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Frequently Asked Questions

 

Wills

+ DO I NEED A WILL?

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 to whose hands our property ultimately falls. It is because of this concern that a will is a good idea for most everyone who has the 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:

  • The attested or formal will, which is in writing and is witnessed by two or more witnesses aged fourteen(14) and older
  • 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
  • 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. On the other hand, if you have little property, are unmarried, with no children, with both living parents, and you want all of your property to pass to your parents, you may not need a will. These are just examples. Ask an attorney at our firm about your situation to see how important it is for you to have a will.

+ 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?

Maybe, but 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.

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. A well-drafted will may contain a trust for minors and incapacitated persons, but without that trust an expensive, cumbersome guardianship is the result.

There also are potential negative tax consequences of using only beneficiary designations or pay-on-death designations to pass property at your death. For example, if your estate is a taxable estate for federal estate tax purposes, a well-drafted will can provide for creation of a trust after your death to save taxes. If you do not have a will, your loved ones could end up paying estate taxes which may have been avoided if you had a properly drafted will.

+ I’VE 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 properly 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. Click here for more information about the estate planning process and preparing to meet with an estate planning attorney.

+ HOW MUCH DOES A WILL COST?

This question is difficult to answer because the complexity (or lack thereof) of each individual’s situation will determine the amount of time that is necessary to prepare the will. Many estate planning attorneys bill hourly for their services while others may work on a flat-fee basis. When you hire an attorney to assist you in preparing a will, make sure that you fully understand the fee structure and that you are comfortable with the fee arrangement. If you have questions regarding the fee or the fee arrangement, you should always ask.

+ 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 than wills. Texas has relatively simple and inexpensive probate. For these reasons, most Texans can achieve their estate planning goals cheaper and more simply with a will. However, there are times when living trusts are appropriate and a better solution than a will. Click here for more information about living trusts, and be sure to ask your attorney to weigh the pros and cons for you.

+ IS A LIVING TRUST A GOOD IDEA?

Living trusts have become popular alternatives to traditional wills as estate planning documents. Determining if a living trust is the best solution for you depends on your circumstances.

+ WHAT IS A LIVING TRUST?

A trust is a legal device used for the management of property. In a trust, legal title to the property—the right to manage the property—is held by one person, called a trustee, while another person, called the beneficiary, has the beneficial right to the use and enjoyment of the property.

A living trust is a trust created while the creator is living (compared to a testamentary trust, which is created at or after the creator's death under the terms of his or her will). A living trust may be revocable (changeable by the creator prior to his or her death) or irrevocable (unchangeable by the creator). When most people speak of a "living trust," they mean a revocable trust created during the creator's lifetime for the management and disposition of all, or substantially all, of the creator's property.

Different marketers of these types of trusts call them different things—some are registered trademarks such as "Loving Trust," while others are more descriptive terms such as "family trust," "revocable management trusts" or simply "living trusts." Living trusts will be discussed below.

+ HOW DOES A BASIC LIVING TRUST WORK?

In a typical case, the creator of the trust—called the settlor or trustor—names himself or herself as the initial trustee and the initial beneficiary. Thus, the settlor holds legal title to trust property as trustee for his or her own use and benefit as beneficiary. When the settlor dies, becomes incapacitated or resigns as trustee, another person becomes trustee and manages the property for the benefit of the settlor, if living, or for the beneficiaries named by the settlor, if the settlor is dead. For example, the trust may provide that, upon the settlor's death, the settlor's daughter becomes trustee and is instructed to distribute the trust property in equal shares to the settlor's three children.

+ HOW DOES A LIVING TRUST DIFFER FROM A WILL?

A will is a legal document that becomes effective at your death and specifies how your property is to be disposed of. To be effective, a will must be acknowledged as valid through a court procedure known as probate. A living trust also specifies how your property is to be disposed of at your death, but since it exists before your death, its validity does not need to be acknowledged by a probate proceeding. It is this quality—avoidance of probate—that has brought the living trust most of its recent popularity.

+ DO I NEED TO “AVOID PROBATE?”

Revocable living trusts are marketed in many states as a great way to avoid probate—especially in states with complicated administration procedures. In many states, estates are put through court-supervised administrations where the executor must have the court’s approval to do most anything. Over time this can be very expensive. However, in Texas, most well-drafted wills provided for independent administration, which allows an executor to handle estate business without on-going court supervision and approval. Therefore, in Texas, delays or prohibitive costs of probate are not as much of a concern as they are in many states.

+ HOW MUCH IN PROBATE EXPENSES WILL A LIVING TRUST SAVE?

