What is a Fiduciary

What is a Fiduciary?

The caregiving and supporter role often arises out of crisis. A loved one becomes disabled, or worse, unexpectedly passes away. It’s natural for family members and friends to want to help, but it’s also important to consider the legal obligations underpinning these roles.

Defining “Fiduciary”

Fiduciary roles often arise out of legal documents and relationships such as a trustee or executor under a Will; the parent-child relationship; spouses; and business partnerships. But did you know that a fiduciary role can arise out of an informal relationship as well? These informal relationships, or “confidential” relationships can occur by simply undertaking to act on behalf of another person. This is especially true in relationships where one person is more vulnerable due to disability, and is relying on the other person to assist, or act on their behalf.

Consider, for example, an aging parent who is starting to have failing health and memory problems. They may begin looking to their adult child to assist them with making certain life decisions or engaging in every day transactions. They may need them to start accompanying them to doctors’ appointments and be their “surrogate” when interacting with third parties concerning billing matters or scheduling. In such a situation, there is no doubt that the adult child who engages to assist this parent has become a “fiduciary”. Even an informal fiduciary such as this has legal responsibilities, and correspondingly, personal liability if they fail.

The Legal Responsibility of a Fiduciary

In formal fiduciary relationships, the legal responsibilities of the fiduciary are clearly defined in the legal document under which they arose. For example, an agent acting under a valid Durable Power of Attorney need look no further than the signed document to know what is expected of them. The Texas statutory form even includes a two-page explanation of fiduciary duties and the liability of the agent for breach of those duties.

But what about the example of the adult child helping the disabled parent? What if the parent did not have any formal estate planning documents in place before they became ill? As it turns out, they owe similar fiduciary duties to the aging parent just as a legally appointed agent under a valid legal document. These general duties include: (1) duty of loyalty and utmost good faith; (2) duty of candor (being open and honest); (3) duty to refrain from self-dealing; (4) duty to act with integrity; (5) duty of fair, honest dealing; and (6) duty of full disclosure (being transparent in decision-making). With duties like this, the informal fiduciary may want to consider how to make the relationship more formal to insure their acts are protected.

How to Legalize an Informal Fiduciary Relationship

Informal relationships can be formalized through proper legal planning. This can include making estate planning documents such as power of attorney documents where the individual appoints a legal “agent” to act on their behalf. However, such documents are dependent on the individual having the mental capacity to understand what these documents mean. But what if the individual is disabled and has lost this capacity?

In cases where the disabled individual lacks mental capacity to create legal documents, a legal proceeding called a guardianship, may be necessary. In a guardianship, a court can appoint someone to act on behalf of the disabled individual for healthcare and residential decisions as well as financial decisions. These are one-time legal proceedings that offer the fiduciary better legal protection as they instill the guardian with full legal authority to act on behalf of the disabled individual. Guardianships are also supervised by the court, creating accountability as it concerns the fiduciary duties owed to the disabled individual.

Whether a fiduciary role has arisen out of a relationship is very fact specific. Before undertaking to act on behalf of another, it’s important to be advised as to the legal role and responsibility, and potential personal liability.

Adriane S. Grace is a guardianship attorney in Frisco, Texas who regularly assists and counsels clients who are acting in a caregiver or supporter role. If you have questions about guardianship or fiduciary duties in the Frisco, Prosper, Allen, McKinney, Richardson, Dallas, Carrollton, The Colony, or Denton area, please complete the contact form to request a meeting.



When to Update a Will and Estate Plan

How Often Should I Update My Will and Estate Plan?

“When to update a Will” is a frequent question in my estate planning practice. I build contingencies into my clients’ Will and Trust documents  so that they only need review it at certain life events. Below are important life events that trigger the need to update a Will and estate plan.

Top 5 Reasons for Updating a Will and Estate Plan

  1. Marriage or Divorce
  2. Birth of children or grandchildren
  3. Interstate Move
  4. Tax law changes
  5. Retirement

1. Marriage or Divorce

Texas is a community property state. Our state law presumes that all income and property acquired during a marriage is community property, belonging to both spouses. Each spouse is entitled to an undivided 1/2 interest in the community property. As such, each spouse can gift away their 1/2 interest in their Will. However, if a spouse does not make a Will, the surviving spouse could end up splitting the community property with multiple other people under our state’s default inheritance laws.

