Another benefit is that you can take steps to minimize estate taxes.

A will can also be used to establish a trust. A trust is where a person or entity is appointed to manage property for the benefit of someone else. This is often used when you have a child or incapacitated person who will be inheriting property. You can use a trust to delay when a child will receive his or her inheritance, so that they will be older, and possibly more mature, when they get direct access to the funds.

A will should be updated whenever there are major life changes, such as a divorce or remarriage, birth of a child who has special needs, or you acquire a substantial estate that requires some tax planning. A will can also be changed to re-designate beneficiaries, executors or guardians.

What are Non-probate Assets?
There are certain assets that are not part of your estate, except perhaps for tax purposes. These assets will contractually pass to the designated beneficiaries. Non-probate assets include life-insurance proceeds, IRA's, and employee benefits. You should review your beneficiary designations periodically to make sue that the designations are up to date.

If you own property as a joint tenant with the right of survivorship, such as a bank account, CD, or stocks and bonds, then this property will pass outside of the estate and go directly to the beneficiary. Every time an account with a financial institution is opened, a type of account will be established. You should review your accounts to determine if they will pass under your will or by the contract established when you opened the account.

Can a Will Minimize Taxes
A will can be used to reduce or minimize federal estate taxes and state inheritance taxes. These taxes will be assessed if the value of the estate exceeds $650,000. This valuation is based upon all of your separate property and 1/2 of the community property that you and your spouse have acquired. Life insurance and non-probate assets are used in determining the total value of the estate, even though they do not pass under your will. Federal tax rates range from 37 to 55 percent. The only way to take full advantage of estate tax planning is to have a will.

Important Decisions
When drafting a will you will have to determine who you want to control your estate and the estate of your children. The executor is the person that you designate to marshal your assets, pay off the debts and distribute the assets to your beneficiaries. This person will make the court appearance, prepare the formal inventory for the court and handle the transfer of assets. Typically your surviving spouse will be designated as your executor, but this is not required.

You will also need to designate a guardian of the person and estate if you have minor children. This is the person who will physically have possess ion of your children. If there is a surviving parent, then the provisions in your will will not supercede the legal presumption that the surviving parent will become the guardian. If you have children from a previous relationship, then the other parent, not your spouse, will become the guardian, unless there is a court order to the contrary. In the will you can also designate who will control your children's inheritance. This person is called the guardian of the estate or a trustee if you establish a trust.

Beneficiaries will also need to be designated. These are the people that you want to receive your property. You should designate contingent or alternate beneficiaries.

What is a Living Will?
A living will is also referred to as a Directive to Physician. This document allows you to instruct your physician to withhold or withdraw artificial life-sustaining procedures if you have a terminal condition. In the directive you can designate a person to make treatment decisions if you become incapable of making those decisions yourself. Another alternative is to designate a specific physician who will make those determinations on your behalf.

What is a Power of Attorney
A power of attorney is a document that you can sign which gives someone else the authority to act on your behalf. A Health Care Power of Attorney gives you agent the authority to make health care decisions for you if a physician certifies that you do not have the capacity to make those decisions. This can be revoked at any time.

A Durable Power of Attorney gives someone the authority to manage your property. This can be limited to specific acts or cover any and all action that you could make. It can also be made effective immediately upon execution or only in the event of your disability.

Do I need a Will?
Generally speaking, most people benefit from having a will. Having a valid will in place at your death can help make the administration and distribution of your estate easier for those who are left behind. Most of us are concerned (at least to some degree) about what happens to our property at our death and in whose hands our property ultimately falls. It is because of this concern that a will is a good idea for most everyone who has capacity to make one.

What exactly is a will?
A will is a document which controls the passage of your property upon your death. In Texas, there are two basic types of wills -- (1) the attested or formal will, which is in writing and is witnessed (by two or more witnesses) and (2) the holographic will, which is wholly in the testator’s handwriting and signed by the testator. Generally, the most effective wills are the attested or formal wills.

If I write my wishes down on a piece of paper and sign it, will that qualify as a will? Maybe. As stated above, it is possible that a will written wholly in the testator’s handwriting and signed by the testator can be valid and admitted to probate in Texas. Many problems can arise with this type of will, however. It may not be recognized as valid by the court. It may fail to dispose of all property. It may fail to take advantage of efficient and cost-saving procedures available if a proper, formal will is used. And it will cost more to probate the will than a proper, formal will. For these reasons, holographic wills are not recommended.

I do not have many assets, so I think a will is unnecessary for me. Am I right?
Not necessarily. You do not know what your financial condition will be at your death or what property you will own at your death. Also, your family situation may make having a will crucial to your loved ones. For example, if you are married with a minor child, having a will can make all the difference for your survivors, even if you have few assets.

I set up all of my assets so that they pass by beneficiary designation, or are payable on death to certain persons so I can avoid the hassle and expense of doing a will. Is this a good plan? Probably not. A plan like this may work in some situations, but in most cases it fails to cover many contingencies which may occur, with disastrous results. For example, if the person you designate on a beneficiary designation or signature card dies before you do and you do not change the designation, the property could go to someone you don't want. A well-drafted will covers many more contingencies. Also, if the person who ends up with the property is a minor or an incapacitated person, insurance companies, brokerage firms and banks will not pay proceeds to or transfer assets without a guardianship or trust.

I have been diagnosed with a terminal illness, should I make a will now? If you know that you have a terminal condition and you are concerned about the disposition of your property or the care of loved ones after your death, you may want to execute a will as soon as possible while you are well enough and have the capacity to do so. These situations are very personal, and if you find yourself in this position, you should consult an attorney to discuss your options with you.

I just married for the second time. I have children from a prior marriage. I would like to make sure that a portion of my assets go to my children. Would having a will help me in this situation?
Yes. If you are concerned about making sure that some of your property goes to your children in this situation, you can take certain steps in a will to help accomplish your goals. For example, you could make a gift of a certain amount of cash or a certain percentage of your estate to your children, outright or in trust at your death. (However, there may be negative tax consequences in doing this.) You could also leave property in trust for the benefit of your spouse with what is left of the trust (the remainder of the trust) passing to your children at your spouse’s death. This type of arrangement has potential problems as well. These are just two examples of steps you can take in this situation. However, this is very personal and the appropriate provisions to include in your will depend on your family dynamics and your estate planning objectives. Having a property drafted will can help. You should contact an attorney to assist you.

How do I go about doing a will?
There are many estate planning products on the market today that represent to consumers that legal documents such as a will may be prepared on a home computer without the help of an attorney. In some cases, these products may work. However, many of these products are not state specific, and therefore, do not meet the specific requirements for the state in which the testator resides and, ultimately, where the will is offered for probate. (Even though the form may be "valid in all 50 states," it could fail to include provisions required by Texas law for low-cost, efficient administration of your estate.) The best way to go about doing a will is to contact an attorney in your area to assist you. Prior to meeting with an estate planning attorney, you should think about how you would like to leave your property at your death, and who you would like to designate to handle your estate after your death.

I heard that a living trust is better than a will. Is this true?
A living trust can be used as an alternative to a will. In most cases, these trusts are more expensive and complicated that wills. Texas has relatively simple and inexpensive probate. For these reasons, most Texans can achieve their estate planning goals cheaper and simpler with a will. However, there are times when living trusts are appropriate and a better solution than a will.

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