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3 Differences Between a Will and a Transfer-On-Death Deed in Texas
When someone starts thinking about what they will leave behind when they pass away, it can be difficult for two reasons. First, it is emotionally challenging to plan for our own death, something most of us would prefer not to focus on. Second, there are so many options available that it can be confusing to sort through it all. This article will compare two estate planning options - wills and transfer-on-death deeds. Both are official ways to leave things behind for loved ones after your death, but they have different characteristics that make them preferable for different circumstances. Contact a knowledgeable Flower Mound, TX estate planning attorney to discuss which option makes the most sense for you.
How to Decide Between a Will and a Transfer-On-Death Deed
Transfer-on-death (TOD) deeds and wills are two options commonly used for bequeathing your assets to people you leave behind when you die. While they accomplish similar goals, there are some important differences that might make one method better suited to your needs:
Planning Your Own Funeral in Texas
People tend to care a lot about how big events in their lives are marked. Why should a funeral be any different? Since your funeral will leave a lasting impression of your life on all who attend, it is not unreasonable for you to have certain ideas about how it should be. To that end, it is common for people to include their funeral plans in their estate planning arrangements. If this seems relevant to you, speak with a skilled Flower Mound, TX estate planning lawyer to learn more about how you can plan your own funeral.
Why Would You Plan Your Own Funeral?
Most people do not relish the idea of making plans for when they die, but as Benjamin Franklin famously said, nothing is certain but death and taxes. With death being a certainty rather than a possibility, it can be sensible to try to plan for when it happens.
There are two main reasons why you might want to plan your own funeral:
Establishing a Texas Special Needs Trust
Parents of children with special needs typically want to do everything they can to get them every resource to help them live a great life. That also includes setting up ways to ensure that they will keep getting the care they need after their parents are no longer around. Often in situations like this, a family might decide to establish a special needs trust, which can leave someone with financial resources but maintain their eligibility for programs that offer care and basic needs. If you are interested in taking steps to protect your child’s financial future, speak with a skilled Flower Mound, TX estate planning lawyer to learn more.
Government Programs for People with Special Needs
The government has programs like Supplemental Security Income (SSI) and Medicaid that offer financial support to people with special needs. However, if someone has a certain amount of resources, they can be disqualified as a Medicaid beneficiary. A special needs trust is a way to hold assets that can be used for someone receiving Medicaid benefits to pay for a nursing home or other type of long-term care.
Tax Considerations to Keep in Mind for Your Texas Estate Plan
When you live in Texas and are granted an inheritance, you benefit from the fact that the state does not have an inheritance tax. There are also some federal estate tax exemptions you might be entitled to. All that can make you think you have nothing to worry about when you inherit something. However, Texas residents might still need to pay federal estate taxes depending on the circumstances of the inheritance. If you are trying to plan for your financial future, speak with a skilled Denton County, TX estate planning lawyer who can explain your options for protecting assets.
How do Estate Taxes Work in Texas?
There is currently no state-imposed inheritance tax in Texas. As for federal taxes, if an individual inherits up to $13.61 million or a couple inherits up to $27.22 million, they are exempt from taxes. Since these amounts are so high, many people will not be liable to pay taxes, but it is best to be aware that laws can change.
Understanding the Lookback Period for Medicaid Trusts
One important but less discussed aspect of estate planning is something called a "lookback period," which is the time when financial transactions - particularly involving trusts - are scrutinized. This is done to determine Medicaid eligibility. If you are considering Medicaid planning, speak with a knowledgeable Flower Mound, TX estate planning lawyer to understand the implications of this lookback period.
How Do Medicaid Trusts Work?
Medicaid is a federal and state-funded program that provides healthcare benefits to eligible individuals with limited financial resources. To qualify for Medicaid’s long-term care benefits, applicants must prove that their financial situation necessitates them. They need to meet strict conditions, with any assets they own not exceeding a certain limitation.
Texas Closes the Loophole Used to Defraud Seniors and Others
S.B. 576 went into effect almost a year ago to restrict the exploitation of senior citizens and mentally disabled people. While scams and scammers change from week to week, this vulnerable group of seniors and the mentally disabled are common targets of "friends" and caretakers looking for a quick buck. All too often, these fraudsters have been able to get away with stealing money, possessions, and even identities, thanks to a loophole in Texas law. Comprehensive estate planning can help prevent unscrupulous people from taking advantage of the elderly.
