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Common Will Planning Mistakes: How to Avoid Them

Most Common Will Planning Mistakes: How to Avoid Them

Do you want to ensure your will is legal and issue-free? If so, find out what are the most common will planning mistakes and how to avoid them.

Keyword(s): will planning

As adults, we tend to focus on our future life, constantly planning and revising where we see ourselves headed. However, the imminent scenario of death requires some attention as well.

Your will ensures that your assets fall into the proper hands when you pass away. Proper will planning eliminates problems for your loved ones later on.

Will Planning Mistakes to Avoid

Do not make mistakes that will leave your grieving loved ones with a headache later on. Keep reading to learn common and avoidable planning mistakes.

Not Planning at All

Many people push off even creating a plan because they feel too young to think about it. This might be the biggest mistake of all. We never really know when tomorrow will stop coming for us.

All adults should create a will to save their loved ones from chaos during a heartbreaking time. If you own a home, then create an estate plan will. Even if you do not own much, creating a will can save family members from fighting over keepsake items.

Failing to Keep it Updated

Families grow and shrink. Whenever this happens, you want to make sure that you put a new child into the will or take a deceased loved one out fairly quickly.

Your assets may frequently change as well. Regularly updating the will guarantees that everyone and everything important makes their way into this important document.

Overlooking a "What-If" Plan

For instance, what if you and your spouse die together in a tragic accident? Then, who receives the assets? Make sure you note this for your business, estate, and other important assets to avoid mistakes.

You may also want to name somebody else on the will in case somebody passes away after you. For instance, you may want your home to go to your child whenever your spouse passes away, to avoid a new spouse from overtaking a family asset.

Giving Taxing Gifts

Make sure that the person can afford whatever you leave them. The IRS sets a gift tax. If you leave items valued over $14,000, then the person must claim them on their taxes and pay up to 40%.

This brings up one of the most common estate planning mistakes. Putting your child's name onto the deed can put them into debt. In your estate plan, give the home to your loved one as an inheritance to avoid this tax.

Forgetting About Intangible Assets

We live in a digital age. You want to include intangible assets like important research, business data, and logins with passwords for social media accounts for your loved ones to protect your work and personal business. It will also give them the option to delete or memorialize your accounts.

Not Meeting with a Professional

You might think that you already know who gets what. However, it is not always that cut and dry. A legal professional can help you navigate this process too keep everything legal and avoid estate issues.

Hire an Attorney to Help You Plan Your Will

Will planning should happen now. Don't wait until it's too late.

We want to help ensure that your loved ones inherit treasures and not headaches. Contact us to help plan your will and estate plan today!

Benefits of an Estate Lawyer for Estate Planning

Benefits of Consulting an Estate Lawyer for Estate Planning

Estate planning involves more than just writing a will. In fact, it's an incredibly complicated process. Here's why you should hire an estate lawyer to help.

Keyword(s): estate lawyer

Does the thought of your beloved home being sold at auction bring tears to your eyes? Would your heart break if your favorite daughter didn't receive your wedding rings?

Well, without drafting a will and creating an estate plan, this is exactly what happens. The state where you reside takes control over all your assets following your death, leaving you no control over your keepsakes or property.

If you don't have a will or aren't sure where to start, an estate lawyer can help. Here are 5 reasons to hire an attorney and plan for life after you're gone.

1. Estate Planning is Complicated

You're not an estate lawyer. Which means drafting your own will and estate plan can be a complicated business. Every word and phrase included in the documents are subject to scrutiny.

There are certain DIY projects that are therapeutic and fun to complete. Writing your own will and estate plan isn't one of them. The process is best left to the professionals who are trained in drafting and finalizing legal documents.

Another thing to consider is the fact that state laws surrounding wills and estate planning are constantly changing. Your estate lawyer will be up to date on the most recent laws and how they affect your future.

2. An Estate Lawyer Saves You Money

You may think that drafting your own will and estate plan is cheaper than hiring an estate lawyer. But the truth is, hiring a lawyer will actually save you money in the long run.

Hiring an attorney is a one-time, flat fee. You know exactly how much you're paying and what you're getting in return. When you go it alone, you run the risk of paying court costs, additional taxes, and other professional fees.

3. Estate Lawyers Are Unbiased

One of the hardest parts about will and estate drafting is fairly dividing your property and assets. Your family and loved ones will all have an opinion about what you should do. This can get overwhelming and downright ugly.

