How Will I Be Taken Care Of If I Can't Take Care of Myself?

Great question. If a person is alive but incapacitated, the person’s “Agent” pursuant to a Power of Attorney is granted certain powers to handle the person’s financial affairs. However, the Power of Attorney is limited to just the powers that are prescribed within the document itself. If there isn’t a Power of Attorney, a Guardianship proceeding (lawsuit) is initiated to determine the person’s incapacity and so that the Court can appoint a guardian. Guardianship proceedings are difficult and super expensive. They can be easily avoided by having a good, comprehensive Power of Attorney, carefully crafted so that its not overly powerful, but, powerful enough so that business gets handled during the period of incapacity.

Remember: Powers of Attorney are only valid during the principal’s lifetime. Upon death, Powers of Attorney are rendered invalid. More on that later.

When is the Best Time to Make an Estate Plan?

When is the Best Time to Make an Estate Plan?

“When is the best time to make an Estate Plan” is a question that I hear often.  Sometimes, depending upon the questioner’s sense of humor, I will sarcastically reply “At least six months before your die!”  The truth is there is no better time than the present to take care of these essential issues. No one likes to think of their own mortality, but many families are caught off-guard and unprepared when incapacity or death occurs. Knowing that your instructions, wishes, and intentions are properly set forth and in place will give you and your loved ones great peace of mind and the asset protection that you need. Developing a unique and comprehensive estate plan will be one of the most mindful and considerate things you can do for yourself and your family. 

Another truth: Its selfish to not have an Estate Plan in place.  Why?  Because all procrastinating does is push the fret, worry and work off of you and onto your surviving spouse and children.  But its worse because your family will have to figure out or guess what you would have wanted.  I can't tell you how many times I've sat in my conference room with the families of deceased parents and heard them say "Why didn't Mom and Dad take care of this while they were alive?"

If you’ve procrastinated long enough, contact us for a free consultation to start getting your affairs in order.

Donald R. Jones, Attorney

214.220.2130

www.JonesEstatePlanning.com

 

IRS - Annual Gift Tax Rules Question from Workshop

Here's an excerpt from a follow-up email that I sent to an attendee of a recent Workshop that I hosted.  I'm sharing it because it contains a couple of common misconceptions about the Federal Gift Tax and maximum annual gift tax rule.

"Mr. Smith, I wanted to follow-up with you regarding your question about the “Nelda” story from my Workshop talk today. 

If you recall, we talked about Nelda would be permitted to make a distribution from her Trust to her daughter and her daughter could give it back to her without tax consequences.  The story is intended to show the freedom that Nelda would have within her Trust.  One of your questions, though, was more along the lines of gift tax…..I think you asked why wouldn’t Nelda’s daughter be taxed on the distribution from Nelda?

From the way you asked your question, I believe you are under the impression that gifts to a person in excess of $14,000 per year are taxable to the recipient.  But, that’s not the case.  Gifts that are truly gifts are not taxable to the recipient regardless of the amount (here’s a link to an IRS tax tip https://www.irs.gov/uac/eight-tips-to-determine-if-your-gift-is-taxable).  The issue with gifts exceeding $14,000 to one person in a year is that the lifetime exemption of the “giver” is reduced by the amount that the gift exceeds $14,000.  At present, the lifetime exemption for federal estate taxes is $5,490,000 for single filers and $10,980,000 for a married couple.  So, if a person were to give $15,000 to one person in a year, the “giver” would have her lifetime exemption reduced by $1000 to $5,489,000 ($15,000-$14,000 = $1000.  $5,490,000 - $1000 = $5,489,000).  So, after the reduction of the lifetime exemption, the “giver” would owe 40% tax on their estate to the extent that it exceeds $5,489,000 rather than $5,490,000.  But, there would be no tax consequences to the giver for the year of the gift and there would be no tax consequences to the recipient at any point. 

I just wanted to clarify that for you.  Let me know if you have any questions."

I was working with a super family recently and the primary concerns of the family were two-fold. They wanted to avoid capital gains tax on the sale of a highly appreciated piece of property in California, and they also wanted to avoid the four probates (one for each spouse in Texas, and one for each spouse in California) that would have been required had all of these properties been in their name when they die.

