Estate Planning FAQ

Estate planning is one of the most important steps any person can take to make sure that their final property and health care wishes are honored, and that loved ones are provided for in their absence. Though often overlooked, or put off in favor of more immediate concerns, a comprehensive estate plan can resolve a number of legal questions that arise whenever anyone dies: What is the state of their financial affairs? What real and personal property do they own? Who gets what? Does a personal guardian need to be appointed to care for minor children? How much tax will need to be paid in order to transfer property ownership? What funeral arrangements are appropriate?

What is an “Estate”?

Your “estate” consists of all property owned by you at the time of your death, including:

• Real estate
• Bank accounts
• Stocks and other securities,
• Life insurance policies,
• Personal property, such as automobiles, jewelry, and artwork.
• Care of pets and animals

How Can an Estate Plan Help?

Regardless of your age, or the size and complexity of your estate, an estate plan can accomplish the following:

• Identify the family members and other loved ones that you wish to receive your property after your death.
• Ensure that your property will be transferred to those you have identified, as quickly and with as few legal hurdles as possible.
• Minimize the amount of taxes that will need to be paid in order for your property to pass to others after your death.
• Avoid the time and costs associated with the probate process by utilizing estate planning devices like living trusts and “payable on death” bank accounts.
• Dictate the kinds of life-prolonging medical care you wish to receive should you be unable to make your wishes known when the time comes.
• Set forth the kind of funeral arrangements you would like, and how related expenses are to be paid.

Understanding the estate plan options that are right for you can be a complex undertaking. The law firm of Buckner & Cross, L.L.P. can help you in ever stage of your decision-making process.

Getting Legal Help with Your Estate Plan

An experienced estate planning attorney can explain all options available to you in meeting your estate planning goals and fulfilling the needs of your loved ones — whether you need to revise an existing will or create a comprehensive estate plan from scratch.

What can I do to Minimize the Costs of Estate Planning?

A lawyer or other professional often charges by the hour for the amount of work put into the estate plan. Ask about fees at your first consultation and inquire about how much your total estate plan might cost. If your legal adviser charges by the hour, the more time you invest in locating relevant documents and putting your wishes in writing, the less preparatory work your adviser will have to do. This should go a long way toward reducing the final cost of your estate plan.  The law firm of Buckner & Cross, L.L.P. typically charges a “flat fee” for most estate planning work and you will negotiate in advance the fee for all legal services.

Should I Consult a Lawyer as I Plan my Estate?

If your estate is relatively small and your objectives straightforward, you might plan your estate mostly on your own, using various resource materials from the Internet, and use professional help largely for tasks like writing a will or a trust. However, a caveat is in order. “How-to” guides can assist you as you start the estate-planning process. But before finalizing anything, consult with an experienced estate lawyer to make sure that your property goes exactly where you want it to; that your family is protected fully; and that you are assured of proper care in the case of incapacity.

The language in a will is critical.  We have seen many instances where a person used language that ended up defeating their original purpose in making the will, because they attempted to draft something themselves.  If what you are doing matters to you, you should absolutely consult with an attorney.

As a general rule, the larger your estate, the more important it is to consult a lawyer. You should most certainly use a lawyer if you own a business, if you own real estate, if your estate nears or exceeds $1.5 million (making tax planning a factor under current federal law), if you have a “blended” family with a mix of children and step-children, or if you anticipate a challenge to the will from a disgruntled relative or anyone else.

Why Can’t I Just use a Book, or One of Those Computerized “Will Kits” I’ve Seen in Bookstores and Do it Myself?

For some people—those with very small or otherwise uncomplicated estates (no real estate, for example), such alternatives might provide sufficient help. Make sure that a book or kit is up-to-date and thorough, especially since probate laws vary from state to state.  And, be careful which of the self-help kits you use!  There is a kit sold by one Amarillo bookstore that is worthless and will cost you serious money if you rely upon it.

These alternatives, such as self-help kits or online legal document preparation websites, don’t provide you with legal expertise to review your work. Do-it-yourself books and kits, some lawyers say, have caused more work for lawyers (and bills for clients) than they have avoided. Once you begin totaling up all your assets, you may be surprised to find that your estate is larger than you thought, meaning a simple will isn’t enough. At the same time, family relationships are becoming more complicated. Today, a do-it-yourself will kit or large multi-state legal website might not do the job.

