Generally, everyone should have a Will. The purpose of a Will is to accomplish two primary objectives. The first, to make sure that your assets pass to the proper persons. The second, to make sure that it happens with as little time, trouble and expense as possible.
The cost of a Will depends upon the complexity of the Will. A Will may be a fairly straight forward document between a husband and wife or may include numerous trusts. It is difficult to give the cost of a Will until you have had a chance to meet with the attorney to determine what type of Will provisions you may need in order to accomplish your goals.
Probate is the process of transferring assets at death. It may include the transfer of assets through a Will, through beneficiary designations, or through a trust.
Probate matters are usually handled on a time basis. It is not handled as a percentage of the estate. It is difficult to estimate the probate cost until we have an opportunity to review all documents relating to probate and assets of the estate. With a properly drawn Will and proper estate planning, probate costs can be minimized.
The length of a probate depends on many factors including the complexity of the estate, tax issues and whether proper estate planning was done. In some cases probate can be completed in as little as 30 days. A probate without a properly drawn Will is a much longer and more involved process.
A guardian for minor children can be designated in your Will or may be designated by a separate document under Texas law. The requirements for designation of a guardian are very strict if a document other than a Will is used.
Minor children cannot directly receive an inheritance. Generally, any assets left to a minor would be held under the supervision of the probate court until they turn 18. A better alternative is to leave the minor's share in a trust for them and designate a trustee to hold their money and make expenditures for them outside of the probate court.
A trust is an entity used to hold assets for the benefit of one or more beneficiaries. The assets are managed by a trustee during the term of the trust. The trust can continue for a person's lifetime, for a particular term of years or to a particular age.
There are many different kinds of trusts used to accomplish different purposes. A trust may be revocable or irrevocable. Some trusts begin operating during the trust creator's lifetime. Some trusts begin to operate at a person's death. A trust that begins operating during the trust creator's lifetime is called an Inter Vivos trust. A trust that begins operating at a person's death through their Will is called a Testamentary trust.
A living trust is an inter vivos trust that begins to operate during the trust creator's lifetime. It is generally revocable and amendable during the trust creator's lifetime. At the trust creator's death, the trust may then terminate and be distributed to designated persons or may continue for other beneficiaries. There are advantages and disadvantages to a living trust. It is appropriate in some cases, but not in all cases.
A living trust is neither better than a Will nor worse than a Will. It is merely a different vehicle to use for passing assets. In some cases it becomes more difficult to pass assets through a living trust than a Will and in other cases a living trust is preferable to a Will. A living trust is a tool to use in a person's estate plan that should not be viewed as the solution to every problem. The estate planner needs to make an evaluation of all of the assets, the objectives of the client, and the situation regarding beneficiaries. In many cases the probate of an estate can proceed quicker and less expensively through a Will than through a living trust. Many times living trusts are heavily marketed as the ultimate estate planning device. Living trusts should be viewed as a tool to use in the right circumstances.
A living trust may pass some or all of the assets outside of the Will. In some regards it may act as a Will substitute; however, in many cases the cost of the probate of passing assets through a Will may be less than the cost of creating a living trust. A living trust may cause some assets to be more difficult to manage during a person's lifetime.
In 2009 the estate tax exemption amount was $3,500,000.00. The status of the estate tax exemption in 2010 and after is somewhat uncertain. Most estate planners feel that there will be a change in the estate tax law before the end of 2010.
If a person dies without a Will, then their assets will pass to their heirs as determined under Texas law. It is possible for assets to pass to the state, but only if no heirs can be located. When a person dies without a Will, they are said to die intestate.
A life insurance beneficiary designation takes precedence over a person's Will or any trust provisions.
In Texas, community property assets do not automatically pass to a surviving spouse. If a person dies without a Will, then in some cases community property will pass to a spouse, but in other cases community property will pass to the children of the deceased. This can be a complicated issue and can be avoided through the use of a properly drawn Will.
The drafting and preparation of a Will is not necessarily a simple matter. A person is taking a significant risk in preparing a Will themselves since Texas law is very specific on the way various matters must be worded in a Will. Unfortunately, the defect in a Will may not be discovered until the person passes away when it is too late to correct the problem. The money you may save in preparing your own Will may be a small amount in comparison to the additional costs incurred in dealing with an estate using a Will that has a defect or that may not even be valid.
Both an executor and an administrator are responsible for transferring the assets in a person's estate. An executor is someone designated in the Will to do that job. An administrator is a person appointed by the court when there is no Will or when there is a defective Will.
For purposes of the federal estate tax, all assets of every type are generally included in your estate including real estate, life insurance, personal items, investments, retirement plans and the like.
No, the cost of a probate is based on the time and effort in dealing with the estate. It is generally much less than the fee would be if it was a percentage of the estate. Some other states use a percentage method for the attorney's fees, but that generally is not the case in Texas.
Life insurance is not an income taxable item; however, it is included in your gross estate for estate tax purposes. This includes group life insurance through your employer.
If your Will was validly executed in another state, it will be recognized as valid in Texas. There are, however, differences from state to state relating to the procedures and court supervision of executors. It may be that a Will from another state needs to be amended to take advantage of the simplified probate procedure allowed in Texas.
You should update your Will whenever this is a significant change in your assets or family situation. You should also review your Will with an estate planning attorney every 3 to 5 years to make sure that there are no changes in federal or state law that may impact your estate.