Special Estate Planning Concerns for Second Marriages

If you’ve recently married for a second time or are planning to do so, it’s important to meet with your attorney to be sure all your assets will still be properly distributed in the future. Even if you think your new spouse is very trustworthy, you must understand how Texas community property laws may affect all preferred beneficiaries when you pass away one day.

In order to minimize future misunderstandings, many spouses in second marriages enter into property agreements that help balance out the interests of all children from prior marriages – as well as those who might be born into your new one.

Before reviewing some of the basic legal documents your lawyer may need to redraft on your behalf now that you’ve remarried, it will be helpful to note some of the complications that can develop when newlyweds simply assume their current estate plans don’t need to be updated.

Careful planning can help you minimize problems with the future disposition of your estate

  • Suppose you’ve married a much younger new spouse and you have children from your first marriage. What will likely happen to your home and all other possessions upon your death? Sometimes, newlyweds just assume that all will go well once the older spouse dies first – and that older children of the deceased spouse will just wait many years until the new spouse passes dies to inherit the family home and other wealth.

Unfortunately, bitter legal fights can erupt between your adult children and your surviving spouse under this type of scenario. What’s often best is to leave an insurance policy (and possibly other funds) in a trust, so that your children can receive specific amounts of money upon your death – and then other property or wealth years later when your surviving spouse finally passes away;

  • What if your new spouse keeps insisting that if you pass away first, he’ll make sure your kids from an earlier marriage will inherit all that you wish, without stating this in newly executed documents? Can this type of arrangement ever be risky? Yes, it can. It’s always possible that you and your new spouse will experience hard times financially at some point in the future. If that happens, keeping sincere early promises may no longer seem reasonable to a surviving spouse left with only a modest amount of money.

Always update your estate plan when you remarry. And if you and your new spouse hold very different attitudes toward certain financial bequests, go ahead and meet with different attorneys to update your estate plans separately. However, make sure you both understand your responsibilities to your new spouses under the new estate plans (and ask your lawyers to review both plans to be sure they won’t precipitate any crises);

  • Will it cause unnecessary confusion for spouses in a second marriage to hold joint bank accounts in the future to pay certain mutual expenses – without jeopardizing the later disposition of assets when one spouse dies? That arrangement should work out fine, although you should both consider also maintaining separate bank accounts to help you pay expenses tied to all separate properties you brought into the marriage.

Should new spouses carefully revise named beneficiaries in POD and retirement accounts?

The answer to that question is almost always, “Yes.” Be sure to bring information about all accounts you have when meeting with your Houston estate planning attorney. You should also bring copies of any property deeds in which you’re named — and information about any trust accounts you currently have (or may desire). Your attorney will also need to see copies of your current Last Will and Testament, 401k and POD accounts, all retirement accounts and all insurance policies.

If you need any advice about your current estate plan due to an upcoming marriage – or divorce, please contact one of our Murray Lobb attorneys at your convenience. We will look forward to providing you with the documents you’ll need to feel confident and secure about your entire family’s financial future.

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Why Most Adults Under Age 35 Needs an Estate Plan

Many young adults assume they won’t need a simple or comprehensive estate plan until they’ve created or inherited a sizeable amount of wealth. However, all adults, especially those who are married or have children, need estate plans to protect their legal interests.

After all, none of us know when we may suddenly become the victim of a severe pedestrian or auto accident – or receive a devastating medical diagnosis. When you have a basic Will, it can greatly simplify matters for your loved ones if you become too incapacitated to manage your own finances or even pass away.

The following information helps explain why no one should want to continue being one of the approximately 60% of American adults who are without a Will or estate plan.

While it may be a bit uncomfortable requesting documents that directly address your own possible incapacitation or death – the peace of mind you and your loved ones will gain always makes the effort worth it.