What’s more, most do-it-yourself alternatives can’t tell you what strategies you might be able to take advantage of to save money or to make sure your wishes are accomplished. Estate planning for most people should consist of more than just a will: IRAs, insurance, living trusts, and other elements can be a money-saving part of the mix. The precise mix that’s best for you is as unique as your circumstances.

And because they cannot give legal advice, many alternative estate providers often fail to inform you when there might be a better (and cheaper) way to accomplish your goals. For example, a recent New York Times story recounted a reporter’s experience with one such service. He wanted to leave his father part of his estate, but require the father to bequeath anything left over when he died to the reporter’s children. “The service would not—could not—tell him that such a proviso is not binding (something he later confirmed with a lawyer, who pointed out other ways to accomplish his goal).” he wrote. “I might have died in the naïve belief that my children were protected.”

Law firms have other advantages—witnesses available (wills must be signed in front of witnesses to be effective), availability of a notary public, codes of conduct that protect clients’ confidentiality, and, most of all, lawyers who know the various alternatives the law affords.

Although many people will fit a standard form, many more have unique situations that can benefit from the custom-made advice tailored to their specific situation by a lawyer who’s charged to represent their best interest. And since lawyers generally charge less for less-complicated estates, you may be able to gain the benefits and flexibility of real legal advice at little more than the cost of a computerized will kit.

Knowing that your will and estate plan will pass legal muster will help you sleep better at night—and that peace of mind is worth a few dollars more.

How Will I Work With my Lawyer to Plan my Estate?

Don’t just expect to pile some papers on your lawyer’s desk and have a will or trust magically appear in a few weeks. Preparing these documents is seldom as simple as filling in blanks on a form. Most people will meet with their lawyer several times, with more extensive estates requiring more consultations.

At the first meeting, be prepared to tell your lawyer about some rather intimate details of your life—how much money you have; how many more children you plan to have; which relatives, friends, or other associates you want to get more or less of your estate. Bring as much information and as many relevant documents as you can to the meeting.

After talking with you, your lawyer will explain the options the law provides for accomplishing your estate-planning goals. Based on your direction, your lawyer can draft a will or trust or both, depending on your circumstances.

It’s a good idea to ask your lawyer to send you a draft of the will or trust document for your review. After examining the draft, ask for any clarification you might need and provide any necessary changes. This information will assist your lawyer in preparing the finalized will or trust document that, upon signing, will become legally effective to distribute your estate.

You should review your estate plan periodically, so you’ll want to stay in touch with your lawyer. Don’t think of estate planning as a onetime retail transaction, but rather as an occasional process that works best when you have a continuing relationship with your professional advisers.

Do I Have to Have a Lawyer to Write my Will?

No. If your will meets the legal requirements established by Texas law, it is valid, whether you wrote it with a lawyer’s help or by yourself. However, a lawyer can help ensure that your will is more than just valid. Your lawyer can make sure that the will does what you really want it to do. It is for this reason that more than eighty-five percent (85%) of Americans who have wills worked with a lawyer.

What Happens if I Die Without a Will?

If you die without a will, you die intestate. Your property still must be distributed, and will be done so according to your state’s laws of intestacy. The probate court in your area will appoint someone (who may or may not be the person you would have wanted to comb through all your affairs) as the administrator of your estate. He or she will be responsible for distributing your property in accordance with the law of your state.

The probate court will supervise the administrator’s work closely and may require the administrator to post bond to ensure that your estate will not be charged with the costs of any errors made by the administrator. Of course, all this involvement may be much more expensive than administering an estate under a will—and these costs come out of your estate before it is distributed. Some of your property may have to be sold to pay these costs, instead of going to family or friends.

Who Gets my Property if I Die Without a Will?

By not leaving a valid will or trust, or by not transferring your property in some other way before death, you’ve left it to the great state of Texas to write your “will” for you. In the absence of a will, the law of Texas has made certain judgments about who should receive a decedent’s property. Those judgments may or may not bear any relationship to the judgments you would have made if you had prepared a will or executed a trust.

As a general rule, state law gives your property to the people most closely related to you by blood, marriage, or adoption. As a result, your hard-earned money might end up with relatives who don’t need it, while others, whether or not related to you, who might be in greater need or who are more deserving, are passed over. In the unlikely event that you have no relatives or in the event that your relatives cannot be located after diligent efforts, your property will go to the State of Texas—a big reason to have a will or a trust.  We are presently having budget woes in Texas, but does that mean that you really want to leave your cherished ’56 Chevy to the State?

Does a Will Cover all my Property?