Your estate lawyer has no vested interest in your assets or property, other than carrying out your wishes. Your attorney will offer unbias advice and guidance. This takes the emotional aspect of trying to please your family out of the equation.

4. Estates Are Settled By (Other) Lawyers

After you leave this life, it'll be time to look over your will and estate plan. This process is done by lawyers. Lawyers, just like your estate lawyer, who know exactly what they're doing and looking for.

A state judge will review your estate paperwork to make sure it's valid. Writing it yourself, without legal guidance, could result in complications for your family. Having a professional attorney oversee the planning, streamlines the review process.

5. Save Yourself Time and Aggravation

The biggest reason to hire an estate lawyer is to save you time and aggravation. Let's face it, writing a will and estate plan is straight up hard! Especially if you lack the experience or knowledge to get the job done.

And that's just the initial writing of the documents. Forget if the will or estate end up in probate where a court determines it's validity. The entire process of drafting a will and estate plan can be extremely stressful. Best to leave it to the professionals.

Hire an Estate Lawyer and Rest Easy

When the end of your time here on earth comes, the last thing you or your family should worry about is what will happen to your assets. Hiring an estate lawyer will put your mind at ease so you can focus your attention on your loved ones.

If you're ready to plan your estate and start living life, contact us today!

What Is a Medical Power of Attorney and Why Do You Need One?

What Is a Medical Power of Attorney and Why Do You Need One?

You may have heard of a power of attorney. But what is a medical power of attorney? We take a closer look at exactly what it involves.

Keyword(s): medical power of attorney

What if you were rendered unconscious, and doctors wanted to perform surgery on you? What if your elderly parent suffered from dementia and yet needed certain medical procedures performed?

These hypothetical situations are why having a medical power of attorney in place is so important. You never know when you or a loved one may be unable to make important medical decisions.

By having a medical power of attorney in place before a crisis, you can rest assured that someone you trust will make those crucial decisions on your behalf.

Here are four important facts you need to know about POAs in Texas. They may come in handy for when you least expect it.

1. Everyone Should Have a Medical Power of Attorney

If you have an aging relative, you should definitely advise them to put a medical POA in place in case they are ever physically or medically incompetent to make decisions regarding their own healthcare.

A medical power of attorney is a document, signed by a competent adult designating someone they trust to make health care decisions on their behalf should they become unable to make such decisions.

While medical POA is one important document that seniors should put in place as part of their overall estate planning, you do not have to be elderly to have one. Unfortunately, illness and injuries can happen at any time.

It's better to be safe than sorry and have one of these documents in place. Its especially important if you have firm religious or other convictions regarding your healthcare that you want to be sure are obeyed in case you are unable to speak for yourself.

2. Medical Power of Attorney is Not the Same as Durable Power of Attorney

Medical POA is just that- it only pertains to medical decisions. Durable power of attorney extends to the right to handle other decisions including financial ones. If you have a durable power of attorney, you will have the ability to pay bills and sign agreements on behalf of a disabled or elderly person.

Durable POA lasts until the principal says it is over. Medical POA, on the other hand, lasts only through the perosn's period of incompetency. If they get better, a doctor may determine they are now able to make their own healthcare decisions.

3. Medical Power of Attorney Does Not Incur Financial Liability

You are not liable for the person's medical bills when you hold their medical power of attorney.

You are only liable for their financial obligations if you are a party to the debt: for example, if you and your spouse are both on the mortgage, you will still be liable for payments even if she becomes incompetent.

4. Medical Power of Attorney Does Not Negate the Need for a Living Will or Will

You can designate someone else to make healthcare decisions for you, but if you have strong opinions on your end of life care, you will be best protected if you also have a living will.

Also known as an ‘advance directive,’ a living will allows you to clarify your end of life wishes such as whether or not doctors should use extreme measures to prolong life.

Neither of these documents has any impact on the distribution of your property after death. For that, you need to consult an attorney on your last will and testament.

Consult an Attorney about Medical Power of Attorney

If you have concerns about your future ability to control your healthcare decisions, you will feel better if you designate a medical power of attorney. If you have concerns about a relative who may soon need to have such decisions made on her behalf, talk to an attorney to see if this is a possible avenue for you both as well.

For more information on POAs, wills and other matters, contact us. We can help.

Revocable vs Irrevocable Trusts: Which Option is Right?

Revocable vs Irrevocable Trusts: Which Option is Right?

Are you planning for the future? Do you know the difference between a revocable vs irrevocable trust?

