FAQs about Texas Wills and Estate Planning

Estate planning enables you to make vital personal decisions about the management and distribution of your assets, as well as your health and personal care if you become unable to do so yourself. An effective estate plan allows you to accomplish your personal and family goals for distribution of your assets and personal care, while providing peace of mind regarding management of your financial and legal affairs. Depending on the value of your estate, some estate plans also include measures to reduce taxes and other expenses. Having a proper estate plan in place is extremely important. Unless you make your wishes known, the state of Texas has laws in place that will make the decisions on your behalf.

A basic estate plan should include the following documents. These documents allow you to distribute your property to individuals of your choosing upon your death and plan for your incapacity. The documents below do not provide for tax planning, such as estate tax, gift tax, or the generation skipping tax.

 *A Will enables you to distribute your assets to named individuals upon your death. Without a will, your assets will be distributed according to Texas law rather than to the beneficiaries of your choice.
*An advanced health care directive, also known as a living will, is a legal document that allows you to state in advance the end-of-life decisions you would want made on your behalf should you ever become unable to make these decisions yourself. The advanced health care directive allows you to appoint someone of your choosing, an agent, to make health care decisions for you when you can no longer make them for yourself. The authorized agent is allowed to access your medical information.
*A durable power of attorney allows you to name an agent who is authorized to act on your behalf with respect to financial decisions in the event you become incapacitated. The person would have authority to deal with third parties, such as banks, on your behalf.
*A medical power of attorney allows you to designate one or more persons to make medical decisions on your behalf in case of your incapacity.
 *Designation of guardian in advance of need. See below for more information about this document.

Depending on the circumstances and the needs of the individual, there may be various options available, including the appointment of a legal guardian. In the event that an individual becomes incapacitated and can longer care for herself or manage her financial affairs, a court may appoint a legal guardian to do so on behalf of the incapacitated person (also known as the “ward”). A guardian of the estate is responsible for managing the property and financial affairs of the ward. A guardian of the person is generally responsible for providing care, supervision, food, clothing, and shelter for the incapacitated person, and may also consent to medical treatment on her behalf. An individual may be appointed either guardian of the person or guardian of the estate, or both, depending on the needs of the incapacitated person.

An individual may pre-designate a guardian of the estate and a guardian of the person in the event of incapacity by completing a Designation of Guardian in Advance of Need. If a designation is not made in advance, the individual’s spouse and, then, next of kin have priority for appointment as guardian.

Your executor is responsible for carrying out your wishes as specified in your Will. An executor’s responsibilities include collecting and protecting the assets in your estate, paying off debts and taxes owed by your estate, and then distributing the assets in accordance with your Will. Under Texas law, an executor has the responsibility to manage and care for the estate property as a prudent person would care for his own property.

Unlike most other states, Texas allows you to designate your executor to serve as an “independent executor,” meaning with minimal court supervision. Having an independent executor can save your estate a significant amount of money and expedite the probate process.

You should appoint a person you trust and who is willing and capable to serve. Remember, if you appoint a spouse, family member, or friend, he or she will also be grieving. You should only appoint someone who you trust to handle your assets and the responsibility of administering your estate during what will be a difficult time. It is also important to name at least one alternate executor in case your executor is unwilling or unable to serve.

The estate tax is a tax on the transfer of wealth following death. Generally, the estate tax affects only individuals with a large estate. For example, in 2013, any transfer of assets of less than $5.25 million transfer estate tax-free. Estates worth more than $5.25 million will be subject to a 40% tax. If you are married, the estate tax exclusion doubles for transfers of wealth from both you and your spouse. Thus, a widow or widower may transfer up to $10.5 million without incurring estate tax. While there are estate planning strategies that reduce the impact of the estate tax, (and other taxes such as gift tax and generation-skipping tax) such planning is beyond the scope of this guide.

A trust is an entity in which an individual, the trustee, holds legal title to property for the benefit and use of another, the beneficiary. The trustee and the beneficiary essentially each share a portion of title to the property in the trust; the trustee holds legal title and the beneficiary holds equitable title. The person who makes the trust appoints the trustee in the document creating the trust. The trustee has certain duties to the beneficiary (or beneficiaries) to manage the property in the trust in accordance with the provisions of the trust and Texas law.

A trust can be set up to be revocable—that is, the person who makes the trust can change it or revoke it during her lifetime—or irrevocable, meaning it can longer be revoked once the trust is finalized. Whether the trust should be revocable or irrevocable depends on the purpose of the trust. Certain irrevocable trusts are used for tax planning.

A living trust is a revocable trust. Many people believe they need a living trust in order to avoid probate. While a living trust can be used to avoid probate, because the probate process can be relatively straightforward in Texas if a Will is properly drafted, there is usually no need to avoid probate unless you expect someone to contest your Will. Other reasons to set up a living trust include if you own property in another state or if you wish someone else to manage your assets (in case of incapacity, for instance). Revocable trusts also enable you to more tightly control distribution of your assets following your death. Property in a living trust does not avoid estate taxes.

A living will, also known as a directive to physician, allows you to designate in advance medical treatment for end of life care, specifically regarding the use of life-sustaining treatment in the event of an irreversible or terminal condition. However, a Will is a document used to specify how you would like your assets distributed upon your death.

While the required formalities for drafting a Will are governed by state law and therefore vary from state to state, there is often overlap in the formal requirements for a Will. Therefore, it is very possible that a Will drafted in another state is also valid in Texas. If your Will was drafted in another state and you are concerned about its validity, consult with an estate planning attorney who is licensed to practice in Texas.

Major life changes such as death of a family member, divorce, birth of a child, or changes in assets often necessitate drafting a new Will, or a codicil (amendment) to your current Will. If you’ve experienced these or other major life changes since drafting your Will and have questions about whether you need to update your Will, consult with an estate planning attorney.