If you live in Texas and are thinking about creating an estate plan, you likely have a lot of questions. Below are answers to the most frequently asked questions propective clients ask when thinking about estate planning in Texas.
What happens if I die without a will in Texas?
If you die without a will in Texas, the Texas law will determine who gets your property. Texas intestacy laws are rigid and your property may end up going to people you didn’t intend to benefit. You can learn more about how Texas law distributes your property if you die without a Will in Texas by clicking on the link.
Isn’t a will all I really need?
Although a will is an important part of an estate plan, it only takes effect after you die. You need other documents to carry out your wishes and manage your assets if you end up with a temporary or long term incapacaity. I recommend five basic estate planning documents. Read more about five basic estate planning documents every adult in Texas needs.
What legal documents do I need?
In addition to a will, you should also have a durable power of attorney, a medical power of attorney, a health care directive and a HIPAA authorization. Read more about Texas powers of attorney.
How often should I update my will?
There are no hard and fast rules about how often you should review your estate plan, but certain life changes, such as a change in your marital status, an addition to your family, a change in the value of your assets, a move to another state, changes in the tax code, and the simple passage of time may trigger a need to update your plan. Read more about how often you should update your Texas Will.
What is estate planning?
Estate planning is the process of making the legal arrangements necessary to protect your family, plan for your personal and health care, and manage or transfer assets in the event of your incapacity or death.
What does an “estate” consist of?
An “estate” consists of all your assets including real estate, bank accounts, stocks and other securities, life insurance policies, and personal property such as cars, jewelry and artwork. The value of your estate is equal to the fair market value of the assets minus your debts. Read more about How to figure out the value of your estate.
Who needs estate planning?
You do, regardless of the size of your estate. Without adequate estate planning, you forfeit your opportunity to make many important decisions such as:
- choosing the person who will make health care decisions for you if you are not able to make your own decisions
- naming a guardian for your minor children in case of your incapacity or death
- naming a guardian to manage the assets you leave behind for your minor children and specifying when and how you would like those assets distributed
- specifying how and by whom your assets will be managed if you are temporarily or permanently disabled
- specifying how and to whom your assets will be distributed when you die
What is estate tax?
The federal estate tax is a tax that applies when someone dies with a “taxable estate”.
Although every U.S. citizen is subject to the estate tax, the vast majority will never have to pay any taxes at all because a certain amount of a person’s estate is exempt from taxation. Currently, Americans can transfer $15 million, indexed for inflation, without any federal estate tax liability. Only property valued at over $15 million are subject to an estate tax.
Do I have to worry about a Texas inheritance tax?
Texas doesn’t have an inheritance tax, but some other states do. For more information read my article “Does Texas Have an Inheritance Tax?”
What is a living will?
A living will, or directive to physicians, is a document that allows you to instruct your physicians not to use artificial methods to extend your life if you are diagnosed with a terminal or irreversible condition.
What is probate?
Probate is the legal process by which a will is proved to be valid or invalid. Current usage of this term also refers to the legal process of settling a deceased person’s estate.
Generally, the probate process involves collecting a decedent’s assets, liquidating liabilities, paying necessary taxes, and distributing property to heirs. These activities are carried out by the executor or administrator of an estate.
Can I use legal software to prepare my estate planning documents?
You can, but by doing so, you run the risk that your estate will not be handled according to your wishes. There are many risks associated with Do-It-Yourself Wills and Estate Planning. Texas has very specific requirements concerning wills. If a will does not comply with all these requirements, it can be declared invalid, meaning that your estate could be treated as though you never had one.
By doing your own estate planning, there is a chance you could misapply the law, use the wrong form, or prepare it incorrectly. Additionally, the one-size-fits-all character of a do-it-yourself plan does not take into account each individual’s unique circumstances, and consequently each of their individual estate planning needs. Read more about the risks of DIY estate planning.