The couple had been warned by their local CPA that selling the appreciated property while they were alive would cause the family to incur significant capital gains tax - he was right. So, the couple is renting the property and setting up an estate legal program so that when the first parent dies, the property will get a "step-up" in basis to the value of the property at the time that the first spouse dies. We are also setting up their estate legal program so that if the property is not sold after the first spouse dies, the entire property will get another step up in basis when the surviving spouse dies. We're talking big savings in state and federal taxes here.

We're also arranging the properties, and their publicly traded stocks, and their privately held business interests, in a way so that nothing will have to go through probate - in either state - when they pass away. Now, the children will avoid that expense and hassle that would have been required had they simply kept everything in their name.

If you own things that you would like to protect for yourself and your family, while avoiding taxes and government interference, and if you live in Texas, give our office a call, and we'll start a discussion about how simple it is to put your estate legal program in place.

 

How to Protect an Inheritance from Your Children’s Divorces

I was working with a couple who wants to make sure that their children do not lose their inheritance if the children get divorced.

Neither of the two children are married, but both children have "significant others" and the couple anticipates marriage is coming up for each of their children. They fear that one of their children will continue to invest in their spouse's business.

We discussed the options that are available to the couple. We are setting up their estate legal program so that when the children inherit, they will inherit in a trust - we call this trust the Children's Inheritance Trust.

By having the couple leave their estate to their two children's Inheritance Trusts, they make it more likely that the inheritance will be kept separate from any community property that the child may have with their spouse. If a child subsequently gets a divorce, then the child will keep their trust because the trust will not have been commingled with the assets that the child acquired with their spouse.

Most families these days have divorce circumstances. If you want to set up an estate legal program so that your children's inheritance is protected from their past, present, and future divorces, give us a call to start a conversation about the easiest ways to protect what you've worked to build.

 

How to Leave the Family Business

I was working with a Dallas couple this week. They had five children; two of them worked in their business and the other three children did not. They were very sensitive to the fact that the two sons "in the business" should inherit the business when Mom and Dad pass away.

The mother, in particular, was emotional about wanting to set up an estate planning legal program that was "fair" to all of their five children. The couple knew that their business was valuable, and Mom felt that if they left the business to the two children who were in the business, and left everything else to the other three children, then that would not be "fair" because the children getting the business would be getting significantly more than their other three children. 

They did not want to short change their other three children simply because those three children were not suited to work in the family business. One solution Dad had already created was to purchase life insurance that would go to the three children who were not in the business. But still, the life insurance death proceeds would not be enough to "compensate" the other three children for not getting any of the business value.

We discussed a number of alternatives. One of the alternatives we discussed was to structure the ownership of the business so that after Mom and Dad died, the business (it's actually three businesses) would be in a trust. The two children in the business would continue working in the business and would continue to collect salaries. However, when the business would later sell, the sales proceeds of the business would be shared by all five children.

This alternative seemed to resonate with the parents as a way to fairly provide for the transition of their business to the next generation while being fair to each of their five children. This arrangement can be tricky and we are still working out the details.

If you own a business and want to make sure that it passes to the right people the right way, you may want to give us a call and schedule a time to discuss your alternatives so that you can leave a legacy rather than leave some massive headaches to your loved ones.

 

Grandparents Leave Their Estate to Trust for Grandchild

I've been working with a couple recently who has been raising their grandchild since the grandchild was born. Their son was not responsible and the mother of their grandchild has a drug habit. Fortunately, the grandparents have been able to "save" this grandchild from his parents.

The couple knows that if their land and their money is left to their children, it will be wasted. Their children are not responsible, have no jobs, and have no appreciation for saving.

So the parents made a mutual decision to leave their entire estate for the benefit of their grandchild that they have been raising. Their children will not be included at all. If the grandchild is still young when the couple dies, the grandchild's inheritance will be placed in a trust with the grandchild's aunt as the trustee until the grandchild reaches the age of 25.