Probably not. It is easy to think that a will covers all of your property. But because property can be passed to others by gift, contract, joint tenancy, life insurance, or other methods, a will might best be viewed as just one of many ways of determining how and to whom your estate will be distributed at your death.

Many of the various methods of distributing your estate are discussed here. Be sure to keep in mind the kinds of property that a will may not cover and include them in your estate planning.

Examples of property that pass outside of a will include:

• Anything that has a designated beneficiary (including life insurance and retirement plans)
• Bank accounts that are set up “payable on death” (or “POD”) to the survivor of multiple account holders

Are There any Special Legal Formalities Required To Make my Will Legally Valid?

After you’ve drawn up your will, there remains one step: the formal legal procedure called executing the will.  This requires witnesses to your signing of the will. In almost all states, including Texas, the signature of at least two witnesses is required. In some states, a will is not deemed legally valid unless the witnesses appear in court and testify about witnessing the will. However, in a growing number of states, a will can be “self-proved”—that is, the will is accepted as valid and the witnesses will not be required to appear and testify if, at the time the will was executed, the witnesses’ signatures were notarized and each witness submits an affidavit attesting to the fact that he or she witnessed the signing of the will.  Texas allows for “self-proved” wills and all of the wills prepared by Buckner & Cross, L.L.P. contain the “self-proving affidavit” that the law allows.  This will save your loved ones a great deal of trouble, by bypassing the requirement of finding the witnesses years later!

In my Will, can I leave my Property to Anyone I Wish?

In general, you can pick the people you want your property to go to and leave it to them in whatever proportions you want, but there are a few exceptions. For example, a surviving husband or wife may have the right to take a fixed share of the estate regardless of the will. Because Texas is a community property state, each spouse already owns their own one-half of the marital estate.  Therefore, each spouse can only give away one-half (1/2) of the total that is owned.  You can, however, give your one-half (1/2) share to whomever you wish and there is not requirement that you leave your one-half share to your spouse.  Some states limit how much you can leave to a charity if you have a surviving spouse or children, or if you die soon after making the provision.  Texas has no such provision.

Some people try to make their influence felt beyond the grave by attaching bizarre or excessive conditions to a gift made in the will. Most lawyers will advise you not to try this. Courts don’t like such conditions, and you’re inviting a will contest if you try to tie multiple, unreasonable conditions to a gift. For the most part, though, it’s your call.  (For instance, I have a client who owns her own home.  She wants to let her husband live in her home during his lifetime, with the “remainder” going to her children.  However, she doesn’t want her husband to move a woman into the house after she is gone.  In her will, she gave him a “life estate” in the house, with the restriction that he cannot have a woman move into the house if he is having a dating or romantic relationship with her.  A court would likely enforce this restriction, as it is reasonable.  If he moves his girlfriend in after his wife is gone, the children can have him removed from the home.)

Can I Disinherit My Spouse and Children?

Texas law allows you to disinherit your spouse. State laws generally entitle a surviving spouse to take a portion of the deceased spouse’s estate—regardless of the deceased spouse’s will or estate plan, but that is not true in Texas.  If you own community property, you own one-half (1/2) and your spouse owns one-half (1/2).  You may not give away your spouse’s half, but you may give your own half to anyone you wish.

The situation with children is dramatically the opposite. Except for Louisiana, every state permits you to disinherit your children. However, to be effective, it’s better if your intent to disinherit is express, which usually means it has to be stated in writing.  If is actually pretty common for a parent to disinherit a child.  So as to not unnecessarily hurt the child, we often include language like, “I specifically disinherit my daughter, Linda Lou Smith, and she is familiar with the reasons for this decision.”

Whom Should I Make the Executor of my Will?

There’s no consensus about who makes the best executor. It all depends on your individual circumstances.

One approach is to appoint someone with no potential conflict of interest—that is, someone who doesn’t stand to gain from the will. Under this approach, you can minimize the likelihood of a will contest from a disgruntled beneficiary who might be tempted to accuse the executor of taking undue advantage of his or her role to the detriment of others named in the will. On the other hand, if you believe that there is little possibility of a will contest, you could choose a beneficiary as executor. Since an executor who is a beneficiary usually waives the executor’s fee to which he or she is entitled, your estate will save money.

For most people whose assets amount to less than a million dollars, a good choice is your spouse or the person who will be the main beneficiary of your will. This person naturally will be interested in making sure the probate process goes efficiently and with minimal expense. For larger estates and those that involve running a business, it may be advisable to use the estate-planning department of your bank, your accountant, or your lawyer.