It depends. Living trusts are more complicated than wills and typically cost more. They also require the consumer to do more things, such as change ownership of property into the name of the trust, which definitely adds trouble and inconvenience and may add expense. Usually some of the settlor's property is left out of the living trust (either by design or neglect), so a pour-over will—a will which "backs up" the living trust and says, in essence, "if I forgot to put anything into the living trust before I died, I hereby put it there at my death"—has to be probated to get those assets into the trust.

In most cases, where the plan of disposition is straightforward (for example, in trust for your spouse and then to your children in equal shares when the surviving spouse dies), the cost of the probate proceeding is likely to be roughly equal to the additional cost of the living trust-based estate plan, so there is little or no savings. In other cases, the savings and other advantages can be substantial.

+ CAN OTHER ESTATE PLANNING TOOLS BE USED INSTEAD?

The traditional and most common method of estate planning involves a will and various disability documents. One advantage of a living trust is its usefulness in the event of incapacity. However, a statutory durable power of attorney may accomplish the same thing in case of incapacity. While some banks and others are reluctant to accept and act on a power of attorney, the Texas Statutory Durable Power of Attorney is generally accepted at most banks and financial institutions.

+ I SAW A DO-IT-YOURSELF LIVING TRUST KIT AT THE STORE. WILL IT WORK?

Maybe so, maybe not. It is likely to have some effect, but it might not work the way you intend. Wills are complex documents that should be prepared by an attorney—and living trusts are even more complicated than wills. Lawyers who do estate planning and probate work often are called on to fix, or try to administer, do-it-yourself living trusts which are deficient in one or more respects. The cost of fixing or administering a deficient trust often exceeds the cost of having a proper, lawyer-prepared instrument. It may sound self-serving for lawyers to say so, but self-help trusts and wills often do more harm than good.

+ SO WHEN IS USING A LIVING TRUST A GOOD IDEA?

Your lawyer should evaluate your particular situation to determine if a living trust is right for you. Be careful if the lawyer you consult never uses living trusts or always uses living trusts—rarely is "one size fits all" good legal advice. Here are some factors which often make using a living trust a good idea:

  • Real estate in another state — if you are a Texas resident and own real estate in a state other than Texas, the proper use of a living trust could save you the cost of a probate proceeding in the other state.
  • Impending disability is likely — if your age or medical condition is such that you have a reasonable fear that you will soon be unable to manage your own property prior to your death, then a well-drafted living trust could make it easier for the people you pick to manage your property.
  • Heightened privacy concerns — virtually everyone wishes to keep their personal financial affairs private, but if you have a greater than average desire for privacy, then a living trust may be a good idea. If used properly, there can be less public disclosure of what you own if you become disabled or die. Be careful that marketers of living trusts don't use this improperly as a fear factor to motivate you to buy their product, however.
  • Post-retirement, stable assets — if you are retired and are not in "acquisition mode"—in other words, if you are not buying new cars every couple of years, opening and closing accounts frequently, changing jobs, starting new businesses, etc.—then a living trust may make sense. For the rest of us, properly operating a funded living trust is usually too much of a hassle, especially if probate avoidance is the primary goal.
  • Will contest likely — if your loved ones are likely to fight over your will, then in some cases (with expert advice and attention) a living trust may make it less likely that someone will successfully contest your plan based on undue influence, lack of capacity, etc.

If most or all of these factors are not present in your situation, and they aren't for the vast majority of people, then a traditional will-based plan is probably the simplest and cheapest way to plan. Remember, though, that these are just general guidelines—your lawyer will discuss your particular situation with you and help you determine what is best for you.


Living Trusts

+ IS A LIVING TRUST A GOOD IDEA?

Living trusts have become popular alternatives to traditional wills as estate planning documents. Determining if a living trust is the best solution for you depends on your circumstances.

+ WHAT IS A LIVING TRUST?

A trust is a legal device used for the management of property. In a trust, legal title to the property—the right to manage the property—is held by one person, called a trustee, while another person, called the beneficiary, has the beneficial right to the use and enjoyment of the property.

A living trust is a trust created while the creator is living (compared to a testamentary trust, which is created at or after the creator's death under the terms of his or her will). A living trust may be revocable (changeable by the creator prior to his or her death) or irrevocable (unchangeable by the creator). When most people speak of a "living trust," they mean a revocable trust created during the creator's lifetime for the management and disposition of all, or substantially all, of the creator's property.

Different marketers of these types of trusts call them different things—some are registered trademarks such as "Loving Trust," while others are more descriptive terms such as "family trust," "revocable management trusts" or simply "living trusts." Living trusts will be discussed below.

+ HOW DOES A BASIC LIVING TRUST WORK?