There appear to be no Texas forced heirship issues which would otherwise require the couple to leave an inheritance to their children. The children are older than 23 years of age, and the children are not incapable - they are just lazy.

The couple feels like they have worked for 40 years to accumulate some savings and some property, and they don't want to see it wasted by their children. They made a smart decision in leaving it in trust for their grandchild. Now - just maybe - their estate can do some good for their grandchild and their future great grandchildren.

 

 

Annuities: Watch Out!

A lot of our clients have Annuities among their assets.  An annuity is a relatively low-risk investment product, where the insured (usually, an individual) pays a life insurance company a lump-sum premium at the start of the contract. That money plus a return is paid back to the insured in fixed, incremental amounts, over some future period (predetermined by the insured). The insurer invests the premium; the resulting profit funds the payments received by the insured and compensate the insurer. Conventional annuity contracts provide a predictable, guaranteed stream of future income for retirement, etc. until the death of the beneficiaries named in the contract, or, until a future termination date, whichever occurs first.

Annuities are different animals.  Buyers of annuities are often faced with hefty penalties when they try to get all or some of their money out of their annuity in advance of its regular, agreed payment schedule.

What makes them even more unusual is that they have their own set of rules when it comes to qualifying for Texas Long Term Care Medicaid. The following is an analysis of several scenarios involving annuities and their treatment under Medicaid law.

Deferred Annuities. A deferred annuity is an annuity where the income is not paid to the insured (buyer) until some future date.  Deferred annuities have no place in Medicaid planning. Example: Mom has $85,000 in his savings account and $1,500 in her checking account. Mom has been admitted to the nursing home, and her family wants to protect the assets and qualify for Medicaid. Mom uses the $85,000 and purchases an $85,000 deferred annuity.  (The plan was to get the money out of their hands, i.e. convert it to a non-countable resource, so that they could qualify under Medicaid’s Asset Test, but keep the income for themselves by having it paid back in the future, presumably after Mom had passed away….bad idea.)  Mom then applies for Medicaid because she has less than $2,000 in her bank account. Mom is denied Medicaid eligibility because she owns the deferred annuity. The result will be that Mom has to surrender the annuity and pay significant surrender penalties, and then “spends-down” all of the money she received from the annuity less the penalties. Then, after she spends all of the remaining funds she would be eligible for Medicaid.


Single Person with Immediate Annuity. An immediate annuity is annuity where the income is paid to the insured (buyer) almost immediately.  John has $101,000 of savings and is about to enter a nursing home. He spends $100,000 and purchases an immediate annuity which pays John $1,000 per month for his lifetime. The immediate annuity is not considered a countable resource. John then applies for Medicaid because he has less than $2,000 of Countable Resources. John will pass Medicaid’s Asset test, but he must assign all of his income to the nursing home.  John's $1,000 monthly income from the annuity will go straight to the nursing home.  John has qualified for Medicaid by converting the cash into a non-countable resource, but, John’s family will not get any benefit from John owning an immediate annuity.


Married Couple with Immediate Annuity and Both Spouses in the Nursing Home. Same thing as the second scenario above. A married couple with both spouses in the nursing home will qualify for Medicaid if their combined assets are less than $3,000, but they must assign all of their income to the nursing home. They will qualify for Medicaid, but they will not receive the income from the annuity.


Married Couple with Immediate Annuity and Only One Spouse in the Nursing Home.  Mom is in nursing home. Dad stays in their residence. Mom and Dad have $215,000 of Countable Resources. The annuity salesman sells Dad an immediate annuity for $100,000 in an attempt to reduce Mom and Dad's assets below the Community Spouse Resource Allowance. Now, Mom and Dad have Countable Resources of only $115,000 and Dad has a monthly income stream. While Mom may qualify for Medicaid, the law provides that, the annuity must name the State as the remainder beneficiary for the total amount of Medicaid assistance paid on behalf of the institutionalized individual... If the state is not named as a remainder beneficiary in the correct position, the purchase of the annuity will be considered a transfer for less than fair market value.

