Author Archives: Bryan Willis

Estate Planning 101

Most people hear the term “estate planning” and either don’t know what it involves or don’t fully understand what an estate plan accomplishes.  This article is an Estate Planning 101 to help explain what estate planning is all about, including what an estate is, the goals of estate planning, what an estate plan does, and what documents you might expect to see in an estate plan.

What is Estate Planning?

Estate planning is the process of thinking about and addressing your wishes with regard to two events: your unexpected disability during life as well as your testamentary plans for the disposition of your estate after your death.

What is an Estate?

The short answer is that an estate consists of every piece of property you own.

Examples of assets commonly found in an estate includes your house, any other real estate you may own, your cars, your personal effects such as jewelry and clothes.  It also includes your bank accounts, brokerage accounts, IRAs, 401k’s, other retirement accounts, life insurance, and your business interests.

One asset class often overlooked are your digital assets.  For example, Apple ID’s , Facebook accounts, as well as files and documents stored online are all part of your estate.

In probate, after you pass away, your estate may have liabilities in the form of unpaid debts and may have claims against third parties that arose during or at the end of your life (for example, an asbestos, medical malpractice, or wrongful death claim).

What are the Goals of Estate Planning?

Every person’s estate planning goals differ because everyone’s life is different.  Your estate plan will develop based on your planning goals that are specific to your life, your family, your assets, and your wishes.

That being said, below are a list of some of the common goals clients have when constructing their estate plan:

  • transferring assets at the death to the beneficiaries they wish to receive them;
  • planning for incapacity or disability;
  • providing instructions for their end-of-life care wishes;
  • charitable giving;
  • protecting assets from creditors; and
  • protecting assets from their beneficiaries’ creditors.

What Does an Estate Plan Do?

A properly constructed estate plan will usually accomplish the following objectives:

  • identify the individual recipients of your assets after your death and allocate your assets to them according to your wishes;
  • make sure that the transfer of your assets is accomplished as efficiently as possible;
  • minimize the costs imposed on your estate through taxes and the costs of probate;
  • make sure your non-probate asset dispositions are consistent with your probate asset dispositions;
  • make your end-of-life medical care wishes known;
  • address who will make medical decisions for you in the event you become incapacitated or disabled and are unable to make those decisions yourself;
  • address who will manage your assets and pay your bills in the event you become incapacitated or disabled;
  • provide for the designation of whom you wish and whom you do not wish to serve as your guardian should the need arise; and
  • set forth detailed instructions for how you wish your remains to be handled, whether by cremation or funeral.

Other objectives an estate plan might accomplish include the following:

  • planning for the care of minor children in the event both parents pass away;
  • planning for the care of a child with special needs; and
  • planning for the care of a family pet;

What Type of Documents Should You Expect to See in Your Estate Plan?

Basic estate plans will include the following documents:

  • a last will and testament;
  • an advanced directive (also known as a living will);
  • a power of attorney;
  • a medical power of attorney;
  • a designation of guardian; and
  • instructions on disposition of remains.

More complex estates might also include additional documents such as inter vivos or testamentary trusts as well as business organization documents.

You can read more about each of these documents and what they do by visiting this link:  Key Estate Planning Documents.

If you would like to contact my firm to schedule a consultation to discuss your estate plan, then please visit the firm’s contact page by clicking here.

Four Probate Options When Someone Passes Away Without A Will

When someone passes away without a will, family members are often left unsure what to do when it comes to settling the person’s estate.  In general, there are four options: (1) a small estate affidavit; (2) an affidavit of heirship; (3) a determination of heirship; and (4) a dependent or independent administration of the estate.  Which option is appropriate depends upon the facts of that person’s estate.  The pros and cons of each of these options are discuss below.

Small Estate Affidavit

The Small Estate Affidavit is used to pass title to assets of smaller estates without the need for significant interaction with the probate court.  There are certain eligibility requirements and the small estate affidavit is not available to transfer title to all types of property or in all situations.

For example, the total value of the estate, excluding homestead and exempt property, cannot exceed $75,000.  In addition, the estate must be solvent meaning that it has more assets than liabilities.

One significant limitation of the small estate affidavit is transferring title to real property.  The affidavit can only be used to transfer title to a homestead (if there is one).  If the house does not qualify as a homestead or there are other pieces of real estate that require transfer, then the small estate affidavit cannot be used.

