Many have considered estate planning the process of memorializing wishes upon someone's passing, which is a part of the goals and purposes of estate planning; however, estate planning includes more than the planning for death but also the planning for life. Estate planning is about effectively planning for seen and unforeseen contingencies in life that include but are not limited to incapacity, tax planning, death, public benefits planning, care for oneself and designation of who provides that care, empowering loved ones and trusted friends to assist you, and securing the care and provisions for children and other loved ones. A good and periodically reviewed estate plan creates comfort in providing the assurance that you have taken the steps necessary for yourself and for those you care about.
Estate Planning Tools
A well prepared estate plan contains the provisions necessary to deal with the events of life that you can envision, and those you cannot. Many tools can be employed to achieve goals, to address concerns, and to ensure transitions in the event of contingencies.
Wills and Codicils
Although many estate planning tools have gained popularity, most estate plans still contain a will. A will is a writing designed to direct the disposition of one's property and possessions at death, according to the provisions the "testator," or person who made the will, created. The making of a will is so revered as a personal right in the law that it is enshrined in the legal doctrine of "freedom of testation," or the right to determine how one's estate is distributed and disposed of after death. Nevertheless, while an individual possesses the right to dispose of his or her property by the terms contained in a will, Texas has developed laws about wills in terms of form, content, public policy concerns, relevant issues of community property, and equity.
Simple Wills- A simple will deals with the disposition of property at death. Also, this kind of will appoints an individual named the "Executor" to handle the affairs of the estate. While a simple will does not address estate tax concerns, it may designate a person to serve as a guardian of minor or disabled children or provide direction for funeral and burial plans.
Wills with Tax Planning- A will with tax planning provisions covers the items contained in a simple will, but also covers estate tax planning to limit estate tax liabilities.
Codicils- While a will typically deals with the totality of an estate, a codicil amends or supplements the terms of a will. Codicils may be useful in updating an estate plan after a recent event or acquisition of property that warrants special attention.
Holographic Wills- A handwritten will that is wholly in the handwriting of the testator and signed by the testator. While Texas courts recognize holographic wills, whether or not the handwritten will someone creates meets all of the legal requirements or provides for all the necessities of a particular estate are essential considerations in the creation and review of a particular will.
Trusts can be very effective tools to manage property during life, or direct distribution or management of property at death. Several trust forms exist and can be used independently or jointly in an estate plan. A trust is a legal relationship in which the creator or "settlor" transfers title to property or assets to a trust managed by an individual named the "trustee" who is charged with the duty of preserving and managing the trust assets for the benefit of another called a "beneficiary."
Revocable Living Trust- A trust in which title to assets are transferred to the trust during the lifetime of the settlor. Where not all the assets are transferred to the trust during the settlor's lifetime, probate will be required to complete the funding of the trust. This additional probate step is usually accomplished by a pour-over will that assists in completion of the funding of the trust.
Testamentary Trust- A testamentary trust is contained in the provisions of a will, and most often, considers estate tax implications and any special planning for the beneficiaries of the estate.
Spendthrift Trust- A primary function of a spendthrift trust is to create trust assets that are protected from creditor claims of the trust's beneficiaries.
Life Insurance Trust- A properly created Irrevocable Life Insurance Trust separates the insured from any incidents of ownership and permits the beneficiaries to receive the proceeds or the benefits of the proceeds without estate tax liabilities. A life insurance trust can be a useful tool in paying estate settlement expenses and estate taxes, and funding education for children and grandchildren.
Special Needs Trust - A trust designed to maximize public benefits eligibility to ensure a continuum of care throughout the lifetime of the beneficiary. This trust involves careful planning and continued supervision to ensure that the trust terms stay in conformity with relevant laws and continue to meet the needs of the trust beneficiary.
Directives are critical elements of any estate plan because they can ensure that your affairs can be managed in the event of disability, illness, or incapacity.
Statutory Durable Power of Attorney- A power of attorney for financial matters can be essential in ensuring that the management of your affairs continues without undue delay or waste to your financial estate in the event you are unable to do so. It is imperative that any one given this kind of delegation of decision making be known to you and trusted by you. Further, because this document establishes a fiduciary relationship, certain rights and obligations attend it. Knowing your rights as the person who has given the power of attorney and even how to revoke it can be essential in preserving your estate or remedying inappropriate uses of the authority granted.
Medical Power of Attorney- Delegating medical decisions to a family member or friend in the event of disability or incapacity can assist in the continuation of treatment and decision making in the provision of your healthcare.
Living Will or "Directive to Physicians"- A living will directs physicians as to your wishes in the event of terminal conditions and life sustaining treatment options if you are unable to communicate your desires.
Designation of Guardian Before the Need Arises- In a duly prepared and signed writing, an individual may designate whom he or she may want to serve as their guardian, if a court determines that such appointment is needed.
Creating your plan for the future requires thoughtful and careful planning in the many areas that your estate plan can affect your life and the lives of the ones you care about most. Schedule a consultation with Estate Planning Attorney John B. Henry, III, to begin discussing options that may fit your estate planning goals and needs.
An estate planning consultation with the office of John B. Henry, III, Attorney at Law, will require the review of a current financial statement, copies of existing wills, trusts, directives, or other estate planning documents, and completion of the firm's client questionnaire that will be provided upon a scheduled consultation.