Be very careful before purchasing an annuity as part of your Long Term Care Medicaid planning.  In some situations, the buyer of the annuity can end-up worse off than if he or she had simply maintained the cash.
 

Why LLC's Are Great Asset Protection Tools

Some of my clients need not only estate planning but business planning as well.  A lot of business planning is resolved by the use of LLC’s, or limited liability companies, whereby they are formed and then hold investment properties or rental properties as a way to protect other assets.

The idea of the LLC is to shield the individual and/or other LLCs and entities and their assets from any lawsuit arising from and against a property. For example, let’s say you own a rental property and your tenant slips and falls on the property and is severely injured.  He or she decides to sue you for the damages (medical bills, lost wages, pain and suffering).  If that property is in your individual name, the tenant would be allowed to sue you in your own name and any property that you own in your own name would be subject to his claims.  But, if the property was owned by an LLC, the tenant will have to sue the LLC and only the LLC’s property would be subject to his claims.  And, if the LLC’s only asset is the rental property, the tenant’s recovery will be limited to the property, and any lawsuit will not threaten all of your other assets.  Be mindful, though, that if the tenant was occupying the property prior to the property’s transfer to the LLC, he would likely still have claims against the owner, individually.

An LLC can be a very valuable tool when you own investment properties. LLCs allow you to protect assets and that is the primary goal of professional estate planning. If you would like to look into your needs when it comes to Dallas Estate Planning and whether business planning may also be helpful to you; call me at 214.220.2130 for more information or to set up a free consultation.

Life Insurance: Should it Be a Trust Asset?

Adam and Betty wanted to make their estate settlement simple for each other and for their two kids. Knowing that assets in their own individual names would have to go through a court proceeding called probate, they created a revocable living trust and transferred their stock, home, LLCs into their trust.  They wanted to avoid lawyers, judges and courtrooms. 

Adam and Betty had heard that life insurance policies, IRAs, 401-Ks and annuities automatically avoid probate by their very nature because they are paid to the account’s beneficiary.  So, they didn’t transfer their life insurance policies to the trust.  Adam passed away. The insurance company immediately tells Betty that the insurance company needs a court order from the probate court. What?

Because life insurance agents used to believe that there would be some estate tax savings, the insurance agents would write the insurance applications in a way that the husband would own the life insurance policy on the life of the wife, and the wife would own the policy on the life of the husband.

So, when Adam died, it was determined that Adam owned the policy on Betty's life. When Betty dies, the death benefit will be payable to Adam (or Adam's estate). In either case, Adam's probate is necessary to collect the death benefit when Betty dies. In addition, if the policy that Adam owns has cash value, Betty will not be able to access this cash value until the policy’s ownership gets transferred by the probate court proceeding.

Had they transferred their life insurance policies to their trust prior to Adam's death, probate would not have been necessary. After Adam died, Betty, as the sole trustee, would have been able to access the policy’s cash value or change the beneficiary. But since they assumed that life insurance avoided probate, they ended up being required to complete Adam's probate to correct the life insurance problem, even though all of their remaining assets avoided probate.

If you would like to review your life insurance policy ownership and determine your best options, contact us at 214.220.2130 for an appointment. 

A Trust is the Solution for Dallas Grandparents

A Dallas family asked me a few questions during a free meeting the other day.  They are contemplating setting up an arrangement for their estate. Their goals are to make everything as simple as possible for the surviving spouse, whomever it is; have both of their children involved with their estate, avoid Dallas County probate court after they pass away; and make sure that the money they leave to their grandchildren will be used for good.

We are going to create a revocable living trust for them so that after the first of them passes away, the surviving spouse is the sole trustee and is in complete control of everything, no assets or titles will be frozen, the survivor will have immediate access to do what needs to be done and there is no need to deal with lawyers, judges or courtrooms; their two children will be the Successor Co-Trustees after both parents die, and since there will be no probate, the children can immediately sell their home after the parents pass away; and third, instead of handing $150,000 to each of their grandchild, when they pass away (encouraging possible bad habits from the grandchildren), the grandchildren's parents (their children) will serve as the trustees of the trust for the grandchildren. The parents will have total discretion regarding what the money is used for, and the grandchildren's parents will transfer the inherited funds to the grandchildren when the grandchildren show adequate maturity and financial responsibility.