Key reasons why all younger adults can benefit from a Will or comprehensive estate plan

  • They each allow you to specifically name the beneficiaries you want to receive your real property and investment accounts. When you fail to create a Will, the state of Texas will apply its laws of intestacy to decide who will inherit everything you own. Even if you’ve only had time to pay into a 401k or other investment account for a few years, chances are you also own a car and a few other valuable possessions. Creating an estate plan lets you decide who will receive your assets – although community property and other laws will also come into play if you’re married;
  • You can designate a guardian for any minor children. There may be good reasons why your child shouldn’t go live with certain relatives if you become critically ill (or too disabled) to care for the child. A Will lets you designate one or more people to shoulder this responsibility, along with one or two back-up guardians.
  • You can designate someone else to speak for you in a medical Advanced Directive. This type of estate planning document lets a person you trust choose the specific medical care you wish to receive if you become seriously ill and can’t make decisions for yourself;
  • Your Houston estate planning attorney can provide you with valuable legal advice on how to protect your wealth against excessive taxes as your estate begins to grow. Even if you hold a degree in asset or wealth management, you’ll always need to make sure you’re using tax-efficient wealth transfers to others that fully comply with all recent changes in IRS laws and regulations. You may also want to have a trust account created to help you annually transfer wealth to specific individuals or charitable organizations;
  • Creating an estate plan helps you develop meaningful savings goals as you begin to plan for your eventual retirement. If you begin funding your retirement in your early 20s and 30s, you’ll increase the chances of being able to choose the date when you’ll retire or reduce your workload. Should you marry, having an estate plan can help you and your spouse make more informed choices about assuming a new mortgage, having children, setting aside funds to help pay for your children’s education — and possibly even one day funding a charitable trust or family foundation.

Perhaps the best part of creating an estate plan when you’re very young is that you’ll be able to reflect on how your legal documents are helping you “grow your income.” And you’ll always be able to change and update your financial goals when new life circumstances develop.

While many younger people request an entire set of estate planning documents, others are more comfortable just requesting a Will that will cover all their current, limited possessions.

Please feel free to contact one of our Murray Lobb attorneys so we can provide you with the estate planning advice you currently need. We’ll always be available to answer any questions you have and update your legal paperwork as your life changes and moves forward.

Creative Planning for Your Senior Years Should Begin Now

Creative Planning for Your Senior Years Should Begin Now

Just as most younger people make detailed plans before entering college or starting their careers, older Americans must also carefully plan how they want to live out the last decades of their lives. If you’ll start this process early, you’re much more likely to have many positive options and choices available.

Yet before older Americans or “seniors” start thinking about vacations and other pleasure pursuits – it’s crucial to first address such basic needs as finances, housing and medical care. A good way to start this process is by asking yourself each of the following questions.

  • What family, financial and legal resources do I currently have?
  • When – and in what order — should I begin drawing upon those resources in the most efficient manner?
  • If I’m short on all or most resources – how can I immediately begin creating a supportive community of friends, relatives and others to help me?

Your financial and legal resources require immediate planning and regular oversight

You’ll always need to know more than just how much money you have and how quickly you can liquidate it in case of an emergency. Although it’s important to be able to access large amounts of money should you or your spouse require immediate medical care that isn’t readily covered by insurance, there are other more critical issues you should address first.

Stated simply, everyone needs to secure Medical Power of Attorney documents, a Will and other supporting documents. You can easily acquire this paperwork by meeting with your Houston estate planning lawyer long before you reach your senior years. This will help you obtain the best medical care available – in keeping with your preferences.  You can also inquire about other documents that can grant trusted individuals the right to handle your finances (especially if you’re single without adult children) if you become temporarily incapacitated.

Given how many older Americans now live alone, these matters should never be postponed. As of 2010, about 12% of women between the ages of 80 and 84 were unmarried and childless. By 2018, some experts predict that about 16% of women in that age group will fit that description.

Of course, many men may also have similar needs since the average woman only outlives the average male by a few years.

Once you and your attorney have created all this legal paperwork, be sure to give copies to trusted relatives or friends so that they can make sure you obtain the care you need right when you need it the most.

If you’re age sixty and single (or even if married) – start proactively deciding where you’ll live Afraid to face the reality of eventual death, too many people refuse to move into proper housing before their health seriously deteriorates. When this happens, helpful family members or friends are often greatly inconvenienced by your avoidable tardiness.

