Estate Planning Nightmare

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 

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!