Frequently Asked Questions – Wills & Trusts


“I don’t have anything do I need a Will?”

There is no simple answer to this question, but more than likely it is better to have a Will than die without one. People are under the mistaken impression that all personal property and real estate will go to the right people and happen automatically. Any assets that do not have beneficiary designations (i.e. life insurance and retirement accounts) and any accounts that are not jointly owned with right of survivorship or have pay-on-death designations will have to go through probate or some type of process to determine heirship. Without a properly written Texas Will, the probate process can be very time-consuming and very expensive. Determining who will take over your property, even if you just have a house, a car and a bank account, can be very costly and lengthy without a Will.

Also, having a Will is not all about material possessions. For example, if you have children, whether from a previous marriage or current marriage, you would benefit from a Will so you can prepare a trust for your child (since a minor cannot inherit property outright) and also state who you would want to be your child’s guardian. It will also greatly benefit your family and loved-ones if you can simplify the transfer of your property during their time of grief. Otherwise, you are leaving it to them to sort everything out, which can leave them in the position of guessing at your wishes or not even knowing your wishes.

Furthermore, an unmarried couple, even if neither has children and they have little assets, should be extra cautious in making sure that they have a Will and other estate planning documents (i.e., medical and financial powers of attorney, funeral and burial arrangements, etc.). Otherwise, the default laws in Texas only favor blood relatives.

The bottom line is that the probate process in Texas is relatively quick and inexpensive with a properly written Will.  Therefore, you are better off having a Will to ensure that whatever property you have (even if seemingly insignificant) will get into the right hands and be handled by the right people.

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What happens if I die without a Will?

  1. The court will determine the guardian of your children. Your family could end up in court fighting over the kids, or they could end up with a stranger.
  2. The court will determine the trustee of your children’s estate.
  3. Your spouse may have to make a yearly report of how s/he is managing any money the state grants to your underage children.
  4. The court will determine who inherits your estate.
  5. The court will appoint an administrator for your estate.
  6. Your court-appointed administrator may have to post a bond to guarantee that s/he is responsibly managing the money the state grants to your underage children.
  7. Your family heirlooms may be divided up with one-third going to your spouse and two-thirds to your children. If the family cannot agree, the court can have the heirlooms sold and divide the proceeds.
  8. If your spouse remarries after your death, his/her new spouse may be entitled to an interest in the assets from your estate.
  9. The new spouse will not be legally required to use those assets for your children and when s/he dies, s/he will not be required to leave any of those assets to your children.
  10. In mixed marriages with children, a new spouse may become partners with step-children or possibly an ex-spouse in handling your estate.

If you die without a Will, you have died “intestate” and your property will pass under the Texas laws of intestate succession. How property is distributed depends on whether the property is community or separate and whether the property is real estate or personal. Separate and community property is defined as follows:

Separate Property:

  1. The property owned or claimed by the spouse before marriage;
  2. The property acquired by the spouse during marriage by gift, will or inheritance; or
  3. The recovery for personal injuries sustained by the spouse during marriage, except any recovery for medical expenses and loss of earning capacity during marriage.
Texas Family Code §3.001

Community Property:

All property, other than separate property, acquired by either spouse during marriage.

Texas Family Code §3.002

The following is a basic overview of the laws of intestate succession (probate distributions)  in Texas.

MARRIED WITH CHILDREN FROM THE SAME MARRIAGE

Separate Property (real estate): Surviving spouse will be entitled to a 1/3 life estate interest and the children will have ownership in of the property subject to the 1/3 life estate. A life estate is an ownership interest for the person’s lifetime. Therefore, once the surviving spouse dies, the children will own the entire property.

Separate Property (personal): Surviving spouse will be entitled to1/3 of the property and the children will be entitled to 2/3 of the property.

Community Property (real estate): Surviving spouse will be entitled to 100% of property.

Community Property (personal): Surviving spouse will be entitled to 100% of property.