For example, under Texas inheritance laws, if a spouse dies leaving behind children who are not also the children of the surviving spouse, the children inherit the community property interest. Under this scenario, a surviving spouse could end up sharing ownership in the marital home with their stepchildren. Spouses can avoid these draconian inheritance laws by making a Will and/or Trust.

Fortunately, state law provides that when spouses divorce, all gifts made under a Will to the divorced spouse are void. However, a divorced spouse with minor children may want to create a new Will, and appoint a trustee for their child’s inheritance, if they want to prevent the other parent from controlling the estate they leave behind.

2. Birth of Children or Grandchildren

Minor children cannot legally own property. Because minor children have a right to inherit under our state laws, it is imperative that parents, and grandparents, plan for this inheritance. This includes carefully selecting a guardian and trustee for any money or property a minor child could inherit.

3. Interstate Move

Although the United States constitution vests the federal government with authority to regulate interstate commerce, certain matters are reserved to the states. This includes laws related to the family relationship and property ownership. As such, state laws concerning rights of inheritance vary.

In addition to planning for inheritance, the formal estate planning process also includes planning for “probate”, or the legal process for transferring property at death. Because probate process varies state to state, so too does the type of estate plan needed to deal with such probate. Therefore, when you move to a new state, it is important to have your estate plan reviewed.

4. Tax Law Changes

Thankfully, we do not have estate tax in Texas, but federal law provides for inheritance taxation. Historically, federal law has provided an exemption from the inheritance tax, but these exemptions are subject to change. For example, just 18 years ago, the exemption was only $1 million. Today, it’s over $11 million per person, but only until December 31, 2025. The estate tax rate is currently set at 40%. By comparison, the highest income tax rate is currently 37%. Therefore, if you have an estate greater than $1 million (inclusive of cash, real estate, retirement accounts, and life insurance policies), you may need to have your estate plan reviewed periodically to determine if your beneficiaries could be taxed.

5. Retirement

Ask any financial advisor; they will tell you that retirement planning isn’t just about when you can afford to stop working, but also planning to pay for disability and long term care. The CDC says our life expectancy is now 78.7 years. Yet as we plan for more years not working, we must also plan for more years needing care as we age. Estate planning is not just about making Wills and planning for after death, but also planning for incapacity. Thus, its incumbent upon retirees to also consider who they will appoint in their estate planning documents to manage their finances and make healthcare decisions when they cannot.

Life changes are best managed when we are prepared for those changes!

Adriane S. Grace is an estate planning attorney in Frisco, Texas who regularly assists and counsels clients who want to prepare and plan in the wake of big life changes. If you have questions about estate planning in the Frisco, Prosper, Allen, McKinney, Richardson, Dallas, Carrollton, The Colony, or Denton area, please complete the contact form to request a meeting.


Power of Attorney

Power of Attorney: How to Avoid Abuse and Financial Exploitation

In estate planning, we often use Power of Attorney documents as a tool to plan for future incapacity. But with great power comes great responsibility. And power of any kind is easily abused. Thus, it’s important to carefully consider the legal effect and consequences of a Power of Attorney document.

What is a Power of Attorney?

A Power of Attorney allows a person to act on behalf of another in a financial transaction or for medical decisionmaking. A person making a Power of Attorney is called the “Principal” and the person they appoint to act on their behalf is called an “Attorney-in-Fact” or “Agent”.

The Agent isn’t really an “Attorney” (as in one who is licensed to practice law), but like a licensed Attorney, an Agent is a “fiduciary”. That means they must put the interests of the Principal above their own interests when acting as Agent. They must also account to the Principal for all actions performed, or decisions made, under the Power of Attorney. A failure to do so is an abuse of a Power of Attorney, or as we call it in legalese, a “breach of fiduciary duty”.

How Does a Power of Attorney Work?

