Estate Planning & Asset ProtectionBook an Initial Visit
There are many legal strategies involved in estate planning, including wills, revocable living trusts, irrevocable trusts, durable powers of attorney, and health care documents. New clients often say that they do not have an estate plan. Most people are surprised to learn that they actually do have a plan. In the absence of legal planning otherwise, their estate will be distributed after death according to Texas’s laws of intestacy. Of course, this may not be the plan they would have chosen. A properly drafted estate plan will replace the terms of the State’s estate plan with your own. Start the process and create your estate plan alongside an estate planning lawyer.
Most of our clients elect to use a Revocable Living Trusts rather than a will as the cornerstone of their estate plan.
The Revocable Living Trust is the foundational document of most of our estate plans. It can be used instead of a will to define the distribution of your estate upon death. If you become ill or mentally incapacitated, the Revocable Living Trust can control and coordinate your property interests while you are alive. The use of a revocable living trust assures that your plans and affairs will remain private rather than made public in the probate process on your death. Assets owned by the revocable living trust are not frozen upon death, allowing for continuity of cash flow and investments. Revocable Living Trusts are easy to create and maintain during your lifetime and are not difficult to change or amend. There are no lifetime income tax consequences that result from the use of a revocable living trust and they are legal in every state. A revocable living trust can be used as a will substitute whenever any of its benefits are desired. The size of one’s estate should not dictate its use.
Many of our clients elect to leave and inheritance to their loved ones not outright, but in a dynasty trust.
When initially considering estate planning, many people want to leave their property to their loved ones outright, provided that at the time of the gift or bequest the desired recipient is capable of managing the property wisely.
If the gift or bequest is large, an outright transfer fails to consider estate tax savings, asset protection and divorce protection. The family wealth could be lost in a generation to taxes, creditors or a spouse divorcing your descendant.
When assets are left to a beneficiary of a trust, the general rule is that the creator of the trust can dictate who may receive the beneficial enjoyment of the property and the extent and circumstances under which this enjoyment may be obtained. As a result, trust assets will be protected from the beneficiary’s creditors and be saved from a second, third or fourth round of estate tax payments as the funds transfer through the generations.
But, to get this asset protection, the trust must be drafted in a very specific manner.
A dynasty trust is an irrevocable trust that is protected from creditors and estate tax for as long as applicable state law allows.
A dynasty trust can be drafted so that the beneficiary controls it, thereby allowing the beneficiary to enjoy the property in a manner as close to outright ownership as possible. Even if the beneficiary is not old or mature enough to be in control at the time the trust is drafted, provisions can be added allowing the beneficiary to obtain control at a certain age or upon certain conditions being met.
Many of the best estate planning attorneys agree that a dynasty trust is the best tool for receiving a large inheritance. In our office, we create these for most of our clients.
A power of attorney is a legal document giving another person (the attorney-in-fact) the legal right (powers) to do certain things for you. What those powers are depends on the terms of the document. A power of attorney may be very broad or very limited and specific. All powers of attorney terminate upon the death of the maker, and may terminate when the maker (principal) becomes incapacitated (unable to make or communicate decisions). When the intent is to designate a back-up decision-maker in the event of incapacity, then a durable power of attorney should be used. Durable Powers of Attorney should be frequently updated because banks and other financial institutions may hesitate to honor a power of attorney that is more than a year old.
An advance directive is a document that specifies the type of medical and personal care you would want should you lose the ability to make and communicate your own decisions. Anyone over the age of 18 may execute an advance directive, and this document is legally binding in Texas. Your advance directive can specify who will make and communicate decisions for you, and it can set out the circumstances under which you would not like your life to be prolonged if, for example, you were in a coma with no reasonable chance of recovery. A document that goes hand-in-hand with your advance directive is an authorization to your medical providers to allow specified individuals to access your medical information. Without this authorization, your doctor may refuse to communicate with your hand-picked decision maker.