MARRIED WITH CHILDREN FROM A PREVIOUS RELATIONSHIP

Separate Property (real estate): Surviving spouse will be entitled to a 1/3 life estate interest and the children will have ownership in of the property subject to the 1/3 life estate.  A life estate is an ownership interest for the person’s lifetime.  Therefore, once the surviving spouse dies, the children will own the entire property.

Separate Property (personal): Surviving spouse will be entitled to1/3 of the property and the children will be entitled to 2/3 of the property.

Community Property (real estate): Surviving spouse will be entitled to 1/2 of property and the remaining 1/2 will be divided among the children (including children from any previous relationship and any children with the surviving spouse).

Community Property (personal): Surviving spouse will be entitled to 1/2 of property and the remaining 1/2 will be divided among the children (including children from any previous relationship and any children with the surviving spouse).

MARRIED WITH NO CHILDREN

Separate Property (real estate): If the deceased parents are alive, they will each be entitled to1/4 and the surviving spouse will be entitled to the other half.
If the deceased only has one parent living, then the surviving parent will be entitled to 1/4, any surviving siblings and their descendants will be entitled to 1/4, and the surviving spouse will be entitled to the other half.
If neither of the deceased’s parents is living, then any surviving siblings and their descendants will be entitled to 1/2, and the surviving spouse will be entitled to the other half.
If there are no living parents, siblings (or their descendents), then the surviving spouse will be entitled to 100% of the property.

Separate Property (personal): Surviving spouse will be entitled to 100% of property.

Community Property (real estate): Surviving spouse will be entitled to 100% of property.

Community Property (personal): Surviving spouse will be entitled to 100% of property.

SINGLE/WIDOWED WITH NO CHILDREN

If both parents of the deceased are alive, they will each be entitled to 1/2 of all real and personal property.  If either parent is also deceased, then that parent’s share will be divided equally among the deceased’s siblings.  If a sibling is also deceased, then that siblings share will be distributed to his/her descendents, if any, otherwise his/her share will be distributed among the surviving siblings.

The deceased’s children will be entitled to an equal share of all real and personal property. If any child is also deceased, his/her share will be distributed to his/her children’ and so on.

SINGLE/WIDOWED WITH CHILDREN

The deceased’s children will be entitled to an equal share of all real and personal property.  If any child is also deceased, his/her share will be distributed to his/her children’ and so on.

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What is an Executor?

An Executor (or Executrix if female) is the person (or persons) responsible for carrying out the directions and requests in your Will.  An Executor will be responsible for inventory and appraisment of assets, paying estate taxes and debts, and distributing property to your beneficiaries.

If you die without a Will, the person serving in this capacity may be called the Administrator or Personal Representative.

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What is a Trust?

A Trust is a legal entity whereby property is held for the benefit for an individual or individuals to be administered according to the specific terms of the Trust by the appointed Trustee.  You can select when the Trust terminates, such as when the Beneficiary becomes a certain age or upon the Beneficiary’s death.

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What is a Trustee?

A Trustee is the individual or individuals responsible for administering a Trust.  For example, if you create a Trust for the benefit of your children upon your death, the Trustee will be the one who is responsible and legally accountable for making sure that the Trust property (i.e. funds) is used for the benefit of your child in accordance with your wishes as stated in the Trust language.

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What is a Living or Revocable Trust?

Many people wonder what the difference is between a Living Trust and a Will.  A Living Trust (also called revocable trusts or inter vivos trusts) allows you to put your assets in a trust while you’re still alive.  People often choose to serve as their own trustee, but you can select an individual or a financial institution to manage your Living Trust.  When you pass away, become incapacitated or resign as trustee, a successor trustee takes over and manages your property for you or for your beneficiaries.  In contrast, a Will only takes effect at your death and spells out how you would want your property to be distributed.

The most common claim by proponents of Living Trusts is that they avoid the probate process.  That need is significantly reduced in Texas because our probate system is efficient and inexpensive if – and this is a big if – you have a properly written TEXAS-specific Will that allows for an “independent administration”.  In many cases, it will cost you less to set up your Will and go through the probate process than create a Living Trust alone.

