Texas Estate Planning

Should I Create Estate Plan Myself?

US News & World Report’s recent article entitled “Do-It-Yourself Estate Planning Mistakes” provides some issues that do-it-yourself estate planners might encounter and why it is best to consult an experienced estate planning attorney.
What are the Right Questions to Ask? Completing a simple and straightforward form—like a beneficiary designation for your IRA— is one thing, but what about tax consequences, probate law, new legislation and court procedures? Are you ready to take these on? The trick is that you may not know what you don’t know. That’s why it’s money well-spent to employ the services of an experienced estate planning attorney.
Is My Situation Complex? Likewise, you may have property and assets all over the country (or world) that require expert advice. You must be certain that your planning, tax planning and financial planning all work together because they’re all interrelated. If you only work on one of these areas at a time, you may create complications in another area and unintentionally increase your expenses or taxes. It can also create headaches and expense for your heirs. If you have a child with special needs, a blended family, or want to control how and where a beneficiary spends your money, a cookie cutter approach won’t do. Instead, you should see an experienced estate planning attorney.
What are the Probate Laws in My State? Estate planning laws and taxes are different in each state. Your state will have different rules and legal procedures for creating and administering an estate. There are many different state laws that govern inheritance taxes. There are 17 states plus DC that tax your estate, inheritance or both, and the tax laws can affect your situation when planning. Eleven states plus DC have only an inheritance tax. One state taxes both inheritances and estates.
If you mess up your estate planning documents, if could cause significant problems for your family. You best bet is to work with an experienced estate planning attorney in your state.
Reference: US News & World Report (Dec. 18, 2020) “Do-It-Yourself Estate Planning Mistakes”

Federal Court Decides for ‘Blue Water’ Navy Veterans

In November, the U.S. District Court for Northern California ruled in favor of thousands of “blue water” Navy veterans and their survivors, who argued that they’re being wrongly denied benefits as part of a deal reached by Congress last year.
Military Times’ recent article entitled “New court ruling could give thousands of Vietnam vets and survivors overdue disability payouts” reports that under that plan, the Department of Veterans Affairs was required to grant presumptive benefit status for chemical defoliant exposure to veterans who served on ships off the coast of Vietnam during that war.
Advocates for years had said that VA’s requirement of direct proof of exposure was hard to obtain, when it has been decades after veterans were in the service. However, more than 22,500 blue water veterans or survivors have received VA benefits payouts since the beginning of 2020.
The new law didn’t require VA officials to go back and review cases denied before 2020. Vets who reapplied for benefits could have their cases considered again, but advocates argue that all of the cases should be resurfaced and reviewed by the VA.
In an interview with Military Times, Under Secretary for Benefits Paul Lawrence said no decision has been made by VA and Department of Justice officials on an appeal. However, he did remark that the lawsuit was discussed as part of VA’s preparations for the new benefits processing at the start of this year.
If the decision stands — either upon further appeal or if the government opts to simply accept the latest ruling — Lawrence said he’s confident the VA can start reviewing those cases without any significant disruption to operations.
President Trump signed legislation granting presumptive status for disability benefits to about 90,000 Navy veterans who served in the seas around Vietnam during the war. This concludes a long battle to get disability benefits more quickly for up to 90,000 Navy veterans who served in Vietnam.
VA has already paid out about $700 million in retroactive benefits related to the “blue water” veterans benefits in 2020.
Reference: Military Times (Nov. 16, 2020) “New court ruling could give thousands of Vietnam vets and survivors overdue disability payouts”

What’s Involved in the Probate Process?

