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10 Important Topics to Know About Estate Law

By clickman • a week ago • 23 views • 3 comments

When is it a good time to start an estate plan? In short: Now. The only time you can establish an effective estate plan is while you are alive and have legal capacity to enter into a contract. We can't predict when something will happen to us, but we can take steps to protect our loved ones and ourselves when they do. Talk to an experienced estate lawyer in Houston to learn how to protect your estate and your family. In the mean time, here are 10 important topics you should know about estate laws.

1) Definition of Estate

An estate is defined as all the property, real and personal, owned or controlled by an individual at the time of their death. This property may be in your name, held in a partnership, in a joint ownership, or through a Trust, and all other assets that would be paid upon your death, such as through life insurance.

Your estate includes:

1. Real property and things attached to it
2. All personal property
3. All businesses and business interests
4. Powers of appointment
5. Life insurance and annuity contracts, pension benefits, IRAs, etc.
6. All debts and obligations owed to others
7. All debts and obligations owed to the person or estate
8. All other claims against others

An estate does not include assets transferred to an irrevocable Trust during your lifetime. When assets are transferred to the Trust, you no longer own or control those assets, your Trust does. It is important to discuss your plan options with an experienced estate lawyer in Houston who can help you take an inventory of your personal estate.

2) Wills vs. Living Trusts

A will transfers property held in your name to the people and places you assign them to. You name an Executor to carry out your wishes and a Guardian for your children. A will goes into effect at your death and after it has been submitted to the probate court.

Unlike a will, a Living Trust is effective as soon as you make it and remains in effect throughout your lifetime. You select a person to carry out your instructions as the Trustee however, typically you are the Trustee. One or more persons are named as the Successor Trustees to take over if anything happens to you. Creating a Living Trust can help minimize, and sometimes avoid, expensive and lengthy probate.

3) Texas Probate Laws

Having a will does not prevent probate. Even with a written will, the court will want to validate your will and allow others to object to it.

The court considers several factors when validating your will:

1. Is there a latter version of the will?
2. Was the deceased mentally capable of making the will?
3. Is the will the result of fraud, mistake, or undue influence?
4. Was the will properly signed?
5. Is the will a forgery?
6. Are there any pre-existing contracts that make the will invalid?
7. Are there other claims against the deceased's estate that impact what the beneficiaries under the will would receive?

Probate is not mandatory in Texas. However, most banks and other institutions will not release assets or funds until the courts assign titles to assets, since they are afraid of being sued if someone lies to them about being a beneficiary. An order from a probate court will protect them from this liability.

4) Non-probate and Probate Properties

Property listed in the deceased's name only, without co-owners or named beneficiaries, is considered probate property. Any documents of ownership that are payable to the estate are also probate property. This includes real estate, vehicles, bank accounts, financial securities, employee benefit plans, foreign property, social security benefits, etc.

Non-probate estates include property owned in joint tenancy with a right of survivorship. These pass directly to the survivor if the documents are accurately prepared by your estate lawyer. With named beneficiaries, a life insurance policy, annuity, IRAs, 401(k) accounts, and other assigned accounts can bypass probate. These assets are transferred directly to the beneficiary who is named in the policy or account documents from the company or bank holding them. Assets put into a Trust while you are alive also avoid probate.

5) Payable on Death Property

Payable on Death accounts automatically pass on to the designated person without having to go through probate. However, during the life of the account owner, the payable on death beneficiary does not have an ownership interest in the account. Only after the account owner passes away does the beneficiary gain ownership of the account. The transfer can be completed by the beneficiary by providing the bank a copy of the death certificate.
6) Community Property with Right of Survivorship

In Texas, property acquired by either spouse during marriage is considered community property. Separate property consists of property owned by either spouse before marriage; property acquired during marriage by gift and nuptial agreements; and damages awarded to a spouse for personal injuries during marriage.

According to the Texas Probate Code, when one spouse dies, the surviving spouse already owns half of the community property. When a will is present, the deceased's half of the community assets are dispensed according the directions in the will. If a spouse dies without a will, Texas law dictates how their half will pass on.

1) The community estate property of the deceased spouse passes to the surviving spouse if:

a. No child or other descendant of the deceased spouse survives the deceased spouse.
b. All surviving children and descendants of the deceased spouse are also children or descendants of the surviving spouse.

2) If a child or descendant of the deceased spouse survives and the child or descendant is not a child or descendant of the surviving spouse, one-half of the community estate is retained by the surviving spouse and the other half is passed to the children or descendants of the deceased spouse.

7) Probate: How long and how much?

Probate length depends on the order your estate is left in. Well planned estates can get through probate in 3-6 months. Complicated estates that are disorganized can take years to gather assets, file taxes, and pay other debts. Debt disputes and lawsuits against the estate can also lengthen the probate process.

When everything is added up, probate can cost 3-7% of the total value of the estate. However, if your will is contested or the estate goes through other litigation, the cost can increase rapidly. An estate lawyer can help you get your estate in order and establish a plan that avoids the common pitfalls in probate matters.

8) Uncontested Will Probate

When a will is not contested, the named Executor visits an experienced estate lawyer in Houston who prepares a petition for the court. The petition is filed along with your will in probate court. The Houston estate lawyer must notify everyone named in the will as well as anyone who would have been legally entitled to receive property from you if a will did not exist. If the estate is in order and there are no objections, the court will approve the petition then:

1. Appoint a Executor
2. Order that taxes and debts be paid
3. Require reports be filed by the Executor to assure the property is accounted for and distributed in accordance with your will.

9) Duties of the Executor

It is the Executor's responsibility to gather the estate documents and file them with the probate court. Typically, the Executor hires an estate lawyer to assist and represent the estate during probate. After the proper documents have been filed with the probate court, the judge will issue letters of administration, which establish the legal authority of the executor.

After the letters are issued, the next stage of administration is identifying, collecting, valuing, and securing assets of the estate. An inventory of all assets and their value must be filed with the court. If the estate is large enough to require filing an estate tax return, similar information must be provided to the local and federal governments. A Houston estate lawyer can assist in preparing the inventory list, obtaining the valuations and preparing the necessary documents that need to be filed.

The executor must identify any outstanding debts owed to the estate and pursue collection of those debts. Once the will is determined to be valid by the probate court, the executor may begin to pay taxes and other claims against the estate. After all expenses have been paid, the executor can then distribute the estate to beneficiaries in accordance with the terms of the will and then close out the estate.

10) Estate Taxes

If estate taxes are due, a final tax return must be filed and the taxes paid before the estate can be distributed. Over 90% of all estates are exempt from federal estate taxes. In 2009 estates with a value of less than $3.5 million were exempt from estate taxes. The estate tax was repealed in 2010 and is planned to be reinstated in 2011 with an exempt amount of only $1 million. Congress frequently changes the tax laws and the estate tax is a heated topic currently being debated. If you have an estate that falls into this bracket, check with an experienced estate lawyer in Houston to make sure your estate plan is up to date.

Nichols Law is a board certified family law firm in Houston Texas.

Article Source: https://EzineArticles.com/expert/Rachel_Ergo/573530



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