An article in the Dallas Morning News highlighted the importance of estate planning for all Texas families and individuals, and once again shows that everyone needs to have an estate plan in place. If you have any assets whatsoever, you need an estate plan in place. This includes your home and other real estate; tangible personal property such as cars and furniture; and intangible assets such as bank accounts, retirement plans, and investments.
At the very least, you will need to decide what happens to your assets when you die. If you have a spouse, this may be as simple as leaving everything to him or her outright. However, if you are concerned with your spouse leaving your assets to a subsequent spouse rather than your children, or losing some of your assets if he or she ever gets divorced later in life, it may mean establishing trusts inside your will that protects those assets from creditors and failed marriages, and ensures that they are passed on to your children when your spouse dies. If you don’t have a will or some other form of post-death estate planning in place when you die, the State of Texas has a will in place for you via the Texas Estates Code, and it may not reflect your wishes at all. For you to control exactly how your estate is distributed, you need an estate plan that’s crafted specifically for you according to your wishes. Additionally, a will can provide for an “independent administration” of your estate, which usually will reduce the time and expense involved in administering your estate.
If you have minor children, an estate plan is especially important. If you and your spouse both die, it’s important to know who will raise your children. A good Houston estate plan will designate the people you want to raise your children if anything happens to both parents. For more information, see the previous blog post concerning what happens in Texas if you die without naming a guardian for your children.
Another aspect of your estate plan relates to who will make your financial and medical decisions for you if you become incapacitated. For your financial decisions, you should have a Durable Power of Attorney which designates an agent to manage your financial assets if you are incapacitated. For medical decisions, you should have a Medical Power of Attorney that appoints an agent to make emergency medical and other healthcare decisions on your behalf. A medical power of attorney is often combined with a HIPAA release which allows your doctors and other medical providers to speak to your agent if you are unable to make your own healthcare decisions. A common misconception about powers of attorney is that they can be used after you die. Powers of attorney cease to have any effect after your death, and are only used by your agents during your lifetime. After you die, the executor named in your will (or trustee if you have a revocable living trust) will be responsible for administering your assets.
As you can see, there is more to estate planning than deciding who will receive your property after you die. The financial security as well as emotional well-being of your loved ones can be shored up by having an estate plan in place that is specifically designed to accomplish your goals and objectives.
Reference: Dallas Morning News (May 2, 2014) “Everyone needs an estate plan, regardless of wealth“