SWAAY’s recent article entitled “What is the Probate Process in Florida?” says that while every state has its own laws, the probate process can be fairly similar. Here are the basic steps in the probate process:
The family consults with an experienced probate attorney. Those mentioned in the decedent’s will should meet with a probate lawyer. During the meeting, all relevant documentation like the list of debts, life insurance policies, financial statements, real estate title deeds, and the will should be available.
Filing the petition. The process would be in initiated by the executor or personal representative named in the will. He or she is in charge of distributing the estate’s assets. If there’s no will, you can ask an estate planning attorney to petition a court to appoint an executor. When the court approves the estate representative, the Letters of Administration are issued as evidence of legal authority to act as the executor. The executor will pay state taxes, funeral costs, and creditor claims on behalf of the decedent. He or she will also notice creditors and beneficiaries, coordinate the asset distribution and then close the probate estate.
Noticing beneficiaries and creditors. The executor must notify all beneficiaries of trust estates, the surviving spouse and all parties that have the rights of inheritance. Creditors of the deceased will also want to be paid and will make a claim on the estate.
Obtaining the letters of administration (letters testamentary) obtained from the probate court. After the executor obtains the letter, he or she will open the estate account at a bank. Statements and assets that were in the deceased name will be liquidated and sold, if there’s a need. Proceeds obtained from the sale of property are kept in the estate account and are later distributed.
Settling all expenses, taxes, and estate debts. By law, the decedent's debts must typically be settled prior to any distributions to the heirs. The executor will also prepare a final income tax return for the estate. Note that life insurance policies and retirement savings are distributed to heirs despite the debts owed, as they transfer by beneficiary designation outside of the will and probate.
Conducting an inventory of the estate. The executor will have conducted a final account of the remaining estate. This accounting will include the fees paid to the executor, probate expenses, cost of assets and the charges incurred when settling debts.
Distributing the assets. After the creditor claims have been settled, the executor will ask the court to transfer all assets to successors in compliance with state law or the provisions of the will. The court will issue an order to move the assets. If there’s no will, the state probate succession laws will decide who is entitled to receive a share of the property.
Finalizing the probate estate. The last step is for the executor to formally close the estate. The includes payment to creditors and distribution of assets, preparing a final distribution document and a closing affidavit that states that the assets were adequately distributed to all heirs.
Reference: SWAAY (Aug. 24, 2020) “What is the Probate Process in Florida?”

Dividing Pablo Picasso’s Estate, a Disaster

Picasso left behind 1,885 paintings, 1,228 sculptures, 7,089 drawings, as well as tens of thousands of prints, thousands of ceramic works and 150 sketchbooks when he passed away in 1973. He owned five homes and a large portfolio of stocks and bonds. “The Master” fathered four children with three women. He was also thought to have had $4.5 million in cash and $1.3 million in gold in his possession when he died. Once again, Picasso did not leave a will. Distributing his assets took six years of contentious negotiations between his children and other heirs, such as his wives, mistresses, legitimate children and his illegitimate ones.
Celebrity Net Worth’s recent article entitled “When Pablo Picasso Died He Left Behind Billions Of Dollars Worth Of Art … Yet He Left No Will” explains that Picasso was creating art up until his death. Unlike most artists who die broke, he had been famous in his lifetime. However, when he died without a will, people came out of the woodwork to claim a piece of his valuable estate. Only one of Picasso's four children was born to a woman who was his wife. One of his mistresses had been living with him for decades. She had a direct and well-documented influence on his work. However, Picasso had no children with her. Dividing his estate was a disaster.
A court-appointed auditor who evaluated Picasso's assets after his death said that he was worth between $100-$250 million (about $530 million to $1.3 billion today, after adjusting for inflation). In addition to his art, his heirs were fighting over the rights to license his image rights. The six-year court battle cost $30 million in legal fees to settle. But it didn't settle for long, as the heirs began fighting over the rights to Picasso's name and image. In 1989, his son Claude sold the name and the image of Picasso's signature to French carmaker Peugeot-Citroen for $20 million. They wanted to release a sedan called the “Citroen Xsara Picasso.” However, one of Picasso's grandchildren tried to halt the sale because she disagreed with the commission paid to the agent who brokered the deal—but oddly enough, the consulting company was owned by her cousin, another Picasso.
Claude created the Picasso Administration in Paris in the mid-90s. This entity manages the heirs' jointly owned property, controls the rights to exhibitions and reproductions of the master’s works, and authorizes merchandising licenses for his work, name and image. The administration also investigates forgeries, illegal use of the Picasso name and stolen works of art. In the 47 years since his death, Picasso has been the most reproduced, most exhibited, most stolen and most faked artist of all time.
Pablo Picasso's heirs are all very well off as a result of his art. His youngest daughter, Paloma Picasso, is the richest, with $600 million. She’s had a successful career as a jewelry designer. She also enjoys her share of her father's estate.
Reference: Celebrity Net Worth (Sep, 13, 2020) “When Pablo Picasso Died He Left Behind Billions Of Dollars Worth Of Art … Yet He Left No Will”

What Do I Do If Property I Just Inherited Has a Mortgage?

