Estate planning is a two-part process in which a person: 1) provides for the management of their property and health care while they are alive but disabled; and 2) provides for the care of their minor or disabled children and the distribution of their property at their death. A comprehensive estate plan resolves a number of legal matters that arise in the event of a person's disability or after a person's death.
Welch & Wright, PLLC offers comprehensive estate planning services with a focus on the client's personal needs and desires. Our experience and knowledge help us assist you with coordinating beneficiary designations on retirement plans, life insurance policies, annuities and financial accounts as well as provide for the care and management of your property for disabled family members.
About Your Estate
An individual's estate consists of all the property that he or she owns at the time of death. This includes:
- Real estate
- Bank accounts
- Stocks and other securities
- Life insurance policies
- Personal property - such as automobiles, jewelry, and artwork
What Does an Estate Plan Include?
Preparing a will allows you to designate exactly how you would like your assets distributed upon death, name guardians for your minor or disabled children, and appoint a person or institution to manage assets on behalf of your loved ones. Dying without a will (or dying intestate) can be very costly and stressful for your heirs and allows the state rather than you to determine who inherits your assets. Even with a trust, a will is still necessary to take care of any important holdings outside of that trust after death.
Financial (Durable) Power of Attorney
Choosing an agent to manage your financial affairs in the event of your disability ensures that your financial matters will be taken care of by someone you trust if you are unable to make decisions yourself. Arranging this in advance helps to ensure that your wishes will be carried out and your best interests will be honored before any accidents or sudden medical issues arise.
Medical Power of Attorney
If a your health declines to the point where you can no longer communicate your wishes or make decisions for yourself, designating an agent to make medical decisions for you allows you to choose who will communicate your medical wishes to others on your behalf. Preparing a medical power of attorney allows at least some degree of control over your health care in the unfortunate event that you are unable to make decisions on your own.
A Trust (Optional)
Though not essential, a trust allows you to put conditions in place that designate how and when assets will be distributed after death without the necessity of probate. When necessary, trusts may also reduce estate and gift taxes. Maybe the biggest advantage of a trust is that it can offer greater protection of assets from creditors and lawsuits for your heirs.
Maintaining and Updating Your Estate Plan
Keeping your estate plan current ensures that it reflects your current property, your health situation, and your wishes. There are several important life events after which we recommend updating your estate plan.
After a Spouse Has Died
In the unfortunate event that your spouse passes away, it's important for you to review your estate plan with your attorney. Though surviving spouses often think that they don't need to change anything in their estate plan, making adjustments may help save money in the long run. Also, because most spouses name each other as the primary agent in their powers of attorney and executor in their wills, it is often necessary to review who will handle your affairs if your spouse is no longer there.
After a Divorce
It is critical to re-examine your estate plan if you decide to end your marriage. The nature and extent of the estate is likely to change after a divorce, and certain legal provisions related to revocable trusts or beneficiary designations under retirement plans or life insurance contracts may bring undesirable consequences for divorced couples. For example, Texas law declares that a divorce cancels any gifts made to the former spouse under a will as well as any appointment of the former spouse as an agent under previously executed medical and financial powers of attorney. However, the law makes no provision concerning ex-spouses under revocable trusts - meaning that a divorced spouse could remain as a trustee or a beneficiary! Reviewing estate plans helps prevent issues such as this.
Change in the Law or Your Financial Circumstances
Recent changes in estate tax laws are making some aspects of older estate plans out-of-place or unnecessary. Bypass trusts, which are designed to take advantage of a smaller lifetime exemption against estate taxes, may be unnecessary now that the estate and gift tax exemption has been increased. Fluctuations in the economy and stock market and the changing values of life insurance policies and retirement accounts also affect the value of many estates. Though bypass trusts and other tax-saving devices were appropriate before, it is prudent to review their value to the estate plan. Estate plans should be reviewed if a person's financial situation changes dramatically for better or worse - such as receiving a large inheritance, financial settlement, or other sizable payment or if downsizing or losing significant portions of your property.
Change in the Intended Beneficiary
If you wish to change the beneficiary of any part of your estate, it's important to revise your estate plan with your attorney as soon as possible.
If You Move to a Different State
Each state has different property and probate laws, and both federal and state laws governing estates must be taken into consideration. It is essential to have your estate plan, wills, and trusts reviewed upon moving to a different state.
Every Five Years
Turbulent economic times and constantly changing laws mean that your estate plan may not reflect your wishes or financial situation. We recommend reviewing your estate plan and will every five years to ensure that everything is up-to-date and accurate.