In a typical case, the creator of the trust—called the settlor or trustor—names himself or herself as the initial trustee and the initial beneficiary. Thus, the settlor holds legal title to trust property as trustee for his or her own use and benefit as beneficiary. When the settlor dies, becomes incapacitated or resigns as trustee, another person becomes trustee and manages the property for the benefit of the settlor, if living, or for the beneficiaries named by the settlor, if the settlor is dead. For example, the trust may provide that, upon the settlor's death, the settlor's daughter becomes trustee and is instructed to distribute the trust property in equal shares to the settlor's three children.

+ HOW DOES A LIVING TRUST DIFFER FROM A WILL?

A will is a legal document that becomes effective at your death and specifies how your property is to be disposed of. To be effective, a will must be acknowledged as valid through a court procedure known as probate. A living trust also specifies how your property is to be disposed of at your death, but since it exists before your death, its validity does not need to be acknowledged by a probate proceeding. It is this quality—avoidance of probate—that has brought the living trust most of its recent popularity.

+ DO I NEED TO “AVOID PROBATE?”

Revocable living trusts are marketed in many states as a great way to avoid probate—especially in states with complicated administration procedures. In many states, estates are put through court-supervised administrations where the executor must have the court’s approval to do most anything. Over time this can be very expensive. However, in Texas, most well-drafted wills provided for independent administration, which allows an executor to handle estate business without on-going court supervision and approval. Therefore, in Texas, delays or prohibitive costs of probate are not as much of a concern as they are in many states.

+ HOW MUCH IN PROBATE EXPENSES WILL A LIVING TRUST SAVE?

It depends. Living trusts are more complicated than wills and typically cost more. They also require the consumer to do more things, such as change ownership of property into the name of the trust, which definitely adds trouble and inconvenience and may add expense. Usually some of the settlor's property is left out of the living trust (either by design or neglect), so a pour-over will—a will which "backs up" the living trust and says, in essence, "if I forgot to put anything into the living trust before I died, I hereby put it there at my death"—has to be probated to get those assets into the trust.

In most cases, where the plan of disposition is straightforward (for example, in trust for your spouse and then to your children in equal shares when the surviving spouse dies), the cost of the probate proceeding is likely to be roughly equal to the additional cost of the living trust-based estate plan, so there is little or no savings. In other cases, the savings and other advantages can be substantial.

+ CAN OTHER ESTATE PLANNING TOOLS BE USED INSTEAD?

The traditional and most common method of estate planning involves a will and various disability documents. One advantage of a living trust is its usefulness in the event of incapacity. However, a statutory durable power of attorney may accomplish the same thing in case of incapacity. While some banks and others are reluctant to accept and act on a power of attorney, the Texas Statutory Durable Power of Attorney is generally accepted at most banks and financial institutions.

+ I SAW A DO-IT-YOURSELF LIVING TRUST KIT AT THE STORE. WILL IT WORK?

Maybe so, maybe not. It is likely to have some effect, but it might not work the way you intend. Wills are complex documents that should be prepared by an attorney—and living trusts are even more complicated than wills. Lawyers who do estate planning and probate work often are called on to fix, or try to administer, do-it-yourself living trusts which are deficient in one or more respects. The cost of fixing or administering a deficient trust often exceeds the cost of having a proper, lawyer-prepared instrument. It may sound self-serving for lawyers to say so, but self-help trusts and wills often do more harm than good.

+ SO WHEN IS USING A LIVING TRUST A GOOD IDEA?

Your lawyer should evaluate your particular situation to determine if a living trust is right for you. Be careful if the lawyer you consult never uses living trusts or always uses living trusts—rarely is "one size fits all" good legal advice. Here are some factors which often make using a living trust a good idea:

  • Real estate in another state — if you are a Texas resident and own real estate in a state other than Texas, the proper use of a living trust could save you the cost of a probate proceeding in the other state.
  • Impending disability is likely — if your age or medical condition is such that you have a reasonable fear that you will soon be unable to manage your own property prior to your death, then a well-drafted living trust could make it easier for the people you pick to manage your property.
  • Heightened privacy concerns — virtually everyone wishes to keep their personal financial affairs private, but if you have a greater than average desire for privacy, then a living trust may be a good idea. If used properly, there can be less public disclosure of what you own if you become disabled or die. Be careful that marketers of living trusts don't use this improperly as a fear factor to motivate you to buy their product, however.
  • Post-retirement, stable assets — if you are retired and are not in "acquisition mode"—in other words, if you are not buying new cars every couple of years, opening and closing accounts frequently, changing jobs, starting new businesses, etc.—then a living trust may make sense. For the rest of us, properly operating a funded living trust is usually too much of a hassle, especially if probate avoidance is the primary goal.
  • Will contest likely — if your loved ones are likely to fight over your will, then in some cases (with expert advice and attention) a living trust may make it less likely that someone will successfully contest your plan based on undue influence, lack of capacity, etc.