Give serious thought to moving into a place now that offers different levels of care. Otherwise, if a sudden emergency develops, you might not wind up where you want to be. Try looking for unique living arrangements where seniors can blend in with others of all ages. Places like Hope Meadows are often a blessing to many.

Think positive if you have little money – consider part-time work – and keep socializing

Stay active pursuing activities that are meaningful, useful and fun. As you get to know others better, you may want to suggest becoming part of each other’s support network. Friendships with others of all ages can prove very beneficial to everyone involved.

If you currently have a tech-savvy friend or family member — and want to live at home as long as possible — be sure to check out the newest “apps” that can help keep you and your financial world safe.

Always be kind to yourself. If current media articles make you feel that you made poor choices in the past regarding marriage and children, keep in mind that married couples (and older singles) with children don’t always “have it made” regarding help while growing older. Many of these people have adult children who: (1) live far away, (2) are estranged from them, (3) are coping with serious addictions – or are (4) barely staying afloat in their own busy family and work lives.

Finally, since so many entrepreneurs are now rushing into the “longevity market,” you must make sure you’re interacting with reputable people and not scam artists. Just because someone is financially “bonded” to do their work, doesn’t mean they’ll do what’s best for you. Stay in touch with your lawyer and always have at least one trusted friend help you make critical decisions.

Please feel free to schedule an appointment with one of our Murray Lobb attorneys so we can help you prepare all the estate planning legal paperwork that you need. We can also review any contracts you’re being asked to sign regarding a continuing care retirement community (CCRC). We look forward to being of service to you.

Choosing Reputable Charities for Your Texas Estate Plan

Many Americans now name one or more charities in their Wills or other estate planning documents to help these important cultural and humanitarian groups maintain adequate funding. However, others less familiar with charitable giving need to understand that, before arranging these types of gifts, they must carefully evaluate each charity or non-profit group to be sure their funds will be shared properly. 

Fortunately, there are several reputable organizations that will readily help consumers decide which charitable or non-profit groups are properly using all their donations while minimizing administrative costs. These same “watchdog” groups often urge all charitable groups to maintain open donation and expenditure records. In addition, our Texas Attorney General’s Office has put together some useful tips that can help all of us do a better job of deciding which charities will be the most responsible recipients of our testamentary gifts.

Here’s a list of basic tips that can help all of us better evaluate all non-profits and charities. That information is followed by a list of different websites and groups dedicated to providing consumers with current news about charitable activities. Of course, it’s always best to start your search by first visiting with your Houston estate planning attorney who may already know about the reputations of many charitable organizations.

Important Information to Obtain While Choosing Charities to Include in Your Estate Plan

  • First, be sure to obtain the full legal name of each group, its address and telephone number. Next, ask if the IRS has formally recognized it as a public charity that’s tax exempt. Then, ask if your donations will all be fully tax deductible.
  • Find out how long the non-profit or charity (hereinafter just referenced as ‘charity’) has been in existence.  While longevity doesn’t always ensure completely honest and frugal management of funds, it does mean that it should be easier to research the group’s reputation by visiting several of the online sources named below.
  • Request a recent annual report that clearly indicates how much money the group spends on administrative costs and how much of every donated dollar will directly benefit those the charity is seeking to help.
  • Find out if the charity’s main goals are related to education, medical services, scientific and medical research – or perhaps providing scholarships to those pursuing careers in specific vocational fields.
  • Do not give the group any of your private bank account or credit card information during your investigative calls – although it’s best to be honest about your intentions. Also, if you’re not ready to receive numerous emails or letters to your home address, avoid giving that type of information out right now.

Be sure to ask members of your professional or business circles if any of them have had positive experiences with the charities that interest you the most. When any charity has a publicly named board of directors, consider contacting those individuals directly by phone to ask them about their experiences with handling tasks on behalf of the charity.

When you’re ready, start visiting some of the websites set forth below to see what you can find out about each of the charities that seem to be highly reputable.