Have a similar need?  Contact us at 214.220.2130.

 

Getting Your Estate Legal Affairs in Order Means More Than Legal Documents

One of the most important things you can do for your loved ones is to make sure all of your affairs are in order, not just your estate legal documents.  Here are five additional things that our clients do for their families to ensure a simpler, less stressful estate settlement process:

A List of Your Friends. There's a section in your Estate Planning Portfolio where you can list the names, addresses, and telephone numbers of your closest family members and friends.  Everyone seems to have friends that they want notified but sometimes they are such old friends, that the family isn’t aware of their names and contact information.  Don't leave your family with the job of having to track them down.  Put them in your Portfolio so that the work is done ahead of time and keep it up to date.

 

Funeral Instructions.  One of the sections in our clients’ Estate Planning Portfolio is for funeral and burial instructions. Documenting your detailed wishes for your preferences (traditional or veteran’s funeral, traditional or graveside service, traditional burial or cremation, type of casket, type of urn, cemetery location, mausoleum or grave, etc.) in the appropriate section of your Estate Planning Portfolio makes things so much easier on your family.  I know from personal experience that trying to determine what a family member would have wanted is an extra layer of unnecessary stress and worry.

 

 

Instructions to Your Executor / Successor Trustee.  There's a section in our clients’ Portfolio that has detailed instructions for the people that you designated to handle your estate, legal, tax, and financial affairs after you have passed away. You simply need to let that person know of the existence and location of your customized documents and your Estate Planning Portfolio and they'll be able to find the section that contains their instructions on what to do.

 

Organized Asset Information. How can your family adequately help manage your estate and your assets if they don’t know they exist?  You can have the most superior set of estate legal documents, does not have detailed records, you will leave them in a frustrating situation.  This will delay your estate settlement because no one will ever know if there is another account or asset out there that will be uncovered at a later date.  Your family will want and need closure.  In our clients’ Portfolio there is a section to list the assets so that your family won’t have to make any guesses in settling your estate.

 

 

Your Estate Planning Letter to Your Heirs.  You can communicate your wishes to your family regarding the distribution of your personal effects, such as jewelry, paintings, tools, watches, furniture, and other personal non-titled items. For some, making sure the personal effects go to the correct person is more important than the division of money and other non-personal assets. It's easy to divide $100,000 between four grandchildren, but families have been known to fight over personal effects which had far less fair market value than other estate assets.  Describe your wishes and your feelings to your surviving wife, husband, children, or other loved ones.

If your estate planning legal documents are the only part of your estate plan, you've missed out on an opportunity.  Having a customized set of estate planning legal documents is critical to the process of settling your estate, but having supporting letters, records, and instructions can be the key to making things easy on your family.  Almost every client we have ever had wants that for his or her family.

Contact us at 214.220.2130 to discuss your estate planning options.

 

Need for Probate Can’t Be Swept Under the Rug

I was consulted on an estate question today from a family in Forney, Texas.  I haven’t previously represented the family. 

Their Mom passed away about two years ago and her Probate was never complete.  After she died, the family assumed that probate wasn’t necessary or required because Dad has no plans to sell the family assets, their house or other real estate or stock, and he already had access to their bank accounts.

The problem is though that Mom had two heirs that have recently passed away. These two heirs each have several heirs, a couple of which are estranged, a couple of which are real “pieces of work” and one of which that is in jail.  Now, completing Mom's probate might be difficult.  To top it off, the successor heirs are jealous and will likely make the proceeding difficult for the sake of being difficult.  All of their expected shenanigans could have been totally avoided if the family had elected to go through the probate shortly after Mom died.

Some Texas families often mistakenly believe that if they ignore the necessity to complete a probate long enough, then the need will just go away.  But that is a false assumption.  The truth is the longer a family waits to complete a probate, the harder it will be.