Keyword(s): revocable vs irrevocable trusts

The revocable vs irrevocable trust debate is one worth having. Unfortunately, the majority of Americans never make it that far as six-in-ten still lack an estate plan of any kind.

But once you mobilize the creation of your estate plan, it's time to consider the difference between revocable and irrevocable trust planning. In the following article, we'll examine the advantages of each, and hopefully, it will help you decide what's best for your situation. Let's begin!

Defining a Revocable Trust

A revocable trust puts you in charge of the income until your death. After this, it transfers to the beneficiaries you've set forth.

It gives you the freedom and control over your earnings while you're alive. It ensures your funds stay out of probate when you die. Many are drawn to it for its "win-win" aspects of serving you during life and protecting your loved ones from the nightmare of red tape if you die intestate (or without an estate plan).

And an Irrevocable Trust

In an irrevocable trust, you remove assets from the reach of others, yourself included. This has an advantage in that creditors are unable to pursue your earnings if you are legally vulnerable.

An irrevocable trust keeps creditors from being able to swoop in and claim your estate. This offers you peace of mind while alive and ensures loved ones will be cared for in the event of your death.

How Do They Handle Asset Protection?

A revocable living trust gives you absolute control while you're alive. You decide who your beneficiaries are. You use your money as you need it while protecting it for their later use.

And this is not exclusive to death. If you should experience a debilitating injury and later recover, the trust can give your beneficiaries the ability to act on your behalf. But once you've recovered, it allows you to reclaim control.

An irrevocable trust removes that degree of control. While that may not sound as appealing, there are good reasons to set your estate plan up with one of these.

If you are in a position that invites significant legal attention, an irrevocable trust will limit the abilities of your detractors to go after you. Same with creditors.

But it's not a Get Out of Jail Free Card either. You cannot simply set one up to avoid liability if you're in the middle of an impending or existing lawsuit.

Which Is Better at Reducing Your Estate Tax?

The question of what is a revocable trust often comes with questions about estate tax vulnerability. Yes, it's included in the value of your estate when you die, thus making it susceptible to taxation.

Irrevocable trusts remove the assets from your inventory, so to speak. This reduces the size of your estate and, thus, the amount open to taxation. It's often a choice for people who resent paying taxes.

Which One Wins the Revocable vs Irrevocable Trust for You?

If you are ready to settle the revocable vs irrevocable trust debate, then you need a qualified attorney well-versed in estate law to help. This is where we can help.

Contact us today if we can help you set up a trust or create your estate plan. For more information on trusts, click here.

What Happens When There is No Will?

Dying without a Will: What Happens to Your Estate?

A good estate plan and will outlines what happens to your assets when you pass away. Dying without a will poses certain challenges. Here's what happens.

Keyword(s): dying without a will

A 2016 poll found that 44 percent of Americans have a will. Those numbers suggest dying without a will is more common than most of us realize.

Wealthier people are more likely to make a will. But money is no guarantee.

In 2016, legendary musician Prince died without leaving a will behind. In 2018, Aretha Franklin died and left behind an estate of approximately $80 million, but no will.

Celebrity deaths get more attention when there's no will. But what happens if you die without a will? Read on to find out.

Dying Without a Will (or Dying Intestate)

Dying without a will is often referred to as "dying intestate." The "state" part is especially important here.

For instance, Franklin died in Michigan while Prince died in Minnesota. Ever state handles intestate deaths in a different way.

Spouses and children will fare better in these cases. They already have a legally established relationship with the deceased. Friends and associates are another matter.

Let's say a non-famous person dies without leaving behind a will. Their estate becomes a matter for probate court.

Probate courts alone aren't bad. In general, an estate goes into probate court even if someone left behind a will with very specific instructions. But an estate with no will is a lot tougher to untangle.

Let's say the person we mentioned earlier had two pieces of property. Property A is more valuable than Property B.

The deceased person had two children. Both of them say their parent intended to leave them Property A and give the other child Property B.

How is the probate court supposed to decide who is right? It's possible the two children will end up splitting the value of both houses. But it usually takes a lot of time and a lot of lawyers to get to that point.

Appointing an Executor

Someone who makes a will can appoint a specific executor. An executor is someone who oversees the distribution of assets. It can be a friend, family member, or probate attorney.

Needless to say, the executor has a lot of power. Which means that oftentimes, family members will go to court to fight over who should be executor.