Furthermore, a Living Trust does not necessarily eliminate the need for probate.  One of the complications of administering a Living Trust is that you must make sure that all of your assets are re-titled in the name of the trust.  You would also have to title any after-acquired property in the name of the trust.  Any asset that the trust does not “own” could possibly go through probate.  Therefore, even with a Living Trust you still need a Will, called a “pour-over” Will, whereby the assets you did not transfer into your Living Trust during your life will be transferred into the trust at your death.

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What are the PROS and CONS of a Living Trust?

PROS

  1. Assists in managing your assets and property
  2. Privacy – Your Will becomes a public record once you pass away
  3. May help avoid probate
  4. Avoids potential guardianship if you become mentally disabled
  5. Avoids complications of anyone contesting your Will
  6. Assists in managing real estate outside of Texas

CONS

  1. Cost – Living Trusts are significantly more expensive to created and administer
  2. Burdensome to transfer the title of all of your property into the name of the trust
  3. Must title all new property in name of trust
  4. Complicated to administer
  5. Still need a Will
  6. Does not save you taxes any better than a well-drafted Will

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What are the alternatives to a Living Trust?

For most people, a carefully drafted Will, prepared by a qualified Texas attorney, is an efficient and effective way to manage and distribute your property.  An attorney may help guide you as to how to designate your assets, such as life insurance, bank accounts and retirement accounts, so that they do not have to go through probate.

Additionally, a “Statutory Durable Power of Attorney” allows you to designate an individual to act on your behalf in you are disabled or incapacitated.  Another document you can prepare is a “Declaration of Guardian in Event of Later Incapacity or Need of Guardian,” which names an individual to manage your person and property if you become so incapacitated or disabled that a guardian must be appointed.

Overall, the Living Trust isn’t guaranteed to save you money or taxes.  Texas has inexpensive probate procedures for the size of most estates if you have a properly written Will.  Also, if your records are well-organized, your assets are simple (not necessarily small, just easily identified), your beneficiaries aren’t likely to argue, and your probate court and lawyer are efficient, legal costs of probate might be so low that it costs less to pass the property through a Will than via a Living Trust.  Finally, with a well-drafted Will, along with a Declaration of Guardian and Powers of Attorney, you can accomplish many of the benefits of a Living Trust in a less complicated and less expensive manner.

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How can I avoid estate taxes?

Many clients are concerned about any taxes being due upon their death; however, a lot of clients do not have the size estate that would be subject to taxes. Additionally, there is an unlimited marital exemption, which means that when one spouse dies, the surviving spouse will inherit everything tax free.

Nevertheless, it is important to remember that if one spouse dies, although his/her share will go to the surviving spouse tax free, when the surviving spouse dies, his/her estate will now include the amount of both spouses. Therefore, many couples choose to do some tax planning in order to avoid taxes being owed upon the surviving spouse’s death.

Avoiding estate tax can be accomplished in a number of ways such as through bypass trusts and other marital trusts. You should consult an attorney and tax professional to learn of the many options that are available to you.

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Is there anything that will be distributed regardless of what my Will says?

There are a number of different kinds of assets that may pass outside the provisions of your Will, such as life insurance and retirement accounts and any other assets where you’ve named a beneficiary.

Furthermore, some bank and brokerage accounts may pass outside your Will, such as payable-on-death (POD) accounts whereby your funds will be distributed to a named beneficiary.  Also, joint accounts set up with “rights of survivorship” will pass to the surviving account holder(s).

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How can I choose who will care for my children?

In your Will, you can select who would take care of your children if you passed away while your children were under 18 years old.

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What is a special needs trust?

Trusts for special needs children have specific language that allows a special needs child to still qualify for government assistance.

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What planning can I do for my pets?

Is your pet a member of your family? Whether you have cats, dogs or horses, you may have specific wishes regarding their care if something were to happen to you. You have a number of options available to make sure that your animals are taken care of and protected.

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How often should I review and/or update my documents?