I wish that the family had been clients of mine before they decided to use an attorney that recommended that a Will serve as the centerpiece of their estate plans.  If they had been clients of mine, I might have been able to show them the benefits of a revocable living trust and how it could have avoided the need for probate altogether.  Then their delay in completing the probate process wouldn’t have mattered since a trust would likely have removed the need for probate altogether.  

If you have an interest in completing a probate so that property or investments can be properly re-titled after the death of a family member, or if you would like to avoid the need for probate altogether, give us a call and we can have a conversation about how easy it can be.  Remember, the real goal should be to make it easy on everyone.  No Lawyers, No Judges, No Courtrooms.

Asset Protection Secrets Revealed

Here’s yet another story on why avoiding probate is a good idea.  I represent a North Dallas, Texas man whose wife died in an auto accident.  She died “intestate” meaning without a Will.  In fact, she didn’t have any estate planning in place.  She didn’t have a Will, Trust, Power of Attorney, Medical Power of Attorney, Advance Directive / DNR (Do Not Resuscitate Order) or anything else.  It just so happens that the wife purchased their family home before she and her husband married, making it her separate property and not their community property.  The difference is really big in the eyes of the law.  The husband wants to sell the house and move out-of-state near his parents so that he can get some help raising their young children. 

Under the Texas Law of Intestacy, and the law of Descent and Distribution, since the house was separate property, the children will receive ownership of the house subject to the husband’s life estate.  But, since they are minors, the court is going to likely require that the estate be administered, that a guardian ad-litem is appointed for the children, and the court will scrutinize any sale of the house to make sure that the children’s best interests are protected.  In short, the process is going to be long, expensive and frustrating because of the court oversight.

Since she didn’t have a Will or a Trust or any other legal planning, we will never know what the wife wanted, but, like most people, we believe that she would have wanted it to be easy on her husband and children and not lengthy and expensive.  Her husband is now in a real bind because he has to continue to make house payments on the house note while he pays rent on a rent house down the street from his parents.  It will likely be six months before he’s in a position to put the house on the market and, the process is even more complicated because he’s now living out of state and has to travel back and forth to Dallas for court.

If they had been clients of ours before the wife passed away, through the use of a Trust, the husband could have sold the house immediately without the delays from court intervention or oversight and without legal expense.  They would likely have had a Will too, but as a “secondary” document, with pour-over provisions.  That means that their primary estate planning tool would have been their Trust with the Will serving as a back-up.

It’s a sad story made even sadder by the predicament that the family is left with.  The frustrating thing is that it all could have been easily avoided.  If you want your family to avoid complications like these, contact our office so that we can speak about the options available to you.

Donald R. Jones, Attorney

The Jones Law Firm

3109 Carlisle St., Suite 100

Dallas, Texas 75204

214.220.2130 office | 214.220.2131 fax

don@jonesestateplanning.com

www.JonesEstatePlanning.com

www.GetMyAffairsInOrder.com

www.NoLawyersNoJudgesNoCourtrooms.com 

Little Known Facts About Medicaid and Your Home – And Why They Matter

I helped a couple today from Irving, Texas.  It’s a really sad story.   Betty has Alzheimer’s and has moved in with her brother and his family.  Before moving in with her brother, Betty got some really bad advice.  She had heard that in order to qualify for Medicaid and to have Medicaid pay for her nursing home care, she couldn’t own a residence in her name.  So, she deeded her residence to her son, Larry and daughter-in-law, Rachel.  A few years ago, the Larry borrowed around $500,000 from a local bank to start a new business in Dallas.  The bank required that Larry and Rachel both personally guarantee the loan, which they did.  The business recently stopped making payments on the bank note and closed its doors.  In order to protect their assets from the bank’s collection on the personal guarantee, Larry and Rachel had to file personal bankruptcy.  Since Betty’s house is now in Larry’s and Rachel’s name, it has become an asset of their bankruptcy estate and will likely be foreclosed upon to pay the bank.

Had Betty consulted with us, we would have advised her against deeding her home to Larry and Rachel for the very reasons that occurred.  There are several ways that she could have qualified for Medicaid and maintained control and ownership of her home.  Most of them involve the use of Trusts.