If you suspect a vulnerable person is being taken advantage of by dishonest caretakers, friends, or greedy family members, take immediate action. A skilled Flower Mound estate planning attorney can help determine whether fraud has occurred and, if so, how to hold the person who committed the fraud accountable and ensure your loved one is safe. This can be a difficult time and a complex situation that benefits from speaking to an experienced lawyer.
Reasons to Create Statutory Durable Powers of Attorney
Aging generally brings with it a need to have plans in place for the future. People want to make sure their finances are in order, and their medical wishes for a variety of scenarios are stated clearly so that if at some point in the future, they are not able to speak up for themselves and say what they want, someone can do it for them based on what they have said they would want in that situation. You can draft a legal document known as a statutory durable power of attorney (SDPOA), which allows you to appoint someone else, otherwise known as an attorney-in-fact or agent. This agent has the authority to make various decisions for you in the hypothetical event that you become incapacitated and unable to express your wishes. If you are interested in creating an SDPOA, speak with a qualified Denton County, TX elder law attorney to find out more.
Why Is an SDPOA Necessary?
When you set up an SDPOA, you are considered the “principal,” and you can appoint an agent who can make legal or financial decisions for you. You can establish an SDPOA to be effective immediately or once you are incapacitated. Your appointed agent will then be able to manage your finances, pay your bills, invest funds, and handle other issues for you.
Incapacity Planning in Texas
Many people decide that the time has come for estate planning when they become concerned that they may become incapacitated and unable to make sound decisions. Incapacity planning is the term that refers to plans you make when you are still capable in case you become incapacitated in the future. With extended life expectancy seeing people live much older than they used to, age-related impaired capacity is more prevalent than it used to be. When you are young and healthy, you have no way of knowing whether you might end up with dementia, Alzheimer’s, or some other form of cognitive decline. Once that happens, it is generally too late to put your affairs in place. If you are wondering about incapacity planning, speak with a trusted Flower Mound, TX estate planning attorney to find out more.
What Does Incapacity Planning Include?
A robust plan for hypothetical incapacity includes several documents. Each serves its own distinct purpose. Some of the documents you might wish to include in your incapacity planning for the future of your estate are:
Texas Spendthrift Trusts Explained
It is common for people to spend more money than they probably should. Sometimes, this happens out of necessity, if you simply need to buy food or pay rent and do not have enough money to cover it all. Other times, it is simply a matter of mismanaging funds, for example, if someone feels like going on a shopping spree or buying a car they cannot afford because it seems like something fun to do. Regardless of the reason why, overspending is quite common in America, leaving people in debt or with bad credit. If your child tends to spend money irresponsibly, you might be worried about how they will manage an inheritance you plan on leaving them. In such cases, it might be advisable to create a spendthrift trust. If this is a situation you can relate to, speak with an experienced Flower Mound, TX estate planning attorney to find out more.
What is a Spendthrift Trust?
If you want to leave your children an inheritance to ensure they are financially stable in the future, you might feel uncomfortable with the idea of simply leaving them money in a will. Inheritances are generally left to people you hope can benefit from and appreciate them. If you have reason to worry that your children will burn through their inheritance irresponsibly without using their money in a wise and responsible manner, you might want to put some restrictions on how the money you leave behind can be used. That is just what a spendthrift trust can do.
When Is It a Good Idea to Conduct an Estate Plan Review?
When you draw up a will, it is like you are giving a wonderful gift to the people you will leave behind because you are taking the guesswork and uncertainty out of the equation. Your loved ones will know exactly what you want to be done with your assets and property even though you will not be there to tell them yourself. It eliminates any need for them to fight over who should get what.
However, even though having a will already sets you apart from about half the country according to a recent Gallup Poll, it does not mean that you are now set and do not need to think about this again. Like with everything in life, things can always change.
Maybe you want to leave everything you have to your children when you pass, but they were both minors living under your roof when you first wrote up your will, and now one is a single parent struggling to get by while the other is a successful CEO of a global company. Maybe a sister you were planning on leaving assets to has cut you out of her life. Maybe you have gotten married again since you wrote it. Maybe you have gotten involved with a charitable organization since you drew up your will and you would now like to leave it with something as well.
Whether you need legal assistance with estate planning, have questions about elder law, or are involved in a business litigation case you can trust Colbert Law Group PLLC to handle your case with the personal attention and commitment to a positive outcome that you deserve. From our office in Flower Mound, we serve clients throughout Denton County and Southern Oklahoma.
6021 Morriss Rd., Suite 101, Flower Mound, TX, 75028
972-724-3338
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