A Power of Attorney allows an Agent to engage in transactions or make certain decisions on behalf of the Principal. Depending on the type of Power of Attorney, the Principal can also continue to engage in the same transactions and decisions. This is true of a “Durable Power of Attorney”. This is a Power of Attorney that permits the Agent to act immediately upon the Principal signing the Power of Attorney. These type of Power of Attorney documents are often used as a matter of convenience for a Principal who wants assistance with managing their assets or business, and who trusts their Agent. The appointment of an agent under a Durable Power of Attorney is effective immediately and continues until the Principal revokes it, dies, or a guardianship is created by a court. Consequently, an Agent is free to act under the Durable Power of Attorney even if the Principal later becomes incapacitated.

With a “springing” Power of Attorney, the Agent acts on behalf of the Principal only in the event of “incapacity”; when the Principal can no longer make decisions concerning their healthcare and/or finances. In Texas, a Medical Power of Attorney is always a “springing” Power of Attorney because the Agent is only permitted to make medical decisions when medical doctors have certified in writing that the Principal is incapacitated. Similarly, a Principal can create a “springing” Power of Attorney for financial transactions by specifying in the document that the Agent can act on their assets and financial accounts only in the event of the Principal’s incapacity.

Although a springing Power of Attorney may seem like a safe option, these documents are also subject to abuse since they are used in the context of a Principal who has lost mental capacity. Thus, it’s important to understand how and when a Power of Attorney can be used. For example, in Texas, a Power of Attorney cannot be used to change a person’s permanent place of residence or to “move” them to a skilled nursing facility. Nor is it permissible to use a Power of Attorney to admit a person to a psychiatric facility for in-patient care. Additionally, an Agent on a Power of Attorney may only engage in those financial transactions specified in the Power of Attorney document.

Who Can Make a Power of Attorney?

A person making a Power of Attorney, or “Principal”, must be able to understand the business they are transacting and the legal effect or consequences of the transaction. Thus, it is essential that at the time that they are making the Power of Attorney, the Principal understands they are granting certain powers to another person that can be exercised on the Principal’s behalf. The Principal must also be able to understand the legal consequences of those powers being exercised without the Principal’s participation.

If a Principal is unable to understand these concepts then they lack “capacity” and should not make a Power of Attorney. If a person makes a Power of Attorney at a time when they lack capacity, the Power of Attorney is voidable.  An Agent who engages in a transaction or makes a decision under a voidable Power of Attorney  could be held personally liable. For example, the purported Agent who sells property under a voidable financial Power of Attorney could be personally sued by third parties if the sales transaction goes awry or if someone complains about their authority to sell the property.

Power of Attorney forms are widely available on the Internet, but if the potential “Principal” is already incapacitated or if their capacity to make a Power of Attorney is questionable, potential Principals and agents should avoid using these forms. Instead, friends or family concerned about how to conduct the business transactions and medical decisionmaking of an incapacitated person, may need to consider a guardianship proceeding.

Avoiding Financial Exploitation Under a Power of Attorney

Because a Power of Attorney is a private document, courts do not oversee the actions of an Agent. Thus, anyone considering whether to make a Power of Attorney should seek legal counsel. Estate Planning Attorneys can advise about who to appoint as an Agent; what kind of powers their Agent should have; and how and when to limit those powers. When powers are not properly limited, Agents can exploit the finances of the Principal and even change their estate plans.

Similarly, appointed Agents under a Power of Attorney should seek their own legal counsel if they are aware that a Power of Attorney was made without the advice or assistance of legal counsel and are concerned about its validity, or their power to act.

Adriane S. Grace is an attorney in Frisco, Texas. If you have questions about Power of Attorney in the Frisco, Prosper, Allen, McKinney, Richardson, Dallas, Carrollton, The Colony, or Denton area, please complete the contact form to request a meeting.

Estate Planning for Co-Parents

Estate Planning for Co-Parents

“Co-parenting”, “platonic parenting”, and “parallel parenting”–social terms to describe the reality of many modern families– is becoming the norm. But what happens when one of the co-parents dies?

When a Co-Parent Dies

As devastating as this is for the child, the hardship to a platonic co-parent is just as profound. Where there were two wage earners and two caregivers, there is now only one. The burden is greatest when a co-parent dies without an estate plan. Not only must the surviving co-parent comfort a mourning child, they must also figure out how to collect, and protect, their child’s inheritance.