If you are interested in learning more about protecting your assets and your home while qualifying for Medicaid, contact us for an appointment.

A Texas Family Avoids an Estate Planning Nightmare

I met with a family from Garland, Texas today.  They were very emotional in telling me a story about a close family friend, Bob, spending his life savings on long-term nursing home care.  Bob has Alzheimer’s and no longer recognizes his family.  They estimated that Bob had spent around $400,000 thus far and that since his condition is worsening, they assumed that the remainder of Bob’s savings would be consumed by his nursing home expenses.

The family wanted to make sure that Bob’s situation doesn’t happen to them.  Their house is paid for and they have an IRA worth around $225,000 along with some savings and some stocks.  They know that they could not be forced to sell the home to pay for their nursing home costs, but that Medicaid can and will lien their home so that they can reimburse themselves for whatever nursing home expenses they pay on their behalves.

We introduced several options available to them and after discussions, we set up a Trust to protect their home and life savings from nursing home expenses. They were surprised how simple and easy it was to protect their assets. One of the key components, though, was their timing. You can’t set up the protections and expect them to work properly if you are on your way to checking-in to the nursing home.  The key is to get your Trust and planning in place while you are still relatively healthy.  It’s not really “planning” if you wait until you are on the doorstep of the nursing home.  In fact, it’s usually too late at that point.  

The family has the peace of mind of knowing that their assets, their home and their belongings are going to wind-up with their children and not go towards paying for nursing home expenses.  Few people have that luxury.  

They were also pleased to find out that since their assets are going to be placed in Trust, they are “doubly” protected from the probate process when they die.  In other words, the Trust avoids losing their assets to the nursing homes AND after they both pass away, their children won’t have to deal with lawyers, judges or courtrooms in order to have access to their parent’s accounts and things.  With their Trust, after the parents both pass away, their children will have access to their assets to pay for funeral expenses and to distribute their belongings and things without the need of lawyers or courts being involved in the process.  Even more peace of mind!

 

Simple Steps Texas Couple Takes to Avoid Estate Planning Nightmare with Son’s Blended Family

Today, I helped a man and his wife from Dallas, Texas.  They have accumulated a real estate business that is worth $5-6 million.  They have one child, a son, who is in his late 40’s.  The son has 2 children from his first marriage and is engaged to a girl that has 3 children from her first marriage.  They are NOT fond of the new fiancé and want to make sure that she doesn’t wind-up with their estate or assets.  They really like the fiancé’s 3 children but don’t want their estate to go to them either.  They want to make sure that it is preserved for their son and his kids rather than his new wife and her kids.  And, they don’t feel guilty or selfish in handling it this way since they understand that the fiance’s ex-husband is wealthy and has already done some estate planning for his 3 kids.

They are more concerned, though, that that if his son received this large estate all at once, then it might do more harm than good, because he has always spent more than he has had. So we discussed arranging an estate plan so that after the husband and his wife pass away, the estate will remain in trust for the benefit of the son. The son will receive annual distributions from the Trust. When the son passes away, the remaining assets will remain in the trust for the benefit of the son’s 2 children. The new daughter-in-law would not inherit or receive anything from them, nor would her 3 children.

You too, can make sure that your assets stay in your family, and out of the hands of new spouses and their children by reaching out to us.  Contact us so that we can have a conversation about how simple it is to get things set up the right way - the first time.

Call us at 214.220.2130. 

Donald R. Jones

www.JonesEstatePlanning.com

www.GetMyAffairsInOrder.com

www.NoLawyersNoJudgesNoCourtrooms.com  

 

