Estate Planning, Probate and Estate Administration

Estate Planning

Our approach to estate planning has changed greatly in the past decade or so.  With the federal estate tax threshold being increased so much in recent years, we spend much less time on tax issues and more time on passing wealth to our beneficiaries in a way that will benefit our beneficiaries.  We look at structuring the passage of wealth in an asset protected manner.

Another difference in estate planning today is the concentration on management of health issues and assets in the event of incapacity for extended periods of time.  Where we used to concentrate on what happens at our passing, we now place more emphasis on management of health and property issues during our lifetime.

The single greatest driver for couples to seek our assistance involves minor children of a marriage.  Who will provide the love and support needed if we are no longer available?  Who will manage financial assets for our children?  How will we structure the distributions to the varying needs of our children?  Can we protect the assets from outside risks and failed marriages in the future?

Individuals passing away without a will or trust will find their estate divided and distributed by the State of Texas according to state laws regarding intestate succession.  This can be costly and may not be according to your expectations.  We work with many blended families.  The default rules for blended families can be extremely problematic to the surviving spouse.  Where there are children from a prior relationship, the surviving spouse is not the presumed beneficiary. 

Estate planning typically involves the creation of a will and/or a trust to allow a person's assets to pass to individuals or organizations upon their death.  We use fewer wills than in the past, largely as a function of our emphasis with managing disability.  Wills do not provide for management of disability.  A will is effective after we pass away upon being admitted to probate.  In the will scenario we are forced to rely on the statutory power of attorney to deal with incapacity.  The statutory power of attorney was the traditional tool for managing disability in the past.  When we were born and died in the same town, and everyone knew our family, the statutory durable power of attorney worked well.

Today, we are more anonymous than in prior generations.  The personnel of our bank likely know us by photo identification as opposed to an ongoing relationship.  Many, if not most, of our financial assets are located in financial institutions based in other states or countries.  When a statutory durable power of attorney is needed due to incapacity, we may find financial institutions unwilling to accept the document as drafted.

We prefer to use tools we know will work.  For this reason we have moved to the living or revocable trust over the past couple of decades.  Because the financial institution knows ahead of time whom to expect as a successor trustee, we are able to manage disability with far greater certainty.

There are many myths about the use of a trust.   The most common we hear is the trust is for family with great wealth.  Due to the use of compilers and word processing, this is no longer true.  We are able to cost efficiently provide the best tools for your family, regardless of the level of wealth.  Families with fewer assets may have a greater need for the more efficient tools.

A trust will not save taxes.  The same tax structure can be used on a will or trust platform.  A revocable trust does not provide asset protection.  Rather, the assets protection comes from the nature of the asset.  For example, a homestead inside a trust is protected the same as it was outside of the trust.  We can, however, create a great deal of protection for your children's assets.

Because of the complex nature of estate planning, be sure to consult an experienced estate planner to develop a plan that meets your needs and accomplishes your objectives.

Probate and Estate Administration

Probate is the process where a court oversees the administration of a deceased person's estate.  Probate typically occurs even if no valid will exists.  In the case of a death without a will, a decedent has died "intestate" and the decedent's estate will be distributed to the decedent's heirs in a manner dictated by the Texas Estates Code.  The general purpose of the probate process is to ensure that any final bills and expenses are paid, such as taxes that are owed, as well as to distribute any assets to the beneficiaries named in a will or any remaining assets to the proper heirs under Texas intestacy laws.

Not all assets are subject to probate administration in Texas.  Assets that are not covered by probate laws include property held in joint tenancy with right of survivorship, assets held in a living trust, and property with beneficiary designations, such as bank accounts, IRAs, and life insurance.

Texas also has established a summary probate administration for small estates.  This process may be used if an individual passes away without a will and the value of the estate (excluding homestead and exempt property) equals $50,000 or less.  The process is subject to various restrictions.  

Texas has a different simplified probate process for estates with no debt other than on real estate.  The process is referred to an a muniment of title action, and can be used to clear title to real estate or obtain the release of assets.  The savings in time and money often make this a better choice for our clients.

Wigington & Dankesreiter, L.L.P.  provides comprehensive, tax-sensitive estate planning services tailored to your individual needs.  For further information regarding the estate planning or probate administration services offered by our firm, contact Wigington & Dankesreiter, L.L.P.