An effective estate plan should be designed to do two things in the event of your death or temporary or permanent disability. Firstly, it should instruct others how to carry out your wishes for the distribution of assets. Secondly, it should appoint representatives to manage your affairs in your place.
To establish your intentions, planning should be completed with clarity and simplicity in mind. It is also important to consider estate and gift tax savings and creditor protection. Minimizing or eliminating unnecessary probate involvement is also key to reducing the burden on your heirs.
With the start of a new year, now is the perfect time to review the plans you have in place. Reflect on any changes that have happened in your life and how they may affect your estate plan. Below are some questions to consider as you review the terms of your will and your related estate planning documents.
Last Will and Testament
Have there been any changes in your family? These could include marriage, divorce, births, deaths, debilitating injuries or illnesses, minor children reaching the age of majority, etc. How about major changes in your financial circumstances, real or personal property, or other assets? This would include increases or decreases in value, liquidity, and succession. Changes in business ownership, moving to a new state or country, or changes in local legislation can also impact your estate plan. Are you effectively planning for estate taxes?
Power of Attorney
Who is named to act as your agent? Have they been granted a Limited Power of Attorney or do they hold a Statutory Durable Power of Attorney? How will medical decisions be made in situations where you are unable to make them yourself? Have you granted a Medical Power of Attorney to anyone, and does that person know generally what your wishes are?
Advance Medical Directives
Medical decisions concerning life-sustaining care and treatment can be some of the hardest decisions to be thrust upon your family members. Do you have a valid Advance Medical Directive that details your wishes in the event of a terminal or irreversible condition and, if so, do your family members know it exists? Be sure to give copies of your Advance Medical Directive to the relevant people for fast access in an emergency.
Are Your Beneficiary Designations Up to Date and Correct?
These will typically become effective immediately at the time of your death and will supersede a bequest in a Last Will and Testament. Did you know that divorce automatically affects a beneficiary designation? The most common example of these is a life insurance policy, but very often bank accounts and other financial assets include a beneficiary designation. Be sure you are keeping track of which of your assets include such a designation, and that they are up to date. Definitely make sure to review your designations after major life events such as marriage, the birth of children, death, divorce, and remarriage. The difficulties you may avoid for your family and loved ones later will definitely make it worth your time.
How Are Your Assets Titled?
Do you understand how marriage affects your ownership of property? Do you know whether any of your property is your separate property, or if it is all community property? Do you know what difference it makes if you have joint assets with rights of survivorship? How you own property and other financial assets make a critical difference in how those assets are distributed under the laws of the Texas Estates Code, and your beneficiary designations should be reviewed periodically to ensure that assets are going to the correct beneficiaries.
Is All of Your Estate Information Gathered in One Place?
And last but definitely not least in terms of importance – remember that the most carefully planned and meticulous estate plan in the world cannot serve you if it remains safely hidden away and is never found. It is vital to keep all of your estates-related information in a location known to your representative, or at the very least keep it somewhere it can be easily found. This should include a listing of assets with account numbers; relevant online account login information; plans for distribution of tangible personal property; the names, contact information, and roles of advisors; and final arrangement information.
Sam M. “Trey” Yates, III is a Houston-based Board Certified Family Law Attorney and creator of The Guide to Good Divorce℠ seminars for women. If you have questions about your Texas divorce, please contact The Law Office of Sam M. “Trey” Yates, III, P.C. for a consultation. If you would like more information about Trey Yates’ 2021 The Guide to Good Divorce℠ seminars, please visit www.GuideToGoodDivorce.com or call 713.742.6606.