If most or all of these factors are not present in your situation, and they aren't for the vast majority of people, then a traditional will-based plan is probably the simplest and cheapest way to plan. Remember, though, that these are just general guidelines—your lawyer will discuss your particular situation with you and help you determine what is best for you.


Preparing for the Estate Planning Process

+ I AM GETTING READY TO GO TO A LAWYER FOR ESTATE PLANNING. WHAT SHOULD I DO TO PREPARE?

Getting a will or living trust to meet your needs doesn't have to be complicated. There are things you can do before meeting with the lawyer that can help move the estate planning process along.

+ WHAT SHOULD I DO FIRST?

First, you need to think about why you are going. For most people, this will be to have your will drawn and to get related powers of attorney. Think about the purpose of the will—it determines who will get your assets at your death. Therefore, the attorney will need to know what your assets are and who you want to leave them to. These are the two broad categories, and there are details in each that need to be shared with the attorney. So you need to be prepared to tell your attorney whom you wish to receive your assets and what those assets might be.

+ IF I DO NOT INTEND TO LEAVE MY ASSETS TO MY FAMILY, BUT TO OTHER PEOPLE OR CHARITIES INSTEAD, DO I HAVE TO LEAVE MY CHILDREN, PARENTS, SIBLINGS, OR SPOUSE ANYTHING, EVEN A DOLLAR, OR CAN I DISINHERIT THEM?

You do not have to leave anyone anything, not even a dollar. It is best to acknowledge in a will that you are married and have children, or siblings, etc., but then you may proceed to leave all assets to whomever you wish. However, it will be important to talk with your attorney about the reasons you are disinheriting your family members so that he or she may be able to take special steps to avoid a potential will contest.

+ SHOULD I TELL MY ATTORNEY ABOUT MY CHILD WITH AN ADDICTION PROBLEM OR MY OTHER CHILD WHO MAY GET A DIVORCE?

Yes, it is very important to discuss with your attorney any special needs your beneficiaries may have. Some clients have children with alcohol or drug problems or potentially divorcing spouses or general creditor problems. Often our clients want to protect their child’s inheritance from being wasted by either the child himself or by grasping creditors or divorcing spouses. There are ways within a will or trust that the estate planning attorney can provide for these needs so by all means discuss this openly with your attorney. Of course, some children with mental or physical handicaps have their own special needs. This usually requires specialized planning and an attorney experienced in this area can help tremendously.

+ HOW DETAILED A LIST SHOULD I MAKE OF MY ASSETS?

The attorney needs to know the general nature and extent of your assets. He or she does not need to know which stocks you own, just that you own stocks and bonds, real estate or whatever, and a general idea of their worth. It will be important to tell the attorney how your assets are held. For example, is your account at a brokerage firm in joint ownership with right of survivorship with your spouse or another person, or is it held as tenants in common? For assets and accounts with beneficiary designations, like IRAs, annuities and insurance, you need to know the currently named beneficiaries. It is especially important to tell your attorney which of your assets are in qualified retirement plans, such as IRAs or 401ks.

+ DO I NEED TO BRING A COPY OF THE DEEDS TO ANY REAL ESTATE I OWN?

No, at least not to the initial meeting. You need to tell your attorney what real estate you own and where it is located. If the real estate is located outside Texas, be sure to mention this to the attorney. Also tell the attorney who the record owner is. For example, if it is your house, you and your spouse are probably on the deed as record owners, but if you inherited 20 acres from your mother, the property is likely to be in your name alone. This is important for the attorney to know.

+ DO I NEED TO LIST ALL MY PERSONAL PROPERTY, ALL THE FURNITURE IN THE HOUSE, JEWELRY, CARS, ETC.?

No, this usually is not necessary. However, if you have specific items of property that are unusually expensive, such as jewelry, art or antiques, you should bring this to the attention of the attorney. What is "expensive" in this case varies with the size of your estate. In general, if you could sell the item for $5,000 or more, then you probably should mention it. You may have paid more than $5,000 for many items in your home, but if you try to sell them, they may be worth much less. This is different from the value used to insure the items. Usually you insure an item for its replacement value, not for the value at which it could be sold by you. Whenever there is a question, mention it to your attorney who can then advise you.

+ MY ASSETS, EVEN MY BANK ACCOUNTS, FLUCTUATE DAILY IN VALUE. DO I HAVE TO GIVE THE ATTORNEY A VALUE FOR ALL MY ASSETS?