If any of the following events occur, you should review the potential effect on your estate planning to determine whether your will should be amended by codicil or revised in its entirety.  (This is not an all-inclusive list.)

Changes in Family Relations
  1. Dissolution of a marriage (divorce) or separation
  2. Death of spouse
  3. Marriage of a single person
  4. Changes regarding child, grandchild or other beneficiary:
    • Birth of a child
    • Death of a child
    • Marriage of a child
    • Marriage dissolution of a child
    • Adoption of a child
    • Illness of a child
    • Economic change (good fortune or bad fortune)
    • Financial irresponsibility
Changes in Economic and Personal Condition of Spouse
  1. Asset values (increase or decrease)
  2. Change in insurability (life insurance)
  3. Change in employment
  4. Change in business interests (e.g., new partnerships, new corporations)
  5. Property acquired in a different state
  6. Change in health of spouse
  7. Retirement from business or profession
External Changes
  1. Changes in laws (state and federal income, estate and gift tax, trusts, probate)
  2. Change in residence to different state
  3. Death of executor, trustee or guardian
  4. Additional document (HIPAA Release Authority) now recommended as a companion to your medical documents

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Can I create a Will online or with software?

While this alternative may seem to be “better than nothing”, it is still a risk not to seek the counsel of a professional.  Where on-line forms and will kits can address your concerns in a general way, a good attorney can make recommendations based on your family’s specific circumstances.

You have many options available to you that you will not know about or understand unless you have a competent attorney to advise you and explain such options.  Detailed and specialized planning cannot be accomplished through online forms or will kits, nor can it be accomplished by filling out a form and sending it in to be prepared, even if it is being prepared by attorneys.

There are a number of questions that your attorney can guide you through, such as:

  1. Do you want your 18-year-old child to receive his inheritance outright, or should a more mature person control it until he’s older?
  2. What is the role of an executor and trustee, and who should assume the job?
  3. What are the advantages and disadvantages of going through probate versus having a living trust?
  4. How should you designate the beneficiary information of your assets, such as checking accounts, investments, life insurance or retirement accounts so that they do not conflict with your Will?
  5. Who should you designate to make medical and financial decisions on your behalf in the event you are incapacitated?
  6. What qualifies as an “irreversible condition” and a “terminal condition” in your Directive to Physicians (living will)?

When you find out that your online form or do-it-yourself will kit was insufficient, it will be too late and your family and loved ones may be in the same position as if you had done nothing at all.  The cost of doing no planning or not doing it correctly far outweighs the cost of the peace of mind you receive by careful and thoughtful planning.

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I have a Will from another state that was written before I moved to Texas.  Should I get a new Will now that I live here?

Yes, it is best for you to prepare a Texas-specific Will.  Texas does recognize Wills executed in other States, however, it will be easier for your executor to go through the probate process if your Will has language specific to Texas.

For instance, Texas allows for what is called an “independent administration” that allows an executor to carry out the wishes in your will essentially free of court interference.  The only actions taken in court in an independent administration is the probate hearing, whereby the executor is appointed pursuant to the Will, and the final filing of an inventory of the estate.  If language requesting an independent administration is not in a Will, then the default is for the court to supervise the entire probate process, which can be very costly and time-consuming.

Some Other Considerations

  1. Your executor or trustee will have to post bond if your Will does not specifically waive that requirement.
  2. In Texas, the signing and notarization of the Will is crucial and your Will could be thrown out if it is not signed with the proper formalities.
  3. Texas, like nearly all states, has specific guidelines when it comes to Directives to Physicians (living wills) and Medical Powers of Attorney and if those guidelines are not followed, your documents may be dishonored.
  4. Texas has its own version of a “self-proving affidavit” that eliminates the need for one of the individuals who witnessed your Will to appear in court for the probate hearing.  Since you may not pass away until decades after you executed your Will, it can significantly complicate the probate process if your executor has to track down one of the witnesses to when you signed your Will.  Furthermore, that witness will be asked to remember signing your Will and that certain formalities were followed!

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