Estate Planning

By Julia Dean, J.D.

Does your estate plan need to be refreshed? Just as you may be doing some spring cleaning of your physical home, think about “spring cleaning” your estate plan too. Perhaps you have an old Will that doesn’t work as well for your family now that time has passed. Perhaps the people you have named to take care of your children or to make your financial and medical decisions are no longer the best people to handle this anymore.

By Julia Dean, J.D.

My daughter loved yellow rubber ducks as a child. It was her favorite bath time toy. Her fascination over these yellow rubber ducks continued all her life.
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I love picking out greeting cards to celebrate special milestones for the special people in my life. I love standing in the greeting card aisle and finding a card that makes me smile, tear up a little, or laugh out loud. Lately, I have noticed that many cards for milestones such as a graduation or 21st birthday use the term “adulting” as either a noun or a verb. A cute card I read for graduation started: “And so the adulting begins.” I recall the first time I heard the term used was from the backseat of my car when shuttling my two sons and their friend to a sports practice.

My clients often ask about using a “Lady Bird Deed” or “Transfer on Death Deed” and are surprised to find out that these are two separate deeds. While the deeds may seem similar, there are several distinctions that should be considered before you sign one.

Enhanced Life Estate Deed, a/k/a Lady Bird Deed. An Enhanced Life Estate Deed allows you to keep a life estate (the right to live in your residence for the rest of your life or until you leave) in your residence, and immediately gift the remainder (interest in your residence after you die) to your beneficiary.

Pros: This deed avoids probate on your residence, it’s revocable, your beneficiary receives a step-up in cost basis, the deed can be recorded after your death, the deed can be signed by an Agent under Durable Power of Attorney, and you retain your right to receive government benefits, such as Medicaid.

Texas is one of nine community property states in the United States. Texas’s community property system stems from the 1845 Texas Constitutional Convention, where a delegate declared that the community property system would prevent a wife from being “forced to ‘sit weeping by, and see the whole of her property wasted in the midnight frolics by a drunken or gambling husband”.(1) Another delegate stated that without the community property principle of separate property, the vices of the husband might reduce the wife or the daughter to the “drudgery of the wash tub”.(2)

The protection of women’s property was common in the western states, serving as inducement for wives to follow their husbands to the frontier. This also allowed for women to benefit from the increased value of property during the marriage, even if they entered the marriage with no property of their own, and recognized their contribution as a stay-at-home wife to provide equal sharing of total earnings of both spouses.

If you’re pondering resolutions to choose for 2023, consider resolving to establish your estate planning documents, such as a Will or Living Trust. A 2022 survey by Caring.com revealed that only 1 in 3 Americans had estate planning documents, such as a Will or Living Trust. Below are the top four excuses that Americans give for not creating an estate plan.

• I haven’t gotten around to it.

It’s a common plot line in soap operas and movies – the main character receives a phone call letter from an attorney’s office saying that they’ve inherited a fortune from some distant relative. While seemingly improbable in real life, this situation occurs more often than you think. If you don’t have a contingency plan in your estate, or if you do not have a Will, then your estate could be distributed to distant relatives.

This person who inherits the fortune is called a laughing heir. A “laughing heir” is an heir of the estate whose relation is so remote to the decedent that they feel no grief over the death, and “laugh all the way to the bank” to collect their inheritance.

When I assist my clients with their estate plan or a probate, I am often asked what a word means in “plain English”. Reading your Will shouldn’t require you to have a legal education, so below I’ve defined common legal terms used in Wills or probate in “plain English”.

• Per Stirpes – a Latin phrase referring to the distribution of your estate if one of your beneficiaries, such as a child, predeceases you.

The death of a family member, a secret will, a disinherited beneficiary, unknown lovers or children, and courtroom contests are often used as plot devices for movies and soap operas. While scandalous Wills and dramatic probates are fun to watch, certain Will myths tend to be recycled by Hollywood, leaving people confused about what actually happens when a Will is probated. Many clients have asked me if certain Hollywood tropes about Wills and probate apply to their own case. I’d like to separate fiction and reality once and for all for these myths.

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Hollywood has produced compelling movies surrounding estate plans, many of which include lessons for your own estate plan. Some notable examples include:

A Series of Unfortunate Events (2017, PG), which follows the Baudelaire orphans after their parents die in a fire. Their parent’s fortune is inaccessible until the oldest child, Violet, turns eighteen, so the Baudelaire orphans must dodge the nefarious plots of fortune-stealing Count Olaf and solve the mystery of the VFD. Lesson: If you have minor children, appoint a guardian for your children and leave your children’s inheritance in a trust to ensure their comfort and security.

In The Ultimate Gift (2006, PG), Jason receives an unexpected windfall after his grandfather’s death.

If you or someone you know has experienced the Texas probate process after a loved one’s death, then you know that probate involves hiring an attorney, appearing before a judge, and several months of administration. Probate may even last several years because of a beneficiary or creditor contest, resulting in your inheritance being spent down by attorney’s fees.

Even if you have a Will, your assets will not automatically transfer to the beneficiary upon your death. Instead, the Will must be approved by a judge and go through probate administration in order to transfer title to your assets to your beneficiaries. In addition, the Will is considered public record, so anyone with internet access could view your probated Will online or request a copy from the county clerk.