However, under Texas inheritance laws, when a co-parent dies without an estate plan, the surviving parent may find themselves either (1) unable to access their child’s inheritance because they cannot afford the legal proceedings, or (2) with strictly limited access to this inheritance.

Why Co-Parents Should Estate Plan

Texas has probate and guardianship laws that address a parent’s failure to estate plan, but these laws are not always helpful. Additionally, the legal proceedings involved are costly. This is especially true in the case of co-parents who are not married to each other.

For starters, under Texas inheritances laws, minor children must share their deceased parent’s estate with that parent’s spouse. This is an uncomfortable situation for the surviving co-parent: to collect an inheritance for their child, they must initiate an adversarial legal proceeding against the deceased parent’s spouse.

Even where there is no spouse involved, the surviving parent will have another dilemma when there is no estate plan: asking a court’s permission to access their child’s inheritance. That’s because Texas default inheritance laws have only one goal–to protect the child’s best interest. The state “protects” this interest by strictly limiting a guardian’s access to the child’s funds. Further, Texas family laws unequivocally state that parents have a duty of support. And this duty is not eliminated or minimized when one of the child’s parents dies. In other words, under these laws, the surviving parent is 100% responsible for their child’s financial needs and the child’s inheritance may only be accessed under the most extraordinary circumstances.

How Co-Parents can Estate Plan, Successfully

Whether you are co-parenting, parallel parenting, or platonic parenting, you need a contingency plan. If you are parallel parenting, you probably have no influence over what your co-parent does. But, you can use these same guidelines to protect what your child inherits from you, while making sure they never lack what they need.

First, consult your financial advisors about life insurance. The best way to replace lost earning potential is through life insurance. And the best time to buy life insurance is when you are young and healthiest and can pass the medical underwriting process. If your employer offers life insurance, consider paying for additional coverage. In sum, life insurance is the cheapest and most effective way to provide for a young family at a time when “lifetime” savings may be minimal.

Second, consult with your estate planner about creating a trust for your child’s benefit. These trusts can be as simple as a testamentary trust; a trust in your Will that is effective only at your death. When you create a trust, you get to choose the trustee who will manage your child’s money. You also determine the age your child will be allowed to manage their own money (whereas, state law presumes everyone is responsible at 18). You can also choose how this money will be distributed. In the case of a spendthrift co-parent, or one who has a spouse you don’t trust, you can choose, instead, to have the trustee make distributions directly to the institutions providing for your child’s needs rather than to the co-parent. In doing so, you can achieve the same goals as state law, but without the financial hardship to your child.

Third, verify that all beneficiary designations on your financial accounts are payable to the trustee of your child’s trust and NOT the child or some other individual (if you have a spouse, there may be other considerations there). A beneficiary designation is a contract and contracts are highly regarded in Texas. Meaning, if you choose someone other than your child, or your child’s trustee, that beneficiary will have an absolute right to those funds and owes no duty to your child. Alternatively, if you name your child as beneficiary, the contract usually requires a caregiver to initiate a guardianship proceeding if they need to access the funds prior to the child turning 18.

Finally, if you are successfully co-parenting, you can talk to your co-parent about your contingency plan. These conversations should emphasize the shared goal of providing for the child’s financial and emotional needs. Stick with goal-oriented, non-judgmental words. If you need assistance with how to approach these conversations, contact your estate planner.

If you would like legal assistance creating a trust for your child, or advice on how to estate plan in a co-parenting situation here in the Dallas, Plano, McKinney, Frisco, Allen, & Prosper area, contact me , an estate planning attorney and probate attorney for a consultation. In addition to in-person consultations, I am also available by teleconference and videoconference.

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Are Handwritten Wills Legal?: A Discussion of Holographic Wills

“Holograph” is a fancy term for a document written entirely in the author’s handwriting. A “Holographic Will”, therefore, is a Will written entirely in the handwriting of the person making the Will. These Wills are also referred to as a “Dying Man’s Will” because they are sometimes written when death is imminent and without the assistance of an attorney.

Are Holographic Wills Legal?