Yes. Of course, in this economy, it is expected that values will be fluctuating a lot. Therefore, an exact value of your investment portfolio is not necessary. Approximate values are satisfactory. You should be able to tell what you normally keep in your cash accounts. You probably will not have to provide your bank account numbers or investment account numbers, so do not spend time writing all these down.

+ HOW CAN I TELL THE VALUE OF MY REAL ESTATE? DOES REAL ESTATE HAVE TO BE VALUED?

For estate planning purposes, the attorney will need a “ball park” value for your real estate, whether it is your house, residential rental property or raw acreage. You can provide what your county ad valorem tax appraisal says or what you think the property might sell for, if you have an idea. Usually, this is all that is needed for planning purposes.

+ DO I HAVE TO KNOW EXACTLY WHOM I WANT AS MY EXECUTOR, TRUSTEE, GUARDIAN FOR MY CHILDREN, ETC. BEFORE I MEET THE ATTORNEY?

Not necessarily, although you should be thinking about this. The attorney can give you good advice in selecting appropriate persons or entities to do these jobs. You may name multiple executors and trustees (for example, you may name all of your adult children to serve as co-executors or co-trustees), but this isn't always the best idea. The persons you name do not need to be related to you. A family friend, a bank or another professional corporate fiduciary might be appropriate, with or without a family member serving as co-trustee. All of these are options. The right answer for you will depend on the dynamics unique to your family. The attorney can explain the pros and cons of the different kinds of designations and help you think about what will work for your family.

+ MY LAST ATTORNEY ASKED ME HOW MUCH OF MY PROPERTY WAS COMMUNITY PROPERTY AND HOW MUCH SEPARATE AND I DID NOT KNOW THE ANSWER. DO I HAVE TO KNOW THIS BEFORE I CAN GET A WILL PREPARED?

No. Usually, this is a legal question that an attorney will have to determine. The attorney will need you to provide information to help him or her make this determination. For example, was the asset earned during your marriage (community property) or was it received by gift or inheritance by one spouse (separate property)? Sometimes, it is harder to tell, such as a retirement account which one spouse owned prior to marriage but which was added to during marriage. Some assets started out separate and become all or part community, like an investment account owned prior to marriage with interest and dividends reinvested after marriage. In Texas, income from separate property earned during marriage is community property, and this can confuse the issue. In many cases, the separate or community character of assets is not important to the estate planning process. The attorney will help you decide how important these designations are in preparing your estate plan.

+ SHOULD I TRY TO PREPARE A COMPLETE FINANCIAL STATEMENT OF OUR PERSONAL FINANCES FOR THE ATTORNEY, OR IS THERE A FORM I CAN USE?

Some estate planning lawyers prefer that the client complete an estate planning questionnaire before the initial visit, while others do not. A financial statement has some but not all information needed. At Swain Law Firm, PC., we provide a form which may be used by our clients to provide us with information, but its use is not required. Many of our clients find that the form helps them start thinking about the issues which are likely to come up during the estate planning consultation. Click here for our form (Word format). This form should be helpful whether you use an attorney in our firm or any other firm.

This is a hard question but one you should discuss with the lawyer at or before the initial meeting. Often, people call us and ask what their estate plan will cost. This is like calling a doctor and saying you have a stomach ache but you want to know what it will cost before you come to see him. The cost depends on the problem. This is the same in an estate plan. The cost usually will depend on the complexity of the documents you need. The complexity depends on the nature of your family or other beneficiaries and your assets.

However, you should ask whether the attorney bills by the hour or charges a flat rate for wills of a certain category. You can ask for “ball park” amounts to give you some idea of the cost. You can ask if the initial meeting is free. Sometimes, attorneys give an initial free consultation. In our firm, we do not because the information we give at the initial meeting is usually the most valuable legal advice we provide in an estate planning engagement. Never hesitate to ask about fees up front.

If an attorney refuses to discuss fees, find another attorney. You have a right to a written fee agreement before you retain the attorney to prepare your documents. You should expect to pay a retainer, which will be some or all of the anticipated fee up front. Estate plans for a husband and wife should not cost twice as much as an estate plan for a single person just because there are two sets of documents. Often, they are mirror images of one another, making the second set of documents less expensive to prepare.


Independent Executors

+ I WAS JUST NAMED INDEPENDENT EXECUTOR OF SOMEONE’S WILL. WHAT DO I NEED TO KNOW?

You need to understand the importance of your job as independent executor and the duties and powers that you have as independent executor. You should ask an attorney about what is involved before agreeing to serve as independent executor.

+ I WAS TOLD THAT I HAVE “FIDUCIARY DUTIES” TO THE BENEFICIARIES. WHAT IS A FIDUCIARY DUTY AND WHAT DOES THAT MEAN FOR ME?