Bankrate’s recent article entitled “Does the home you inherited include a mortgage?’ explains that when a family member dies, there can be questions about wills, inheritances and how best to settle financial affairs. It can be a stressful time, and complicated, especially when real estate is a part of the equation. Let’s look at some specific situations and how to address them.
Inheriting a mortgage. In many instances, a person will inherit both a home and the mortgage that goes with it. If that’s the case, ask for help from an attorney who specializes in elder law or estate planning. Even though the borrower died, the mortgage still must be repaid. Therefore, if you’ve inherited it, you’ll have to decide how the loan and property will be handled. If you move into the home, you may be able to assume the mortgage and continue paying it. You might also think about a cash-out refinance and pay that way. You can also sell the home. Heirs have a good deal of leverage dealing with a mortgage in an estate situation thanks to federal law, which can help them assume an existing loan. You should ask your attorney about estate taxes and capital gains taxes from a sale.
Assuming a mortgage. Typically, if you’re assuming the loan, the lender will be willing to work with you. Mortgages frequently have a “due-on-sale” or “due-on-transfer” clause that requires full repayment of the loan, in the event of a change in ownership. In certain estate situations, federal law prevents the lender from calling the loan, even if it has such a clause. Surviving spouses also have special protections to ensure that they can keep an inherited home.
Inheriting a reverse mortgage. If the home involves a reverse mortgage or a Home Equity Conversion Mortgage (HECM), your options vary according to the circumstances of the borrower who died. If you inherited a reverse mortgage from a parent, your options include the following:
Paying off or refinancing the balance and keeping the home
Selling the home for at least 95% of the appraised value; or
Agreeing to a deed in lieu of foreclosure.
There is a six-month window for the balance to be repaid. This can be extended, if the heir is actively trying to pay off the debt. If the reverse mortgage isn’t paid off after a year, the lender is required by HUD to begin the foreclosure process. This has negative connotations. However, it is a normal part of settling a reverse mortgage, once the last borrower or non-borrowing spouse passes away. If you’re a surviving spouse, and you’re on the reverse mortgage, nothing will change.
If the mortgage is underwater. If the value of the inherited home is less than the outstanding mortgage debt, the home has negative equity or is “underwater.” If the mortgage is a non-recourse loan (the borrower doesn’t have to pay more than the value of the home), the lender may have few options outside of foreclosure. The same usually applies for a reverse mortgage: the most that will ever have to be repaid, is the value of the home. The heirs are fully protected, if the home isn’t worth enough to pay off the entire HECM balance.
When there’s no will. If a borrower dies without a will, there will be more complications and expense when handling a home with a mortgage (or any other assets). Talk to an experienced estate planning attorney regarding your specific situation.
Reference: Bankrate (Oct. 22, 2020) “Does the home you inherited include a mortgage?’

Is My Stuff Worth as Much as I Think?

Don’t take downsizing personally, when their adult children decline your furniture and other possessions.
The Street’s recent article entitled “If You Think Your Kids Want Your Stuff, Think Again,” says that baby boomers are getting ready to pass trillions of dollars to their heirs in coming decades.
Most of the money will pass from wealthy parents to their already well-off children. However, the inheritance many people will have to deal with is unwanted china, unfashionable furniture and memorabilia that reflects someone else’s memories.
Understandably, younger generations hate the thought of sorting through a parent’s lifetime accumulation, since many parents think their children will change their minds, or their grandchildren will want this stuff someday.
However, the reality is that lifestyles have changed. Younger people typically don’t have the time or the inclination to polish silver, hand-wash china, or iron linens. They don’t usually want heavy, dark wood furniture. Neither do buyers, because the values for old furniture have dropped.
While there probably is a hutch-loving millennial out there somewhere, but parents should ask what their childen want. They also need to listen to their answers.
People with things their children don’t want can ask extended family members if they’d like them, prior to deciding whether to sell or donate, that is if a charity will even want them.
You can research the potential value of possessions by looking at the “sold” listings on eBay - Get Report or other auction sites.
You can also hire a personal property appraiser. You can get referrals from an estate planning attorney and expect to pay about $100 to $350 an hour.
It’s important not to put this off. The older people get, the harder it can become to clear out all the clutter.
The thinning-out process should happen sooner not later.
Reference: The Street (July 22, 2020) “If You Think Your Kids Want Your Stuff, Think Again”

