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WILLS AND ESTATES
A person's "estate" consists of all his property and debts. An individual can plan for what will happen to his estate after he dies via a variety of methods, including
- Wills;
- Trusts; and
- "Non-Probate" tools (life insurance, retirement plans, joint tenancy, living trusts).
Attorneys who practice in the area of "wills and estates" can help an individual choose the planning tools most appropriate for his estate, prepare the necessary paperwork, and assist with the distribution of the estate after the person's death.
Wills
An individual (a "Testator") can create a Last Will & Testament (a "will") to ensure that, after his death, his property is distributed according to his wishes. An individual may also use a will to name a guardian for his minor children (in the event of no surviving parent).
Texas law recognizes three wills as valid if made by a person of sound mind age 18 or over (or, if under 18, then lawfully married or in the military):
- a typed or printed (not handwritten) will signed by the Testator and two witnesses over age fourteen;
- a handwritten ("holographic") will; and
- a death bed verbal declaration in front of three credible witnesses ("noncupuative will"; but for personal property only).
A valid Last Will & Testament will control the distribution of property after the Testator's death unless he destroys it, revokes it, or replaces it with another. A Testator who wants to change certain provisions of his will, but does not want to write a new will, must use a "codicil." Texas law only considers a codicil valid if prepared in the same manner as a will. Fortunately, a Testator also has the option of explaining in his will that his property is to be distributed according to instructions set out in a separate document. That document can be changed without the formality of a will or codicil.
Trusts
An individual may also use a trust to distribute his property after death. A trust is created when an individual (a "grantor") transfers property to another person or institution (a "trustee") to manage for the benefit of a third party (a "beneficiary"). An individual can choose to create a trust by his will (a "testamentary trust") or prepare a trust separate and apart from the will (a "living trust").
A testamentary trust has no legal effect until the will is probated. The grantor's property is transferred to the trust via the will and thereafter managed for the benefit of those designated.
A living trust allows a person to distribute his property after death without the necessity of probate. A living trust becomes effective when the creator signs it and transfers her property to the trust. The creator is generally able to remain in control of the property until his death (or, if so provided, until his incapacitation). The trust may terminate or continue upon the grantor's death. Making a living trust irrevocable may allow an individual to reduce income or estate taxes.
Probate
A will has no legal effect until it goes through "probate." The probate process validates (or, sometimes, invalidates) a will and allows a designated representative to settle a decedent's debts and transfer her assets (i.e. administer the estate). The representative may administer the decedent's estate on her own if the will specifically directs (known as an "independent administration"). If the will does not provide for an independent administration, the representative must obtain court approval for any action (known as a "dependant administration"). Administration may not be necessary at all if the estate is small enough.
A person who dies without a will is said to have died "intestate." In that situation, the Probate Court determines the decedent's heirs based upon the state's intestacy laws and designates a representative to settle the decedent's debts and transfer her assets.
Non-Probate Tools
Certain property is distributed upon a person's death without a will or probate, such as:
- life insurance proceeds;
- retirement plan proceeds,
- property held in joint tenancy where the joint tenants agreed in writing that the property would pass to the surviving tenant, and
- assets already transferred to a living trust.
Additional Planning
Other documents an individual may want to consider when planning the administration of his financial affairs 1) a "power of attorney" to grant another person the power to make financial and/or health care decisions in the event of the creator's incapacity; 2) a "living will" (also known as a Directive to Physicians and Family or Surrogates) to express his wish that artificial measures not be taken to prolong his life if he is unconscious and has a terminal or irreversible condition; and/or 3) a "guardianship designation" to designate a guardian to care for himself and/or his minor children should he become unable.
The foregoing material is for informational purposes only, and does not constitute legal advice, nor does it create an attorney-client relationship. It should not be considered a substitute for seeking legal advice from an attorney.
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