A fiduciary is a person having a legal duty to act primarily for the benefit of another. When you are acting as independent executor, you are acting primarily for the beneficiaries of the estate, and you have legal, fiduciary duties to act for their benefit in managing and administering the estate. The law requires a high standard of ethical and moral conduct of fiduciaries. There are many specific duties, some of which are imposed by statute, some by case law and some by the will itself. It is important that you understand these duties. Ask your attorney to explain the duties applicable to you.

+ CAN I SERVE AS INDEPENDENT EXECUTOR WITHOUT AN ATTORNEY REPRESENTING ME?

Probably not. Most courts will not allow a person to act in a fiduciary capacity without an attorney. Even if the court allows you to do so, it is a bad idea, since doing a bad job as independent executor can result in liability.

+ I WAS APPOINTED AS INDEPENDENT EXECUTOR AT A PROBATE HEARING, BUT THEY SAID I HAD NOT QUALIFIED YET. WHAT DOES THAT MEAN?

Once the order appointing you independent executor is signed by the judge, you must then qualify as independent executor in order to receive Letters Testamentary. To qualify as independent executor and receive Letters Testamentary, you must take an oath and file the oath with the court. If a bond was required in the order admitting the will to probate and appointing you independent executor, you must also pay the bond premium and file the bond with the court. Most wills waive the bond requirement for independent executors. When you have taken the oath and paid and filed the bond (if one is required), then you are qualified and you may receive Letters Testamentary.

+ NOW THAT I AM QUALIFIED AND HAVE RECEIVED LETTERS TESTAMENTARY, WHAT DO I DO WITH THESE LETTERS TESTAMENTARY?

Letters Testamentary are your proof that you are the person designated and authorized to act on behalf of the estate. You will need to present Letters Testamentary to persons holding the assets of the estate so that they know you are the representative for the estate and that you are entitled to take possession of the estate assets. Banks, brokerage firms, title companies and insurance companies are the types of entities that may request Letters Testamentary.

+ SINCE MY SIBLINGS AND I ARE THE ONLY BENEFICIARIES OF THE ESTATE, MAY I PUT THE ESTATE PROPERTY IN MY BANK ACCOUNT SO THAT I CAN AVOID OPENING ANOTHER ACCOUNT SOLELY FOR ESTATE PROPERTY?

No. You have a duty to keep estate assets segregated from your personal assets. Therefore, you should never put estate property in your personal bank account and you should never commingle estate assets with you own personal assets. Even though you and your siblings are the only beneficiaries, you should play it safe and keep estate property separate. You should seek the assistance of an attorney if you have questions about this.

+ CAN I USE ESTATE PROPERTY TO PAY THE DECEDENT’S MEDICAL BILLS AND FUNERAL EXPENSES?

Typically, an independent executor may use estate funds to pay funeral expenses and expenses of last illness, and may even sell estate property in order to pay funeral costs and expenses of last illness. However, before paying bills, you should discuss this with your attorney.

+ CAN I SELL THE REAL PROPERTY THAT IS IN THE ESTATE?

Generally, an independent executor may sell estate property (real or personal) if funds are needed to pay expenses of administration, funeral expenses, expenses of last illness, and to satisfy claims against the estate. If the real property is not being sold for one of these purposes, the independent executor must have express authority in the will (in other words, the will must specifically state that the independent executor has the power to sell estate property) in order for the independent to have authority to sell the property. Most well-drafted wills contain this power, but many wills do not, and this can be a trap for the unwary independent executor.

+ I WAS TOLD I AM REQUIRED TO FILE AN INVENTORY, APPRAISEMENT, AND LIST OF CLAIMS. WHAT IS THIS AND WHEN DO I NEED TO FILE IT?

An Inventory, Appraisement and List of Claims is a document which lists the assets in the estate, the value of each asset as of the decedent’s date of death, and a list of all claims due and owing to the estate. The Inventory, Appraisement and List of Claims is often referred to simply as “the inventory.” The inventory must be filed within ninety (90) days of your appointment as independent executor, unless the court grants an extension of time in which to file the inventory. If you need an extension of time to file the inventory, you must file a request with the court. The inventory has specific statutory requirements and you should seek the assistance of an attorney in preparing and filing the inventory.

+ AM I REQUIRED TO PUBLISH OR SEND NOTICE OF ANY KIND TO CREDITORS OF THE ESTATE?