Estate Planning Lawyer, Wills, Intestacy, Probate Court, Inheritance, Asset Protection, Capacity, Guardianship, Executor, Personal Representative, Trusts, Trustee, Power of Attorney, Healthcare Directive, Living Will, Probate Attorney, Beneficiary Designa

First, a fiduciary duty is the requirement that certain professionals, like attorneys or financial advisors, work in the best financial interest of their clients. By law, members of some professions with clients are bound by fiduciary duty.
Forbes’ recent article entitled “What Is Fiduciary Duty?” explains that in a fiduciary relationship, the person who must prioritize their clients’ interests over their own is called the fiduciary. The person getting the services or assistance is called the beneficiary or principal.
You will frequently see a fiduciary relationship with certain types of professionals, like attorneys and financial advisors. A fiduciary duty is a serious obligation, and if a fiduciary doesn’t fulfill his or her duties, it’s known as a breach of fiduciary duty. Fiduciaries must act in a beneficiary’s best interest. They have two main duties: duty of care and duty of loyalty. Fiduciaries may have different or additional requirements, depending on their industry.
With the duty of care, fiduciaries must make informed business decisions after reviewing available information with a critical eye. Lawyers must act carefully in performing work for clients. Care is determined by the prevailing standards of professional competence in the relevant field of law and geographic region. To abide by the duty of loyalty, fiduciaries must not have any undisclosed economic or personal conflict of interest. They can’t use their positions to further their own private interests. For example, fiduciary financial advisors might adhere to the duty of loyalty by disclosing recommendations from which they’ll receive a commission.
Other common professions or positions that require fiduciary duties include directors of corporations and real estate agents, as well as those discussed below:
Trustee of a Trust. When you want your assets to transfer to someone after you die, you can put them into a trust. The trustee who’s in charge of the trust has a fiduciary duty to manage the trust and its assets in the best interests of the beneficiary who will one day inherit them.
Estate Executor. The person who manages your estate and handles your affairs is your estate executor. He or she has a fiduciary responsibility to your heirs and next of kin to distribute the estate according to your wishes.
Lawyer. Your attorney must disclose any conflicts of interest and must work with your best interests in mind.
Financial Advisors. Financial advisors who are fiduciaries must act in the best interest of their clients and offer the lowest cost financial solutions to fit their clients’ needs. However, it important to note that not all financial advisors are fiduciaries.
Reference: Forbes (July 28, 2020) “What Is Fiduciary Duty?”

What Should I Know about Immediate Variable Annuities?

FedWeek’s recent article entitled “Buying an Annuity for an Income Stream” explains that these annuities come in two varieties, immediate fixed annuities and immediate variable annuities. With an immediate fixed annuity, you receive the same amount each month, as long as the annuity lasts.
However, a fixed payout may not be attractive, because that fixed amount is likely to decrease in value over the years as prices increase.
There are, however, immediate variable annuities with payments that are indexed to inflation.
There’s are also immediate variable annuities, where you decide among investment accounts with the aim of upping your payments.
Immediate annuities can be a good strategy for people 65 and older. That’s because the older you are when you buy one, the more cash flow you’ll get and the greater the portion of each check that will be a tax-free return of capital.
When you purchase an immediate annuity, you can select some of the terms of the contract. Let’s look at some of the common choices.
A straight life annuity will pay one individual for as long as he or she lives, whether it’s a month or 50 years.
With a joint annuity, a married couple purchases an annuity that will pay as long as either spouse is alive.
Finally, there are period certain annuities. This kind of annuity can be on one person’s life, just like a straight life annuity. However, with a period-certain annuity, the insurer agrees to make payments for at least a specific number of years (a common term is 10 years). If the annuitant dies within that term, payments to a beneficiary will continue until the term is completed. You can get period-certain annuities for many different lengths of time.
Note that joint annuities and period-certain annuities have smaller payouts than a straight life annuity.
You need to consider whether protecting a spouse or another beneficiary is worth the reduced cash flow while you’re around.
Reference: FedWeek (June 18, 2020) “Buying an Annuity for an Income Stream”

Cat Is Fighting for Her Inheritance?