The court has to appoint a qualified executor when someone dies without a will. But the court's role isn't just to guess what the deceased wanted. They must also apply relevant state laws.

For instance, let's say a person named Fred dies with a wife and three known children. The probate court decides to divide the estate four ways when, at the last minute, another person shows up. This person claims to be Fred's secret child.

If a DNA test confirms they're telling the truth, then they may very well have a claim to some of the estate. It's much easier to leave out specific children if you write a will. The children who get left out can still challenge that will, but they will have a much shakier case.

Why Wills Matter

There are lots of reasons for dying without a will. Some people wrongly assume they have time to make a will later. Some people may think it's too expensive and time-consuming to draft a will.

But not making a will is an expensive choice. It may not cost you anything, but it will cost your survivors a lot of time, money, and heartache.

The estate attorney at R Dean Davenport Attorney at Law has years of experience in drafting wills for Texas residents. Contact us to get started with drafting your will.

What You Need to Know about Creating a Living Will

What You Need to Know about Creating a Living Will

A living will allows you to make decisions about your own healthcare, even if you are incapacitated. We look at what you need to know about creating one.

Keyword(s): a living will

No one wants to think about the idea of being incapacitated and unable to make important decisions. It's a dark thought to consider, but the reality is, it's entirely possible.

And if it does happen, a living will can resolve a ton of conflict. It allows you to let your wishes be known if you are in a coma or otherwise incapacitated.

Here's what you need to know what the importance of creating a living will and how you can get started.

What Is a Living Will?

A living will is also known as an advanced directive, is a legal document that outlines what you want to happen if you are permanently unconscious, incapacitated, or terminally ill.

If you're in a coma, do you want to be kept on life support? If so, for how long?

What are your preferences when it comes to feeding tubes, hydration, pain medication, and medical interventions?

Who Should Have One?

Many young adults don't think they need to worry about creating a living will. They're healthy and have never had any serious medical problems. But the reality is tragedy can come at any age.

People can end up in a coma from car accidents, falls, and much more. These types of accidents don't discriminate based on age.

So, who should have a living will? The answer is easy: all adults should have one. Although being incapacitated is a scary thought to consider, being proactive can protect your medical desires in these situations.

What Happens If You Don't Have a Living Will?

So, what happens if you become incapacitated and you don't have a living will?

Here are a couple of issues that can arise.

Family Could Argue

You may have heard the tragic story of Terri Schiavo. She was in a coma and being kept alive via life support.

Her husband argued that he and Terri had discussed her wishes before and she had said she wouldn't want to be kept on life support. Her parents, however, argued she would not want to be taken off life support.

Terri Schiavo did not have a living will, and this argument went on for 15 years. She was taken off life support in 2005.

This 15-year argument could have been avoided if a living will had been created.

You May Be Given Treatments That Go Against Your Beliefs

Deciding to stay on life support or not is more than a personal preference for some people. It may go against their religion and what they believe in.

If you have strong beliefs about medical intervention, it's incredibly important to have a living will.

How Do You Create the Living Will?

So now that you know it's important to create your living will, how do you do it?

You can get the living will form from an estate attorney. You'll then want to work with the attorney to outline what your wishes are if you become incapacitated. The attorney will help you make sure you cover all of your bases so your wishes are known.

Don't Leave It up to Chance

There's no doubt that creating a living will is important for all adults. You never know when tragedy might hit, and you don't want to be left without any say in medical decisions.

Are you ready to write your living will? Contact us today!

Time isn’t on your side. You’ll work and save your entire life to reach retirement. But as you age, your likelihood of death within the next ten years goes up.

By the time you reach retirement age, your chances of dying within ten years hit 30%. You need to prepare for that eventuality. Do you really want to roll the dice on your retirement savings?

The best way to ensure your retirement goes to your loved ones instead of the government is through an IRA beneficiary designation trust. Today we’re going to cover what that means and why exactly you need one. Let’s dig in.

1. What in the World is a Beneficiary Designation Trust?

If you were to leave your entire life savings to one person who would it be? What happens if they die? Do you have anybody else?

Commonly, you’d assume that your beneficiary would and should be a person. But this isn’t always true. You can leave your IRA savings to an (almost) immortal trust.

A trust is a third-party financial agreement. It’s something people use to control their wealth, protect their assets, and keep certain aspects of their financial situation private.

You can specify the terms of most trusts designating to whom your assets go and when. You can set up a trust that keeps your assets accessible in your lifetime and then passes access to another person. The third party is often a bank, a board of trustees, an attorney, or all three.