Why are Paid Executors Sometimes Preferable?

There are sometimes reasons for choosing a paid executor—usually a lawyer—instead of your spouse. Your spouse may be incapacitated by grief, illness, or disability. Nonetheless, he or she as executor will be personally liable for unpaid estate taxes and fines for late filings, even if he or she has delegated such tasks to a lawyer. Furthermore, since the executor must gather all the estate assets, your spouse may be faced with the odious duty of retrieving money or property you lent to other family members or friends.  And, if your spouse is not the parent of all of your children, your spouse may have motivation to not follow your wishes as set out in the will.

If you think your spouse may not be up to the job (considering that he or she may also be saddled with sole responsibility for any minor children), you might choose a lawyer or other professionals, even though it means paying a fee. Remember, this is a job that, primarily because of tax procedures, can take more than three years of involvement, though most estates take far less.

What if the Executor I Choose Can’t Serve When the Time Comes, or Doesn’t Want to Serve?

Whomever you choose as executor, be sure to provide in your will for a successor executor in case the first named executor dies or is unable or unwilling to perform. Without a backup executor, the probate court will have to appoint someone, and that person may not be to your liking.

One final caution—don’t name someone as your executor unless you have spoken to the person and he or she agrees. This will ensure that the person of your choice, not the court’s, will administer your estate.  Texas has modernized its probate system and so long as you designate your executor to be able to act independently of the court’s supervision, being an executor is not a big deal and it will not consume very much time.

Can I Appoint More Than One Executor?

Yes, naming co-executors is often very popular with small business owners who name a spouse or relative to oversee the personal side of matters and a second person with business expertise to oversee the management of the business.

Naming co-executors may be a good idea if the main beneficiary lives in a different state and is unable to make the trips necessary to handle the many details involved in administering an estate. While this person could be a co-executor, another co-executor living in the state in which the estate is being administered could be named to handle the day-to-day administration. Finally, don’t forget to name one or more successor executors so that if a co-executor dies or declines the position, someone else of your choice will be available.

Is There Anyone Whom I Shouldn’t Appoint as Executor?

As a general rule, the executor can’t be a minor, a convicted felon, or a non-U.S. citizen. In addition, while all states allow an out-of-state resident to act as executor, some require that the nonresident executor be a primary beneficiary or a close relative. Some states require that a nonresident executor obtain a bond or engage a resident to act as the nonresident executor’s representative. For these reasons, and because handling an estate can take months and require several court appearances, it’s a good idea to pick at least one executor who is a legal resident of the state in which your estate will be administered.  You also shouldn’t appoint someone that you do not trust with your money, because by picking them as your executor, you are going to allow them access to your money and you will not be around to supervise them!  If your brother has been dishonest all your life, definitely don’t pick him to be your executor!

What is an “Independent Executor”?

About a dozen states, including Texas, permit the appointment of an independent executor, who, after appraising the estate’s assets and filing an inventory of assets with the probate court, is free to administer the estate without intervention from the court. This saves time and money. However, a court could become involved in the event someone challenges the independent executor’s administration of the estate.

The independent executor has the power to do just about anything necessary to administer the estate. He or she can sue and be sued; settle claims made by others against your estate; deny or pay claims made by others against your estate; pay debts, taxes, and administration expenses; run a business if it is part of the estate; and distribute the assets of your estate to your beneficiaries as spelled out in your will. In some states, including Texas, the independent executor can sell your property without first securing a court order to do so.

Having an independent administration is the best way to avoid costly probate.  At Buckner & Cross, L.L.P., we draft wills that allow for independent administration, to save your estate money and your family extra time in court.

How Much Does an Executor Charge for His or Her Services?

If the executor is a beneficiary—for example, a family member—he or she may choose to forgo the statutory executor’s fee and, you can specifically provide that they are to serve with no compensation (your estate will pay all necessary legal fees).  You can expect any executor who is not a beneficiary, such as a bank or a lawyer, to charge a fee. Fees vary by state and even within regions of a state and usually are set as a percentage of the estate’s value. For small and mid-sized estates—estates under $200,000, for example—expect a fee of 1 to 4 percent of the total estate. Probate courts and state laws usually regulate fees.  It is very common for a will to provide no compensation for executors when you are naming a family member or beneficiary as the executor.

This article is not intended to be legal advice and is not a substitute for legal representation by an attorney. You are encouraged to seek the advice of your own attorney to answer any specific legal questions you may have.