Another drawback is that there is no personal representative appointed in the case of a small estate affidavit – so if there is any need to administer the estate by collecting assets or paying debts – there is no estate representative with the authority to do so.  Some third parties holding estate property may require letters of administration prior to disbursing that property and those letters are not issued with a Small Estate Affidavit.

The affidavit requires signatures from at least two witnesses and all of the distributees of the estate.  Each person signing the affidavit is liable for any damage or loss that arises from a payment or transfer made in reliance on the affidavit.  This may cause some people (particularly witnesses) to question whether they wish to assume such potential liability.

Affidavit of Heirship

An affidavit of heirship can be a useful alternative when the only assets that require a title transfer are real estate.  Affidavits of heirship are only used to transfer title to real property and are not used to transfer title to or collect other types of assets.

Affidavits of heirship are less expensive options designed for small estates where the only asset is real estate.  However, there are some limitations on the effectiveness of affidavits of heirship.  One significant issue is that not all title companies will accept affidavits to establish chain of title to real property.  In some cases, title companies may accept them but only after 2 or 5 years have passed.

Oftentimes, you will not know at the time the affidavit is used which title company will participate in a later sale and whether the affidavit is acceptable to them.  Many title companies require additional information in the affidavit that is above and  beyond what is required by law.

Another drawback is that there is no personal representative appointed in the case of an affidavit of heirship – so if there is any need to administer the estate by collecting assets or paying debts – there is no estate representative with the authority to do so.

The affidavit requires two witness signatures as well as the signatures of all heirs and each of them is liable for any false statements in the affidavit.

Determination of Heirship

A Determination of Heirship is a proceeding in the probate court held for the purpose of establishing the legal heirs to the individual who passed away.   This carries a significant benefit in the form of a judicial determination of the identity of the decedent’s heirs.

In the case of a small estate affidavit or affidavit of heirship, the identity of heirs is established by the sworn statements of those heirs and witnesses.  There is no hearing or court order confirming those facts and they can be easily disputed at a later date in court.  This is the primary reason some third parties refuse to rely upon those affidavits.

Third parties will accept judicial determinations of heirship to identify heirs entitled to property.  This stems from the fact that the court’s judgment comes after evidence is presented and witnesses appear in court.  In addition, the court appoints an attorney ad litem to investigate the family history of the decedent and make a report to the court.  Thus there is less opportunity for fraud or abuse.

The primary drawback to the Determination of Heirship is that it requires filing pleadings with the probate court, the appointment of an attorney ad litem, and at least one hearing before the court.  This means it costs more money.

The benefit is a court order establishing the identity of the decedent’s heirs.  This can prove particularly important in cases where the identity of heirs is questioned or the validity of claims of heirs are suspect.

Dependent or Independent Administration

The difference between a dependent or independent administration of the estate is the amount of probate court involvement in the administration.  Independent administrations occur without significant involvement from the probate court.  Dependent administrations require approval from the court before the administrator can take most actions.

Regardless of whether it is dependent or independent, an administration of the estate involved having someone appointed as administrator of the estate who will be responsible for collecting the decedent’s assets, paying off any liabilities, then distributing any remaining assets to the decedent’s heirs.    In almost all cases, a Determination of Heirship will be filed at the same time as the application for administration of the estate.

The benefit of administering the estate is having a personal representative appointed that receives letters of administration from the probate court.  Letters of administration provide the personal representative with legal authority to deal with third parties on behalf of the estate for the purpose of collecting assets and paying any debts.  Third parties will readily provide information and assets to a personal representative in possession of letters of administration.

This means that the personal representative (with or without court involvement, depending on the type of administration) can handle any issue that comes up in administering the estate, whether it involves collecting estate assets, settling claims, paying liabilities, or distributing those assets to beneficiaries.

The primary drawback is cost.  This is the most expensive option but is often the necessary option for estates with significant assets, liabilities, or property that has been left in the hands of third parties.

What To Do After You Are Served With A Divorce Petition

Unexpectedly being served with a divorce petition is difficult.  You are faced with the loss of a relationship that you may not have been expecting.  Or maybe you thought it was possible but you didn’t expect it to actually happen.

You may be worried about your children.  Or your property.  You have so many thoughts and emotions that you may not know what to do next or how to deal with the situation.

That is what this article is about.  Divorce is a stressful and emotional time – even if the spouses agree on the need to end their relationship.  With a little planning, a little preparation, and a good foundation of support you will be ready to handle your divorce as best you can.

1. Understand That Time Is of the Essence

Once you are served with a petition for divorce, you have a relatively short time period in which you can file an answer in the case – it can be as short as 20 days.  And there is a lot to do!