Yes, a Holographic Will is valid in Texas if the document is wholly in the handwriting of the person making the Will and is signed by them. The policy behind requiring the Will to be “wholly” in a person’s handwriting is to safeguard against fraud and forgery. Like formal typed-written Wills, the Holographic Will must have “testamentary intent”. That means the person making the handwritten document intended it to be a Will—a document that disposes of property after death.

Are Witnesses Required for a Holographic Will?

Witnesses are not required to make a handwritten Will valid. Additionally, a person making a handwritten Will can include a self-proving affidavit with the Will. This affidavit can be signed at the time the Will is made, or later, during the person’s lifetime. A self-proving affidavit must be made before an officer authorized to administer oaths, such as a notary or judge. There are several things the person making a handwritten Will must swear to in this affidavit, including that they were of “sound mind” when they made their Will.

Whether a person had the necessary mental capacity to make a Will is one of the top reasons Wills are contested in court. Although witnesses are not required to make a handwritten Will valid, having witnesses who can swear to the person’s state of mind at the time they made their Holographic Will, could prove useful.

Problems with Holographic Wills

Handwritten Wills are admitted to probate in the same way as typed-written, attorney-assisted Wills. However, these Holographic Wills can cause problems for beneficiaries and heirs. The biggest problem heirs and beneficiaries face is how to interpret instructions in a handwritten Will. Frequently missing from these handwritten Wills is the correct terminology needed to appoint an executor or create an independent administration. Additionally, handwritten Wills are typically written in “stream of consciousness” form, creating instructions that are open to more than one interpretation.

Thus, even if a handwritten Will successfully names an Independent Executor, the executor faces a tough job if their instructions are unclear. In these cases, an additional probate proceeding called a “declaratory judgment” may be required to aid the executor in their job. With a declaratory judgment, the executor obtains a court order construing the terms/instructions in the Will. This order allows the executor to carry out the Will’s instructions under court authority, thereby minimizing or eliminating their personal liability. However, such proceedings increase the costs of probate.

Sometimes a handwritten Will is better than no Will. But for individuals who have time to make an estate plan, consideration should be given to hiring an estate planning attorney. Getting formal legal assistance with making a Will is the best way to ensure a person’s wishes are correctly carried out.

If you would like legal assistance with making a Will, or probating a handwritten Will, here in the Dallas, Plano, McKinney, Frisco, Allen, & Prosper area, contact me , an estate planning attorney and probate attorney for a consultation. In addition to in-person consultations, I am also available by teleconference and videoconference.

Preparing College Students for a Medical Emergency

Preparing College Students and Young Adults for a Medical Emergency

When teenagers turn 18, the law presumes they are an adult.  At age 18, they are vested with the freedom to determine their residence, live on their own, vote, marry, and enlist in the military. This age often marks the first “adult” milestone: moving out of the family home and into a campus dorm or new apartment.

But 18 is not a magic number and most young adults continue to need guidance in their decisionmaking. This is especially true in a medical emergency. While planning a big milestone such as independent living, consider also making a plan with your adult child on how to handle a medical emergency.

Why Parents Should Help Young Adults Make a Plan

Medical emergencies come in many forms in a young adult’s life: car accidents, sports injuries, viral illnesses (aggravated by dormitory living), experimentation with alcohol and/or drugs, mental or emotional breakdowns, and relationship violence.

When making a plan to cover such emergencies, parents and young adults should consider a few questions. What local supports and services are immediately available to your adult child in the event of an emergency? Who will handle medical decisionmaking for the adult child during an emergency? How will the young adult’s tuition, books, car, and other monthly expenses be managed in the event of a medical emergency? Who should an adult child designate as their emergency contact?

How to Make a Plan with a Young Adult

Most college campuses have resources to deal with challenges before emergencies arise. The first step to preparing for an emergency is to build resilience and a positive sense of independence. First, help your adult child become familiar with their local, or on-campus, resources for medical care, counseling, and safety. Next, implement a set of documents that give you the legal authority to act on your adult child’s behalf when they are unable. These documents should include, at a minimum, a medical power of attorney, durable power of attorney, and HIPAA Authorization.