An IRA beneficiary trust is a trust you create to specifically control your retirement savings after you die.

2. The Rules of a Non-Person Beneficiary

If you’re not naming a person as your beneficiary, you will have to follow slightly different rules. For example, since the trust is essentially immortal, the final beneficiaries can’t use the life expectancy method to determine post-death pay-out if the owner dies before the required beginning date.

If that happens, your trust must disperse funds within 5 years rather than over the lifetime of the named beneficiaries.

1. The trust must be valid and under state law.
2. It’s an irrevocable contract (often, this becomes true at the owner’s death).  
3. The trust must name identifiable beneficiaries.
4. To begin dispersing funds, whoever is in charge of the trust must provide documents to the IRA custodian by October 31 following the IRA owner’s death.

3. Why a Trust Instead of a Person?

Someday, you might be the rich uncle or aunt stereotype. If you are going to acquire a large amount of wealth or you suspect you will, a trust might be a good option.

Ask yourself this, do you trust your relatives (or friends) to spend your retirement savings wisely? It’s a tough question because you want to trust your relatives or friends. But some people just burn a hole in their pocket with money.

A trust gives you the peace of mind that your IRA savings will go toward what you want. For example, if your child or nephew or niece will eventually go to college, you can designate funds go directly to education.

If you’ve been through multiple marriages and your children are with different people, you might want to disperse funds accordingly. A trust will allow you to name both your current spouse and their children and your previous spouse and their children.

One such trust is called a qualified terminable interest property trust.

Be Sure Everyone is in Agreement

A beneficiary designation trust could be an effective wealth-planning tool. But be sure everyone involved, including the trustees, the attorney, and the IRA custodian all agree on the provisions and laws surrounding the trust.

If they don’t agree, the process will become long and more complicated than it needs to be. If you need help setting up an IRA trust, contact us. We’ll make sure everything works out in your favor.

Updating a Will: Issues to Consider

Situations that Indicate it Is Time to Make a Change

Updating a will is necessary any time there is a major change in your life. Keep reading to learn some of the most common reasons it is time for a change.

Keyword(s): updating a will

45% of Americans have a living Will as opposed to the 55% who don't. So applaud yourself for being a part of the 45% who cares about the future of their estate.

But life experiences change things and so should your estate plan. You need to know when to update your will.

Taking the time to sit down with a legal advisor to get your papers in order adjures respect. A will puts you in a position to secure a future for your children or loved ones.

It reduces familial conflict in the advent of your death. And, it safeguards all you've worked for—assets like finances, property, and valuables.

If you've had a change in your life and are unsure how to proceed, you need to read this. Learn here some of the most common reasons for updating a will.

Updating a Will After a Death Is Common

Most people stipulate a spouse or their children as first recipients in a will. But that changes when someone you've named passes away.

Every will should list a backup for every named person or entity in it. So if someone proceeds you in death, those stipulations are before noted. But in hindsight, that's never the case.

If you lose a spouse or child, you may want to pass your assets down to another relative. It's a smart idea to review and update your will in the case of a named beneficiary's demise.

In the same process, add additional heirs to avoid revisions for this reason in the future.

Marriage and Divorce

According to recent statistics, one in four marriages fail. If a previous spouse was the original beneficiary, it's time to update your will.

Most people cringe at the thought of leaving their assets to an ex in the event of a divorce. Doing so gives that individual certain rights. Plus you risk giving them the opportunity to contest your will.

If you've gotten a recent divorce, sit down with a legal advisor to discuss ways to amend your will.

Marriage denotes the same. Unless specified in another legal document like a prenup, update your will when you get married. Amending your will to include your spouse means they get their fair share of the assets you leave behind.

Update in Laws

As much as we want them to remain the same, laws are almost never set in stone. Amendments and updates happen all the time.

Wills abide by certain tax laws in each state. Yours is no exception. In recent years there have been drastic changes to provisions within estate tax laws. Forgoing the opportunity to bring your will up-to-date with tax law, could result in your assets getting tied up.

Check the date of your will. If you signed it more than five years ago, it's time to revisit it for a possible update.

Different circumstances in life call for revisions to an estate plan. Updating a will for a life change protects your assets and your loved ones.

Pull out a copy of your existing will and then speak with a trusted legal professional about whether you need to modify or make changes to do. Seek proper advise about updates to your estate plan.

Put your affairs in order. Contact us today for help understanding estate tax law.