Yes. You are required to publish a notice to creditors in a newspaper printed in the county where the Letters Testamentary were issued. The notice must state that all persons having a claim against the estate being administered must present such claim or claims within a particular amount of time prescribed by law. This notice must be published one time and proof of the notice must be provided through an affidavit of the publisher. This notice to creditors must be filed with the court within one month after receiving Letters Testamentary. You also must give notice to all known secured creditors. This notice must be given within two months after receiving Letters Testamentary. You may, but are not required to give notice to unsecured creditors. Even though this notice is not required, it is sometimes a good idea. Because these notices to creditors have very specific requirements, you should seek the assistance of an attorney in preparing and sending these notices.

+ THE COURT’S ORDER ADMITTING THE WILL TO PROBATE AND APPOINTING ME AS INDEPENDENT EXECUTOR STATES THAT I MUST POST AND FILE A BOND. HOW DO I DO THIS?

First, you should contact an insurance company that writes bonds. You will need to fill out a bond application with the insurance company. When the application is approved, you must pay the premium and file the bond with the Court. If you have difficulty finding an insurance company that writes bonds or if you have difficulty obtaining approval for your bond, you should seek assistance. If a bond is required, it must be filed within twenty days of the date of the order granting Letters Testamentary. You will not qualify as independent executor until you pay the bond premium and file the bond, and Letters Testamentary will not be issued to you until the bond is filed. Fortunately, most wills waive the bond requirement for independent executors. Even if the will does not waive the requirement, you may be able to get the court to waive the requirement. Ask your attorney about this.

+ THIS ESTATE EXCEEDS THE AMOUNT A PERSON MAY TRANSFER TAX-FREE AT DEATH. DO I NEED TO FILE A RETURN WITH THE IRS AND/OR WITH THE STATE IN THIS REGARD? WHAT DO I DO IF TAXES ARE DUE AND HOW WILL I KNOW IF TAXES ARE DUE?

If you believe that the estate exceeds the amount a person can pass tax-free at death (that amount depends on the year in which the decedent died), you should seek the assistance of a tax professional to advise you. Your attorney can help you with this. Generally, if the value of the assets in the estate exceed the amount a person can pass tax-free at death, the independent executor must prepare and file a federal estate tax return and a state inheritance tax return and, if taxes are due, pay the tax. This is a complicated process and you should seek the help of a tax professional to assist you with this.

+ WHAT DO I DO WHEN I AM READY TO DISTRIBUTE THE ESTATE PROPERTY?

When you are ready to distribute the estate assets, you should review the will again carefully and distribute the assets as directed in the will. Again, your attorney can assist you with this process.


Steps to Take When Someone Dies

+ MY LOVED ONE JUST DIED. WHAT SHOULD I DO?

This is a concern for everyone. Immediately after a death there seems to be so much to do. It seems overwhelming, but it need not be.

+ WHAT’S THE FIRST THING I SHOULD DO?

The first thing to focus on of course is the funeral. It must be planned and paid for, or at least a plan needs to be made for payment. You should look through all the available records to see if there was a prepaid funeral contract. This may be kept with or near a will or estate planning file. The deceased may even have left instructions about what kind of funeral or other service he or she might want. You should look for this information. Texas law gives a priority to claims for funerals, so if you or someone else has to pay for the funeral, you should keep receipts of your expenditures and plan on presenting a claim to be reimbursed.

+ WHOM SHOULD I CONTACT? SHOULD I CONTACT HIS/HER EMPLOYER?

You should contact the employer and find out if there are any death benefits connected with his or her employment. Talk to the human services or personnel department if there is one. You should also notify the Social Security Administration if he or she was receiving Social Security.

+ DO I HAVE TO FIND THE WILL RIGHT AWAY?

You should look for the deceased's will, which probably says "Last Will and Testament" at the top. If it is not easily found, consider telephoning the office of the deceased’s attorney, if he or she had one. Make sure to look in the safety deposit box if you have access to it and cannot find the will anyplace else. There's plenty of time to probate the will (see below), so your search for the will does not need to be rushed or panicked, but it is a good idea to locate and secure the will when the opportunity is available. If you can't find the original will but think the deceased had one, contact your attorney for advice.

+ WHAT SHOULD I DO WITH THE WILL WHEN I FIND IT?

When you find the will, you should consider making an appointment with an attorney who is qualified and experienced in probate law. Even with a well-drafted will there are options that an experienced lawyer can help you sort through. You may want to use the attorney who drafted the will, if it is current and the attorney is available. You are not required to use the attorney who drafted the will. You may want to use your own attorney or ask your attorney for a reference. If you do not have an attorney, ask friends or other professionals, like financial planners, CPAs, etc., for a referral. Many firms, like The Swain Law Firm, PC, work exclusively in probate and estate planning and may be able to answer your questions quickly and efficiently.

+ DO I HAVE TO PROBATE THE WILL?

