COVID-19 has all of us thinking: what would happen if something bad happened to us? Where would our property go? What happens to our family? Well, it depends on whether you have a plan!
WHAT IS ESTATE PLANNING?
Estate Planning is this broad term for what happens to your property and your family if you die. There's a lot to estate planning, but I'm going to cover three main things:
(2) non-probate property; and
(3) power of attorney.
So let's get into it.
Your estate means the real property and the personal property that you own and which should pass to someone upon your death.
Real property includes things like land, mineral and oil rights, or anything that's on the land like improvements: barns, garages, houses, all that good stuff.
Personal property is literally everything else: jewelry, family heirlooms, paintings, clothing, automobiles, motorcycles, and even your fur babies, among other things. As you can see, it's super important to decide who gets the rights to that property when you pass.
TO WILL OR NOT TO WILL?
There are only two ways we can do this: you die with a will or you die without a will. With a will, you get to decide where your stuff goes and who has guardianship rights of your minor children. If you die without a will, you're not so lucky and the laws of Texas through the courts are going to decide who gets your stuff.
First, let's talk about the situation that we don't want at all: we don't want you passing without a will because it's super, super risky. The law in Texas for probate says that your "heirs at law" (which are generally your relatives by blood or marriage) get your stuff. In this situation, there's no consideration of whether your son or daughter will squander all your money, whether they even like you, whether they're good people or whether they've seen you in the last 50 years; your heirs at law are your heirs at law. With a will, you can give your stuff to whomever you want!!
(1) Let's say your mom passes and you're one of two siblings. You two are talking about splitting up her property but there's no will. Then suddenly, long lost half-brother that you've never met, and she never told you about, comes into the picture. Guess who gets part of that estate?
HE WILL. That's the law.
(2) Now let's say you are the second wife and you have a couple of kids with your spouse and the plan is if he passes, you get all the money and property so you can take care of your minor children. But he doesn't put that in writing and doesn't have a will. Since you’re second wife, there’s got to be a first wife, right? And they had a couple kids as well. If he dies without a will, you and your kids are not going to get everything as planned; those kiddos over there with first wifey are going to get some too. We're not talking about child support; that's different, we're talking about ASSETS. Talk about a change of plans.
(3) Let's say you have a person that you care about that's not your heir at law; a mentor, an educator, a student, a caretaker, whatever. Those types of people aren't heirs, so if you don't have a will, they get NOTHING.
Godchildren get nothing.
Same thing if you have stepchildren. Unless they have been adopted, stepchildren get NADA. It's so, so important that you have a will!
Well, you should know by now it passes property and determines rights to your children or to guardianship of your children. Texas recognizes both handwritten wills and formal wills. Formal wills are your typed wills, you get them through an attorney usually. A handwritten will is called a holographic will and for both, the following rules apply:
(1) be 18 years or older, OR in the military, OR legally married,
(2) be of sound mind,
(3) not forced or deceived into signing the will, and
(4) you have to have the intent to give away the property. Usually that's satisfied by saying, "this is my last will and testament."
For handwritten wills, it needs to be totally in your writing and say that phrase "this is my last will and testament." Does it matter what it's written on? No! Your stationery, a piece of paper and napkin, whatever.
The problem with holographic or handwritten wills is, maybe you don't know what property you can give away or you give away too much or too little property, that may end up in probate anyway. Or, you identify somebody to manage that property, an executor or executrix, but you don't say without court supervision or without bond. All of those things are going to give you problems once this will is actually in play after your death. My recommendation is, find a good attorney to help you do a will!
Simple wills are easy, super-fast and cheap to do.
Your typewritten will, or formal will, is something that an attorney prepares. They'll prepare it for you based on all your assets and all your wishes, you sign it and you have two witnesses over the age of 14 sign it as well, simple as that.
Can you change your will? Abso-freakin'-lutely! And if you learn nothing in this post, review those things periodically, every couple years, every time you get married, divorced, have another kiddo, change jobs, etc. because so many people neglect to do that and end up with people that they don't really like getting their stuff on death! Maybe you don't care because you're gone, but I bet you your family cares, so review this stuff periodically! Same thing with non-probate assets, that's what we're going to talk about next.
WHAT THE HECK IS NON-PROBATE PROPERTY?
Non-probate property passes by contract or survivorship. Survivorship is a theme for another article, but for contract, we're talking about things like life insurance benefits, IRAs, 401ks, pension, employee benefits, things like that. If you've ever had a job or been offered those type of benefits, you should sign a form, a beneficiary form identifying the person who's going to get that cash or property when you pass. Again, if you learn nothing, change these forms periodically because I don't know how many times we've got ex-wife's name on a beneficiary form.
Do you want your ex-wife getting a hundred thousand dollars in life insurance when you die?!
I didn't think so.
Look at this stuff often and change it! Sometimes clients don't even know that they have these assets. For example, "I've got $5,000 in a retirement account from a job that I had ten years ago and I didn't roll it over." SMH.
DO I NEED A POWER OF ATTORNEY? MAYBE.
There's a lot to talk about in this area as well, but I'm going to cover two types of POAs. One is a medical power of attorney and the second is a durable power of attorney. These powers of attorney go into effect when you're incapacitated; you're in a coma, you can't make medical decisions, you are in surgery and something happens and a doctor needs to know what to do, what your wishes are, those kind of things.
A medical power of attorney gives someone a right to make healthcare decisions or medical decisions for you if you're incapacitated.
A durable power of attorney that goes into effect when you're incapacitated gives somebody the decision-making authority over your property, bank accounts, real estate, things like that.
Those two types of POAs are not the same thing. If you give somebody a durable power of attorney that doesn't include medical power of attorney, then they can't make your medical decisions. Same thing if you give somebody a medical power of attorney but don't give them the right to handle your bank accounts, your bills, your real estate, that's a problem.
You can also get powers attorney when you're not incapacitated. I've done several for families who have people who are incarcerated, that need to file taxes, that need to sell cars, things like that. Powers of attorney are great to have, especially medical power of attorney because anything can happen at any time.
We offer Estate Planning Packages that include (1) a will, (2) a medical power of attorney, (3) a medical directive to physicians, (4) a durable power of attorney, and (5) a medical record release form, all for one low price! We can have your estate planning done in less than two weeks.