With a medical power of attorney, a parent can make healthcare decisions for their adult child in a medical emergency, and talk to their adult child’s treating doctors about treatment options. A HIPAA authorization allows a parent to access and obtain their adult child’s medical records; this medical history could be useful to a treating physician in an emergency. With a durable power of attorney, a parent could access their child’s bank accounts and deal with housing, insurance, tuition, and financial aid issues during a crisis.

However, without any of these legal documents, a parent could find themselves shut out of their adult child’s life during a medical emergency.

Young Adults with Special Needs

Finally, young adults with mental disabilities and other special needs may require continued assistance throughout their adult lives. For some of these individuals, guardianship may be necessary, but for those young adults who retain certain abilities and have a trusting relationship with their supporters,  there is an additional legal document they could benefit  from: a “supported decisionmaking agreement”.

A supported decisionmaking agreement is legally recognized in the state of Texas. This is a special agreement between the supporter and young adult that gives a supporter the legal authority to assist the individual with making decisions as it pertains to, or involves, a third party. It differs from a power of attorney because it allows the supporter to make decisions with the adult child instead of independent of them.

As the saying goes, “An ounce of prevention is worth a pound of cure”.

If you would like to receive legal counsel and advice on helping a young adult make a plan for a medical emergency here in the Dallas, Plano, McKinney, Frisco, Allen, & Prosper area, contact me , an estate planning attorney and guardianship attorney for a consultation. In addition to in-person consultations, I am also available by teleconference and videoconference.

Orphan Annie

How to Choose a Guardian for Your Child

Orphaned children are not just the plot of a fictional book or horror movie, but a fact of real life. When thinking about our children, nobody wants to consider their untimely death. However, choosing a guardian for your child is just as important as your decision for your child’s education, healthcare, and religious or moral training.

Why Parents Should Choose Their Child’s Guardian

When a parent fails to legally designate a guardian for their child, the results can be devastating. Real life examples include (1) relatives fighting in court over who will be the orphan child’s guardian; (2) court-appointed guardians who mismanage the orphan child’s assets; (3) court-appointed guardians who are too old, infirm, or negligent; or (4) informal caregivers who steal the Social Security benefits of the orphan child in their care.

If a parent dies before designating a guardian, a state court must make that decision. And those decisions are dictated by state  guardianship laws. In Texas, our state’s guardianship laws state that the child’s relatives in “the third degree by consanguinity” (pronounced CON-SAN-GWEN-IT-EE) have the right to be appointed guardian. Included in that definition is living great-grandparents, grandparents, and adult aunts and uncles from both the mother’s and father’s side of the family. And it’s the oldest generational relatives who have the highest priority (think: grandparents).

Not only is that a lot of people who could argue, fight, and protest, but some of them may include people who the parent would never trust with their child’s care.

Who Should a Parent Designate as their Child’s Guardian?

A lot of times parents fail to choose a guardian for their child because they struggle to find someone who is both a good caregiver and is financially responsible. Fortunately, in Texas, we allow parents to designate different people for those roles. A parent can choose a guardian of the person of their child, and separately, a guardian of their child’s estate. The guardian of the person has the duty of raising the child and providing for their basic needs. The guardian of the estate is responsible for managing the money or property the child will inherit from their parents and also has the right to file lawsuits on behalf of the child.

Careful consideration should be given to the two guardianship roles and to the people in the child’s life who could fulfill those roles responsibly. Parents should also consider whether a court would agree with their selections for guardian. Does this person have a criminal history? Do they have enough experience or education to raise a child? Do they have any issues with money such as bankruptcies or poor credit?

Finally, if parents are choosing a different person in each guardianship role, consideration should also be given to the relationship of the two people designated. Do they know each other well enough? Will they get along? Will they act in the child’s best interest when it comes to making decisions of financial significance? Or, will they use their respective positions as bargaining chips for withholding access to the child?

How to Legally Designate a Guardian for Your Child

Designating a guardian is more than just telling your friends and family about your wishes. You also need a legally defensible plan. In Texas, a parent must make their advance designation of guardian for their child in writing. The designation can be made in a stand alone document or in a Will. Either way, the designation must be signed by the parent and two witnesses. A parent’s legal designation must be honored by a judge unless the person designated is otherwise disqualified by law.