If you were served with a temporary restraining order (TRO), then it likely has a hearing for preliminary injunction set in an even shorter time frame.

You will need to find an attorney.  This may require several consultations with different attorneys before you find a lawyer that you are comfortable working with during your divorce.

You then need to work with your lawyer to decide how you should respond to the petition and develop an overall strategy for how you will proceed with your divorce.

You also need time to gather relevant documents and information for your attorney and the court.  Again, all of this must occur within a very short time frame so do not delay in getting started.

2. Understand Your Options On How to Respond

Not every divorce petition requires a response – or legal counsel.  But many do.

If you do not respond then the court may enter judgment against you and award your spouse all that he or she seeks in the petition for divorce.  In some cases that may be fine, such as when spouses have a planned divorce where they agreed on each and every issue prior to filing.

But if you are reading this article then that likely does not apply to you.

You should work with your attorney to understand your options to respond.  Your strategy may require filing a general denial, filing a counter petition for divorce, or challenging the court’s jurisdiction and venue to hear the matter.  You may want to allege fault grounds even though your spouse claimed no fault grounds for the divorce.

You may need to seek temporary orders on how you and your spouse will handle matters such as possession of property, access to bank accounts, paying bills, custody of your children, child support, and spousal maintenance.

In some cases, you may have been served with a TRO that has a hearing for preliminary injunction set in a very short time frame.  This requires immediate attention in addition to filing your response to the divorce petition as the court will establish your rights and set limits on those rights for the duration of the divorce proceeding.

There are pros and cons to different strategies in responding to a petition for divorce and which is best for your case can only be determined after consulting with your lawyer.

3. Establish Pillars of Support

It is important to understand that your attorney is just that – your attorney.

Your attorney is not your friend.  Your attorney is not a family member.  Your attorney is not a psychiatrist.  Your attorney is not a CPA or financial adviser.

You need to find other individuals to fill those roles.  Many divorces are an emotional roller coaster. You will need a friend or family member that you can lean on when you have a rough day.

You may even need to seek professional help to deal with the emotional aspects of your divorce.

You may need a CPA or financial adviser to help you make smart money decisions about property divisions or the impact of distributions from retirement accounts.

That being said – be careful what you discuss and with whom.  You shouldn’t discuss the details of your divorce case with anyone without your attorney’s consent.

Your conversations with third parties could be subject to discovery and letting out a little frustration to a friend will sound a lot different when that friend recounts the conversation in court under questioning from your spouse’s lawyer.

4. Make a Plan

Life will go on.  Your divorce case will proceed and come to an end one way or another. You need a plan to address key issues both during your divorce and after.

You need to have a plan for how you will handle your financial obligations during the divorce and after.  How will you pay your attorney? How will you pay your bills?  Your car payment?  What if you need to get an apartment?

What about child care?  How will you take care of your kids when you have possession of them?  There will no longer be a second parent to watch them while you run a quick errand.

Will you be receiving child support to augment your income? Will you be paying child support that will reduce your income? How does that affect your financial health?

Where will you live?  Maybe you get to stay in the primary residence during the divorce – or maybe you don’t.  Maybe you are awarded the primary residence in the property division – but maybe you aren’t.  So make a plan for where you will live both during and after your divorce.

Discuss these plans with your attorney – particularly where children are involved – to make sure it will not cause any difficulty in pursuing your legal strategy.

5. Begin Implementing Your Divorce Strategy

Remember one of the things I mentioned in item 1 above – work with your attorney to develop a strategy? Now is the time to start implementing it.

You have a strategy for how you will proceed with your divorce case.  You have a plan for how you will take care of yourself and your children.  You have support in place to help you through the inevitable rough days that will come along during the divorce proceedings.  You are now as ready as you will ever be.

Key Estate Planning Documents in Texas

There are numerous documents used when putting together an estate plan.  Each plan is different and focused on the individual client’s needs so one client may have documents in his or her estate plan that are not necessary to address another client’s estate planning objectives.  However, certain documents are common to most estate plans. It… Continue Reading

Preparing For Your Consultation With A Divorce Attorney

Preparing For Your Consultation With A Divorce Attorney

After you make the decision to retain an attorney and file for divorce, or after you are served with a petition for divorce, you will soon find yourself preparing to meet with divorce lawyer.  There is a lot going on at this point.  You may be mentally or emotionally fatigued just making the decision to… Continue Reading