Estate Planning FAQ's

Texas (along with other states) has a community property system as its basic marital property law.  This is in contrast to other states that derive their property systems from the English common law.  Texas property laws are traceable to the Spanish concept of a marital partnership between husband and wife.

Texas law - somewhat awkwardly - defines community property as that which is not separate property.  Separate property is that which was owned by a spouse before the marriage, as well as property received after marriage by gift or inheritance.  Everything else is community property. For example, the earnings of both spouses are community property.   Income from separate property is also community property.

The foregoing rules may be changed if there is a gift or an agreement between spouses.  For example, a husband and wife may agree to partition community property into separate property. Alternatively, a husband and wife may agree to convert separate property into community property.

If you fail to plan your estate and die without a will, the law will create a plan for you.  The entire system - which is set forth by statute - is too complex for a discussion here, but some surprising and frequently undesirable results can occur.

A holographic will is one which is solely in the makers handwriting. If it meets the other requirements for a will, a holographic will can be valid.

Proceeds from life insurance policies and retirement benefits will pass in accordance with the beneficiary designations and not under your will.  In addition, property held as joint tenants with right of survivorship accounts (e.g., joint bank or brokerage accounts with right of survivorship) will pass to the surviving account holder and not under your will.   Therefore, you should review your beneficiary designations and account agreements to be sure they are coordinated with your will.

A husband and wife may agree that the survivor will own the property.  The agreement must be in writing and signed by both spouses.  The agreement is revocable until the death of the first spouse to die.  As a result of such an agreement, the property will pass by the agreement and not by the will.

An executor is the person appointed in your will to settle your estate.  Your executor will be responsible for administering your estate.   This includes ascertaining your assets and your liabilities.  Your executor must prepare an inventory of what you own and submit that inventory to the Probate Court.   After debts have been paid (including estate and inheritance taxes) the executor makes distributions to the beneficiaries in your will.

A trustee is one to whom property is transferred for the benefit of someone else (the beneficiary).

A "living trust" is a trust that a person (the "Grantor") establishes during his or her lifetime.  A living trust may be for the Grantor's own benefit or for the benefit of others.   The trust may be funded either during the Grantor's lifetime or at the Grantor's death.  Revocable living trusts for the Grantor's own benefit are appropriate in the following circumstances:

• The Grantor owns real property in another state
• The Grantor is likely to become incompetent
• The Grantor wants the disposition of his or her property to be kept private, and not in the public record
• The Grantor wants his or her property holdings to be kept private, and not in the public record
• A will contest is likely or anticipated

Generally, any gratuitous transfer of property is subject to the gift tax. Examples of gratuitous transfers include, but are not limited to:

• A sale of property for less than its fair market value
• A loan for inadequate interest
• Forgiving a loan to a family member
• Paying for a car for a child and titling the car in the child's name

A power of attorney is an instrument in writing by which one person, as principal, appoints another as agent, and it gives the agent authority to perform certain specified acts or kinds of acts on behalf of the principal.  The person holding a power of attorney is known as an "attorney in fact" or "agent."  We have found that many clients want to appoint someone to act for them, particularly in the event of disability.

The other parent.   But if the other parent is not living, this becomes a selection you can make in your will.  If you fail to do so, the court will make the choice for you.   Needless, to say, you should assume the responsibility for this important decision, and not leave it up to the judge.

A directive to physicians (commonly known as a living will) is a document that provides instructions to your attending physician to provide, withhold, or withdraw life sustaining procedures in the event of a terminal or irreversible condition.  The directive to physicians also allows you to specify the types of treatment, like artificial hydration and nutrition, that you would like to have provided or withheld.  We advise you to consult with your personal physician in completing the directive to physicians.

As a general rule, we suggest that you contact us every four or five years for a conference to review your estate plan and to update the information previously provided.   We also recommend that you contact us in the event of a significant change in your finances or in your family situation.  For example, a substantial increase in your estate (through inheritance, gifts, successful investments, or life insurance, etc.) may create opportunities for tax savings, as well as call for further family estate and financial planning.   A divorce necessarily reopens the matter of planning your estate.  Likewise, do not hesitate to contact us any time you have a question as to whether changes in tax or other substantive laws may influence your estate plan.  While we sometimes send information to our clients regarding changes in law, we do not assume the responsibility of doing so, regardless of whether we retain the original copy of the will.