Because an advance designation is admissible in a later guardianship proceeding, parents should consider hiring an estate planning attorney to assist them with properly documenting their choice(s) for guardian. An estate planning attorney can also assist parents with preparing additional legal documents such as a trust for their child. A trust could avoid the need for a guardian of the child’s estate and gives the parent greater flexibility to appoint a bank or other corporate fiduciary to act as trustee. This can be particular useful if the parent expects to leave their child substantial assets that require more complex financial management skills.

Designating a guardian for your child is essential to preserving your legacy. Don’t delay.

If you have questions about guardianship for your child in the Dallas, Plano, McKinney, Frisco, Allen, & Prosper area, contact me, an Estate Planning and Guardianship Attorney, for a consultation. In addition to in-person consultations, I am available by teleconference and videoconference. I have assisted and advised many parents with designating guardians and trustees for their children. Additionally, I have successfully represented and assisted newly single parents and caregivers in probate and guardianship proceedings involving minor children. 

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7 Ways to Avoid Probate

Can I estate plan to avoid probate? In short, yes, there are some ways to exclude assets from probate.

What is Probate?

Probate refers to the legal process for distributing the assets of a deceased person, and often requires the assistance of an attorney and a court proceeding. Not only does probate come with a cost, court proceedings are a matter of public record. Privacy is also a driving factor in avoiding probate. Some of the below methods provide for the the transfer of assets without any public disclosures.

Here are a few estate planning methods for probate avoidance in Texas:

  1. Living Trust—In Texas, a fully funded Living Trust could potentially avoid the probate process. Any assets transferred to the trust can be administered and distributed according to the terms of the trust, even after the creator of the trust dies, and without the need for a court proceeding.
  2. Lifetime Gifting—Why wait until you die? You can transfer your assets during lifetime as a gift, and once that transfer is completed, the assets are not subject to probate. Gifting is also a great way to plan around potential estate taxes because certain lifetime gifts are excluded from the federal estate gift tax.
  3. Payable on Death accounts—Many financial institutions offer checking, savings, and brokerage accounts with a payable on death option. This is a contract between you and the financial institution that tells them who to pay the account balance to upon your death. The person you designate as the beneficiary of the account has no right to access account funds during lifetime. However, caution should be exercised here. Financial institutions often include terms in their depository agreements that give them the option to apply account balances at death to unpaid fees or even loan balances before distributing any funds to your designated beneficiary. Additionally, these account funds could be subject to garnishment for the payment of funeral expenses.
  4. Beneficiary Designation(s)—This method allows you to designate a beneficiary of the proceeds of a life insurance policy, or funds saved in a retirement account, upon your death.
  5. Transfer on Death Deed (TODD)—this is a Deed that providers for the transfer of real estate upon the death of the owner. If the deed is properly drafted, executed, and recorded in the deed records prior to death, the real estate will transfer to the beneficiary designated on the deed without the need for probate.
  6. “Ladybird” Deed—This is a Deed similar to a Transfer on Death Deed, because the effect of this deed is to transfer real estate to a person named on the deed without the need for probate. Users of this method should also proceed with caution and consult an estate planning attorney because this method has no statutory basis.
  7. Affidavit of Heirship—This method is used after a person dies, usually by the heirs of the deceased person’s estate during a real estate sales transaction in which all parties are agreed. An Affidavit of Heirship simply documents facts concerning the identity of the deceased person and his or her heirs and is filed in the deed records.

Plan for Avoiding Probate

As the saying goes, “the best laid plans of mice and men often go awry”, and engaging in self-help to avoid probate is no exception. Consult an estate planning attorney or probate attorney if you have any concerns about the probate process. Most of the time, probate cannot be avoided. Too often people leave behind assets that they neglect to plan for and most of the above-listed methods require careful, advance planning. Additionally, financial institutions prefer to act under court documents that appoint someone to act on behalf of the estate.

However, probate complications can be mitigated with careful estate planning. Moreover, probate can be a great tool for dealing with the debts a person leaves behind and should be carefully considered anytime someone dies with substantial debt.

If you have questions about estate planning to avoid probate here in the Dallas, Plano, McKinney, Frisco, Allen, & Prosper area, contact me to discuss further. In addition to in-person consultations, I am also available by teleconference and videoconference. 

