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Frequently Asked Questions about Texas Estate Planning

What is a Last Will and Testament, i.e. a Will?

The simplest description is a Will is a writing that states how you want your estate to be distributed upon your death, and, for those of you with children it is where you identify who you want to be the Guardian for your children. The most common form for a Will is to have a typewritten document signed by you, a Notary Public and two witnesses who are not interested in your estate. A Will does not have to be prepared by an attorney.

What is a Statutory Durable Power of Attorney?

This document is based on a form created by the Texas legislature years ago. The reason the legislature created the document was in part to help banks and other financial institutions have one general format that was understandable, instead of multiple different forms created by a variety of attorneys. Basically, it is a general power of attorney granting your agent the right to manage your financial affairs in the event that you are incapacitated. If you can't manage your own finances because of a disability or other medical reasons, your agent would do it for you and protect your estate. The power of attorney only works while you are alive. When you pass away, your Will or Trust will state who is going to handle management of your estate.

What is a Medical Power of Attorney?

A Medical Power of Attorney, otherwise known as a Health Care Proxy, is a document stating who you want to make medical decisions for you in the event you cannot do so yourself. The document provides guidance to family members, doctors and physicians, and insures the person you want to make your medical decisions is clearly identified.

What is HIPAA Release and Authorization?

A HIPAA Release and Authorization is typically used along with a Medical Power of Attorney. It authorizes medical personnel to release your medical information to the person you name in the form. Everyone should have one in place, particularly if you have a Medical Power of Attorney that does not contain HIPAA language. Young adults over the age of 18 should seriously consider signing one as well.

What is a Directive to Physicians and Family or Surrogates, i.e. a Living Will?

Most of us know this document as a Living Will, but that name isn't accurate. It is not a Will. It is a statement of your intentions as to what you want done in the event you are terminally ill or have an irreversible condition. It does not name any agents, but it does say that you do or do not want life sustaining treatment in the event you are terminally ill and/or have an irreversible condition. The document is necessary in any estate plan, but it is particularly important when you have family members that may not honor your wishes without something in writing stating your intent.

Ultimate Beneficiaries and Holographic (Handwritten Wills:

When you want to make a specific bequest to a specific person or entity (like "I give my watch to my brother, Bill Smith") you can use a handwritten Memorandum to list the assets and the individuals (or entities). Texas recognizes "holographic Wills", which are handwritten Wills signed by the person making the holographic Will. This law allows Texas residents to change the memo as often as they like without having to redo (and repurchase) their Last Will and Testaments. The key is it MUST be HANDWRITTEN by the Testator and SIGNED by the Testator. It is NOT recommended to use a holographic Will as your Last Will and Testament itself for a variety of reasons, including: (1) it may not correctly dispose of all of your estate; (2) it may not be recognized as a valid Will by a court; (3) it will likely not take advantage of potentially easier and less expensive probate methods; and (4) it typically will cost more to probate a holographic will than a well drafted and formalized Last Will and Testament.

When is my estate considered to be a taxable estate?

The federal law in this area will change in the next few years, but the current taxable estate for an individual is one that is greater than $3,500,000.00. A married couple has a taxable estate of $3,500,000.00 unless you do some basic estate tax planning that will increase the value of your taxable estate to twice that much, or $7,000,000.00. If you want to estimate your taxable estate use one of the worksheets provided on this website.

Is my life insurance considered part of my estate?

The death benefit of life insurance is included in your gross estate for determining your federal estate tax liability. However, it is not included in your probate estate, meaning it does not go through probate to be distributed.

Executors

What does an Executor do for me?

Basically, an Executor "executes" the terms of your Will through the probate process and takes care of transactions that are required to pay your lawful debts and distribute your remaining assets as you intended. An Executor, or Personal Representative, acts as a fiduciary for the estate, the beneficiaries of the estate and the creditors of the decedent. Their job is extremely important and requires a high degree of care, which is why the State of Texas requires Executors hire an attorney. The lawyer effectively does a large part of the work, so your Executor will typically only make one court appearance and will be relying on the lawyer for much of the work.

How do I choose an Executor?

Most people choose a family member to act as their Executor, but it can be any person that is not otherwise disqualified under Texas law (felon, incapacitated, etc.). You should appoint someone who is responsible and can handle the time and energy required to probate your Will. They do not have to be an accountant, but they should have some idea of how to manage finances. They do not have to be a resident of the State of Texas and you can name two or more people to act as Co-Executors, although that isn't always the best idea.

Does my Executor have to live in Texas to act for me?

No, your Executor does not have to be a Texas resident to act on your behalf and probate your will.

Can I appoint two or more Executors to act at the same time?

Yes, although it is not recommended. If you do, make sure you name an odd number of Co-Executors (typically 3) and insure there is language in your Will that states a majority is all that is required to make a final decision, or, if you name 2 Co-Executors make sure there is language in your Will that says one of them has the right to make a final decision if they cannot agree, or appoint a third party to be the "tie-breaker" in the event they cannot decide between themselves.

Guardians

What is the role of a Guardian?

Choosing a Guardian is often the hardest choice to make, in Texas or elsewhere. Their role is to take on the responsibilities of a parent in the day-to-day upbringing of your child or children. They have a legal responsibility and duty to care for and protect your children.

How do I choose a Guardian?

Pick a Guardian that will take care of your child or children in a way that you would. If possible, choose a Guardian that is financially secure and consider giving them a direct gift of part of your estate so they can have it to pay for unexpected additional expenses. You can appoint Co-Guardians but they have to be a married couple under state law. If you do, your Will should address how the guardianship will work if the Co-Guardians divorce or one of them dies. Does the surviving Co-Guardian stay on as Sole Guardian or do your children start living with another Guardian of your choosing?

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