Whether or not you need to probate depends on the nature of the assets and how they are titled (in whose name are they held). Your attorney can help answer this question. There may be shortcut methods to avoid a complete administration if appropriate in your case.

+ HOW LONG DO I HAVE TO PROBATE THE WILL?

In general, the will must be submitted for probate within four years of the date of death. If more than four years have elapsed since the date of death, it may still be possible to probate the will, but a more complicated procedure is required. Ask your attorney for more information about this. Sometimes, people think that because they have access to all the bank accounts, it is not necessary to probate the will. This can cause serious problems. For example, problems may arise later, when the family decides to sell real estate owned by the decedent. If you think it is not necessary in your case to probate the will, you should be sure to discuss this with an attorney before allowing the four-year period for probate to lapse.

+ WHAT DOCUMENTS WILL THE ATTORNEY WANT TO SEE?

The attorney will need to have the original will and a certified copy of the death certificate. If you are anxious to begin the probate process and the death certificate is not yet available, you can start the probate process without the death certificate and file it later. The attorney eventually will need a list of all assets belonging to the deceased, valued as of the date of death. This will include bank accounts with the balance as of the date of death and investments and IRA’s and insurance, no matter who it may be payable to. It will include all real estate owned by the decedent, whether alone or jointly with another person. The attorney will need these to determine if the estate is subject to estate tax.

+ DO I STILL HAVE ACCESS TO JOINT ACCOUNTS EVEN BEFORE I PROBATE THE WILL?

In most cases, the bank or brokerage firm will allow a co-signer on accounts to access funds after the death of one of the co-signers. However, not all accounts with two co-signers automatically belong to the surviving co-signer. Who owns the property in these types of accounts is a complicated subject. Also, if the estate is large, there may be serious tax problems that need to be addressed before the funds are accessed. Therefore, it is a good idea to consult an attorney before using funds from these accounts for personal purposes, and it is a good idea to keep good records of how these funds are spent.

+ I KNOW THAT MY LOVED ONE DID NOT HAVE A WILL. WHAT DO I DO TO SETTLE HIS/HER ESTATE?

What needs to be done will depend on the nature of the assets. Sometimes, a full court procedure, called a "Determination of Heirship," is necessary. In other cases, a less complicated approach, such as an affidavit of heirship or small estates affidavit, can be used. The difference and complexity of each of these processes can be explained by your attorney.

+ HOW LONG DOES IT TAKE TO SETTLE AN ESTATE?

It can take as little as two weeks to have a will admitted to probate. After that, it is a matter of collecting the assets, paying the debts and distributing the remainder to the beneficiaries named in the will. A final tax return will need to be filed when due and any taxes paid. Generally, if no estate taxes are due, most of what needs to be done can be completed within about 3 to 6 months, depending once again on the complexity of the assets. This does not mean that no one may have access to any funds until all is completed.

+ CREDITORS ARE CALLING ME REGARDING MY LOVED ONE’S ACCOUNTS. WHAT DO I TELL THEM?

Tell them your loved one is dead and that they will need to wait until an administrator or executor is appointed. Do not agree to anything or sign anything with the creditor until you have discussed it with an attorney. Many credit card companies attempt have the surviving spouse agree to take over the card (making it sound like they are doing the spouse a favor), and this often is a bad idea. Texas law provides protection and benefits for surviving spouses and children. You should discuss these with your attorney.

+ MY LOVED ONE TOLD ME HE/SHE HAD A LIFE INSURANCE POLICY OF WHICH I AM THE BENEFICIARY. HOW DO I GO ABOUT COLLECTING THE LIFE INSURANCE PROCEEDS?

You should locate the policy, determine that you are the named beneficiary and then call the insurance company and request a claim form. The company will help you if you have questions about how to fill it out, or you can ask your attorney. If you cannot locate a policy, check the bank statements to see if premiums are being automatically withdrawn or checks have been written to an insurance company. If you know one exists but still cannot find the policy call the insurance company and explain the situation to them. If they still are not helpful, discuss it with your attorney.

Before cashing in the policy, be sure to discuss it with your attorney. In some cases, another course of action makes sense. For example, it may make sense for tax or creditor protection reasons to disclaim the insurance proceeds. In most cases, a disclaimer can't be used if the policy already is cashed in. So, it is a good idea to discuss the insurance with your attorney before cashing it in.


 
 

Special Note

The Swain Law Firm, P.C. makes the information it provides on this website available to the public for informational purposes only. The information provided is not to be construed as legal advice, is not guaranteed to be correct or up-to-date, and should not be construed as legal advice or an invitation to create an attorney-client relationship. You should contact and seek the advice of an attorney of your choosing to obtain advice or counsel regarding your personal situation.