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Estate Planning During Uncertain Times

Is there a Right Time to Estate Plan?

Absolutely. When it comes to estate planning, there is no time like the present. Illness, death, and taxes are some of the few certainties about life and are also good reasons to think about estate planning. The problem is that there is usually no known timeline for these events. Thus, if you intend on planning for these events, it’s best not to wait.

Nobody sees an untimely death coming, but we are now living during unusual circumstances. COVID-19, a novel illness, with no vaccine and no known cure, is forcing all of us to face our mortality. Although the disease, like many other flu-like illnesses, is most lethal in our elderly and immune-compromised populations, it is also inexplicably striking down young, and seemingly, healthy individuals.

How to Make Life Planning Decisions

With the knowledge of an indiscriminate virus on the loose, why wouldn’t you choose to estate plan? To make important life decisions? Yet, what I am hearing repeatedly from colleagues, friends, news, and Internet chatter is that people are struggling with making good life decisions. I call it “analysis paralysis” or “reactive” living, and it’s an unstable state of being.

If you are having difficulty making life decisions, the best way to start is to seek out good counsel. This can be friends and family, but when dealing with any financial or legal decision, it’s best to consult the professionals. As an estate planning attorney and legal counselor, I am called upon regularly to assist with making important life decisions. Not only do estate planning attorneys have knowledge about probate and estate administration laws, but many of them, like myself, have knowledge of the negative consequences of inaction. This information can be very instructive in decision-making and life planning.

As for when to make important life decisions, the time is now. And not just because a novel coronavirus is threatening our way of life, but because planning and making well-counseled decisions leads to a more positive life experience. When we are proactive in life, we can generally handle a financial or emotional setback.

So, go, make that important life decision–whether it’s getting back to something you enjoyed about life (albeit in a socially responsible manner), or to start creating a stable future.

If you would like to receive counsel and advice on life planning and estate planning during COVID-19 here in the Dallas, Plano, McKinney, Frisco, Allen, & Prosper area, contact me to discuss further. In addition to in-person consultations, I am also available by teleconference and videoconference. 


COVID 19 Design

What is a Living Will?

And what you need to know about a Living Will during the COVID-19 pandemic.

When you are admitted to the hospital for treatment, you will be asked if you have any estate planning documents like a “Living Will”. In Texas, we call this document a “Directive to Physicians and Family or Surrogates” (or “Advance Medical Directive”, for short). But what is this estate planning document really about for our clients based in the Dallas, Plano, McKinney, Frisco, Allen, & Prosper area?

A “Living Will”, or Advance Medical Directive, is your legal way of telling your family and doctors whether you want “life-sustaining treatment” if you become gravely ill. A “life-sustaining treatment” is exactly how it sounds–a medical treatment that keeps you alive no matter your underlying diagnosis. In Texas, a “life-sustaining treatment” could include food and water administered through a tube in your vein, or through your gastrointestinal tract. It could also include “mechanical breathing machines”, or “ventilator”, as the term is more frequently used in the news lately.

Living Will, Ventilators, and COVID-19.

The American Thoracic Society has explained that “[a ventilator] helps support a person until other treatments become effective, or the person gets better on their own.” However, in the case of COVID-19, there is currently no known cure or vaccine. There is also a lot of speculation about how this novel illness should be treated. Yet, there is ongoing public and private planning surrounding ventilator use and the availability of ventilators during the COVID-19 pandemic. Therefore, not only should you be discussing the risks and benefits of ventilator use with your medical providers, you should also communicate with your loved ones about your wishes for end-of-life-care and estate plan.

With so much unknown about COVID-19 right now, having these discussions is at least one way to provide some certainty during life.  A Living Will allows you to state in advance, not only whether you approve the use of a ventilator when your life is threatened by COVID-19, but also place conditions on its use.

If you have further questions about a Living Will or Advance Medical Directive here in the Dallas, Plano, McKinney, Frisco, Allen, & Prosper area, contact me, a local estate planning attorney, to discuss further.

For questions about the risks and benefits of utilizing life-sustaining treatments such as a ventilator, please speak with your treating medical provider.