Online Websites Offering Detailed Information About Various Charities

  • Give.org. This website includes the sub-title, “BBB Wise Giving Alliance.” On its page dedicated to donors, it states that you can look up information about each charity’s effectiveness, governance, finances – and current brochures or other materials available to the public.
  • The American Institute of Philanthropy (Charity Watch). Among its various offerings, this website offers a list of charitable groups involved with some highly specific causes and issues.
  • Guidestar. This online resource offers a wide array of information about many reputable non-profit groups.
  • Charity Navigator. Like the other websites already named above, this one offers timely information about many charities. It also provides a “hot topics” link that will tell you more about charities currently in the news for one reason or another.

All four of the oversight groups listed above are noted on the Texas Attorney General website. You can also find out additional information about specific charities by visiting this Consumer Reports page.

If you haven’t already thought about giving to a charity or non-profit when you pass away, please consider doing so now.  All Texans need to do a bit more to help others so our state can become more compassionate — and improve our current ranking for charitable giving.

Please feel free to contact our firm so we can explain some of the best ways to include charities as beneficiaries in your estate plan. There are specific legal ways of handling this task so that your estate will reap the best tax advantages available.

Common Reasons for Creating a Spendthrift Trust

Nearly all of us have relatives who need extra help managing their income and assets. When we can, we try to find ways to help them. In some instances, you might have a grandson or granddaughter who’s having trouble holding down a steady part-time job during college – or trying to make ends meet after battling a lengthy addiction. Your troubled relative might also be older and starting to struggle with handling all his monthly financial affairs.

Whatever the individual’s special needs may be, you can often help by making the person a beneficiary of a spendthrift trust.

How Should You Define This Type of Trust to the Beneficiary?

You may first want to simply say that, because you greatly care for this individual, you want to remove all or most of her current money management problems from her life. You can then say that you’ve named the person as a beneficiary of a special trust account that will be managed by a trustee. You should then quickly point out that you’ll be personally choosing the exact terms governing the trust so the trustee can properly meet specific needs of the beneficiary.

Should the beneficiary ask if she can personally manage the money, you must be ready to say that you have considered that alternative and prefer to disburse the funds over time. You might also note your desire to prevent the funds from being taken by untrustworthy creditors. (Of course, there are legal exceptions that do allow some creditors to reach these funds, and they’ll be briefly addressed below).

It’s also useful to tell the beneficiary that the funds or property that you’ll be placing in the trust as its creator (grantor) are generally referred to as the trust principal.

What Basic Terms and Provisions Are Normally Included in a Spendthrift Trust?

As your Houston estate planning lawyer will tell you, specific language must be included in the trust document, making it clear that you’re creating a spendthrift trust, in keeping with Texas law. This enabling language is designed to fully protect all the property and funds that you’re placing in the trust from others who might try to illegally reach them. All of this is clearly explained in the Texas Property Code, Title 9, entitled “Trusts.”

Your spendthrift trust language will clearly state that since the beneficiary has no right to directly reach and control the funds – neither can most creditors. Most grantors also include some specific language indicating that they are trying to provide for the beneficiary’s general needs.

As the grantor/settlor you must also clearly state all the trustee’s rights, duties and obligations while administering the trust. The trustee’s job can be a very difficult one, especially if the beneficiary decides to legally challenge the trustee by demanding large sums of money for serious medical, educational or basic living expenses not expressly referenced in the trust.

When Can Creditors & Other Parties Successfully Obtain Funds from a Spendthrift Trust?

The laws in most states allow creditors that can prove that a beneficiary owes them money for basic “necessities” (like shelter or food) to win judgments and collect funds from these types of trusts. Other legal obligations that can be paid out of spendthrift trust funds (once legal action has been taken) include child support, alimony or support of a past (or current) spouse and certain government claims.

When funds are periodically released to a beneficiary, creditors can also try to obtain them based on judgments they’ve obtained. 

Please feel free to contact one of our Murray Lobb attorneys to learn more about the various types of trusts and other estate planning tools that we can draft to meet all your needs, including a spendthrift trust.