A year later, and the estate of Chanel creative director Karl Lagerfeld is not yet finalized. However, some details have emerged that, while Lagerfeld’s cat Choupette is an heir, she isn't the only one who will inherit a share of Lagerfeld’s grand fortune.
The seven beneficiaries are trying to access Lagerfeld's assets that include real estate in Paris and Monaco, a bookstore and designer furniture.
Choupette is a blue-cream tortie Birman cat who was owned by German fashion designer Karl Lagerfeld from around December 2011 until Lagerfeld's death in February 2019 at the age of 85.
The designer’s feline has her own agent and, according to The New York Times, at the height of her fame she had two minders, a bodyguard, a concierge veterinarian and a personal chef.
Wealth Advisor’s article entitled “Karl Lagerfeld's cat is locked in inheritance battle” says that Lagerfeld's "trusted" accountant for many decades, 87-year-old Lucien Frydlender has been named to manage the creative director's finances. In addition, Frydlender is responsible for distributing the estate, according to Lagerfeld’s will.
However, an investigation by French publication Le Parisienfeatured in Voici magazine found that Frydlender hasn’t been taking calls from the beneficiaries. The magazine also says that "after closing his office in September 2019, the former collaborator of Karl Lagerfeld has simply disappeared from the radar," raising questions for those involved.
Frydlender's wife has defended her husband and assured the public that there's nothing suspicious going on. She says he’s not "on an island paradise with a hidden treasure." Instead, she tells reporters that he’s "very sick".
When Choupette the cat will get her inheritance and what that will look like is unknown. It’s been more that a year since the death of her owner, Lagerfeld. Choupette fans have been concerned for the pet, but the cat isn’t scrounging in garbage cans: she made over $4 million in 2015.
"People came by the store and said how sad they were, and half of it was about Choupette," Caroline Lebar, head of communications for the Karl Lagerfeld brand, admits. "They'd say, 'If she's alone, I'll take her home.'"
However, Lebar promises Choupette is in safe hands, living in Paris with Lagerfeld's former housekeeper Françoise Caçote. "She is in good shape, and is surrounded by love."
Reference: Wealth Advisor (June 9, 2020) “Karl Lagerfeld's cat is locked in inheritance battle”

Texas has the Lady Bird Deed, How Do I Make Sure My Wife Gets the House?

Nj.com’s article “Will my wife get my house when I die?” explains that many of life’s transitions and big events, such as marriage, divorce, new job, birth or adoption of a child and others, are the triggers to address in your estate and financial plan.
It’s not uncommon for a person’s decisions made before marriage as a bachelor, not to match up with a future with a new spouse.
As far as making certain that a house with a sister on the deed passes to the spouse, depends on how the house was titled at purchase. The titling of an asset can affect the way in which it would be transferred at death.
With real estate, most frequently, a person would have titled it either as Tenancy in Common (TIC) or Joint Tenancy with Rights of Survivorship (JTWROS).
If a person elects to go with JTWROS, then at his death, the house will avoid probate and pass entirely to the sister.
The law stipulates that the sister would be the full owner of the house, in which the man and his new wife had been living.
If you select to title as TIC, upon the man’s death, his half of the house would go to his estate. This doesn’t avoid probate. Therefore, the rights of the estate will be determined according to the decedent’s will.
However, neither scenario is too great for the wife. This potentially leaves her in a stressful situation upon her husband’s death.
A wise approach is for the man to begin a dialog with the sister and an experienced estate planning attorney, who can help draft an agreement or help to change the titling of the house.
His will and beneficiaries should also be updated at the same time.
Another recommendation is to consider life insurance to provide for the wife after his death.
Reference: nj.com (June 18, 2020) “Will my wife get my house when I die?”