Trusts in Texas

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.

 

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.

 

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.