You, Me, and Trusts And Red Wagons: The Truth

I helped a man from Plano, Texas today.  He was in our office and wanted to know how Trusts work.  I gave him a quick demonstration using a little red wagon that I keep in our conference room.  The wagon represents the Trust entity itself.   I have several matchbooks that represent a family’s assets (house, car, bank accounts, savings accounts, etc.).  I placed the matchbooks inside the wagon (to represent the re-titling and trust ownership of the assets) and rolled it around the conference room floor to emphasize the mobility and portability of the Trust.  I explained that as long as the assets are inside the trust, they are protected from predators like lawsuits, Probate and the claims of Nursing Homes.  Then I took some of the matchbooks out of the wagon and placed them on the table to demonstrate how the owner maintains control over the assets.  I also indicated, though, that once the matchbooks (assets) were outside of the wagon, they were no longer protected from lawsuits, probate and Nursing Homes.  In the bed of the wagon is a set of instructions that lets everyone know how the trust is to be operated.  I closed my demonstration by explaining to my newest client that trusts aren’t just for the rich anymore.  They are for anyone that wants to protect assets for their families.

That’s a very simple explanation of Trusts.  They can be very complicated but the basics remain the same:  protection and control of family assets.

Don’t Be Fooled by Remarriage and Asset Protection

I helped a Mesquite, Texas couple today with their estate planning needs.  The husband has had some recent health issues.  He had a few questions about protecting their assets if he passed away first and his wife decided to remarry.  He wants to make sure that their kids receive their estate’s assets and that they don’t go to a new husband or the new husband’s family.

Their questions reminded me an old, silly joke:  Fred and Wilma are sitting together on their front porch one day.  Fred asks Wilma out of the blue “Wilma, if I were to die, would you remarry?”  Wilma said “Fred, don’t be silly, you are in great health.”  Fred said, “I know, but would you?”  Wilma said “Maybe so.  We’re still pretty young.”  Then Fred asked, “Would you let him live in our house?”  Wilma replied, “Fred this is weird.”  Fred said, “I know, but would you?”  Wilma said, “I guess so, its paid for.”  Then Fred said, “Would you let him drive my truck?”  Wilma said, “Fred, can we stop this?”  Fred asked her again.  Wilma said, “I guess so.  It would just be sitting there I suppose.”  Then Fred said, “Ok, one more.  Would you let him play with my golf clubs?”  Wilma replied, “No.”  Fred said, “Why not?”  Wilma said “He’s left-handed”.

It’s a silly story designed to illustrate that affairs and remarriage happen.  Protecting your assets from remarriage for the benefit of your children is one of things that we do at The Jones Law Firm.  There are several ways to do so and they all involve the use of Trusts.

Contact us at The Jones Law Firm to learn more.

Texans Experience Estate Planning Mishap

Here’s another story and another reason to avoid Probate.  I was handling an out-of-state probate (I’m licensed to practice in Texas and a couple of other states) for my deceased cousin a few months ago.  My cousin had been represented by another attorney in the preparation of his Will and had spent a good bit of money on legal fees in the process.  (I would have advised against a Will and for a Trust instead!)  After he passed away, his immediate family came to me for help with his estate and to probate the Will.  

I began preparing the pleadings and the accountings and worked closely with my cousin’s family.  We filed the original of the Will with the Clerk of Court, as we are required, and the Clerk acknowledged receiving it.  Several weeks went by while we waited on the Court to “confirm” the appointed Executor.  When it got to the point that it appeared that it was taking too long, (two months) we contacted the Clerk to see if there was a problem.  The Clerk called us back and said that the original Will was missing from the Court’s records.  The Clerk went on to say that since the Will was missing that we would have to re-draft and re-file our pleadings to change from a “testate” proceeding to an “intestate” proceeding (meaning without a Will). The Clerk told the family the same and they were inconsolable.  

They knew how much effort and expense my cousin had gone to in preparing the Will.  They also knew that if the Clerk was correct and the matter had to be re-filed as an intestate matter, that the law of descent and distribution would control, that his estate would be divided amongst many heirs rather than the few that had been named in the Will and that they would likely receive significantly less than my cousin had intended. 

Fortunately, the Clerk was wrong in her opinion that we needed to re-file the matter, and, about two weeks later, the Will was found.  It had been placed in another probate file by accident.  We eventually worked through the matter but not before the family endured the additional worry of the lost Will and the fear of having to share my cousin’s estate with other heirs.  If my cousin had relied upon a Trust instead of a Will for his estate planning vehicle, all the angst and all the probate expenses could have been avoided.