Many people experience a significant change in their family situation from time to time.  These are occurring with ever increasing frequency. Perhaps a recent divorce, separation, or marriage. Or, your children have moved out on their own and perhaps have a new relationship of their own. Maybe someone in your family recently passed away or became incapacitated.

Sometimes these changes result in automatic changes in your beneficiaries under various policies and plans – even though you may not realize the change has occurred.  Changes in any type of family situation is always a very important signal to review your beneficiary designations.

This point is emphasized in a recent decision by the U.S. Supreme Court.   In this 2009 case (Kennedy v. DuPont Savings and Investment Plan), a spouse divorced in 1994 was awarded all rights to her ex-husband’s retirement plan benefits (in a dispute with his daughter) even though the ex-wife had waived all claims to the benefits in the divorce decree.  The problem is that prior to the death of her ex-husband in 2001, he had failed to change the beneficiary named in the plan documents.  Thus, all his $400k in retirement benefits went to his ex, and none to his daughter.   Talk about unintended consequences!

Even though you may update your will and make changes, your beneficiary designations will override what you put in that will. To have a smooth transition of your assets, you should consider having both a primary and a contingent beneficiary designation. Review these designations yearly in your overall financial plan as your overall financial picture changes.

So where do these beneficiary designations typically exist?  Life insurance policies, some bank accounts, some general investment accounts, 401(k) plans, IRAs and infrequently real estate deeds are vehicles that typically have beneficiary designations.  If you have any of these types of vehicles you should check with the company administering them to verify whether you have completed a beneficiary designation and, if so, whether it still represents the persons you want to receive the benefits of those vehicles when you pass away.

If you haven’t done this in several years, make sure to add this to your to-do list!  And you may wish to review those designations with your estate planning attorney to ensure the designations are consistent with the rest of your estate plan.

With a new school year about to start, I am reprinting an article I posted several years ago for parents with children going off to college or just moving out of the house.  If you decide you might need to help your children with some planning, please call my office for an appointment.

Are you still the parents of your “adult” children?

In a recent article in the Dallas Bar Association’s “Headnotes” newsletter, Lori Ashmore and Gary Ashmore of The Ashmore Law Firm, PC remind us that while we are biologically still the parents of our adult children, we may not be allowed to act that way.  For example, if your college student is admitted to a hospital, the doctors there may not provide you any information about your child’s condition or injuries.  You may not be able to move your child to a hospital nearer home and your student’s landlord may not allow you to act for your child regarding his or her lease.

Why?  Because in Texas, a person becomes an adult at age 18.  Just as you need estate planning documents to allow others to act for you in certain circumstances, so does your adult child.  “Absent proper estate planning, there is no legal right for parents to make decisions for their children after they attain the legal age of majority.”

So when your child turns 18 and before they move into their own apartment or travel off to college, you should encourage your child to sit down with your estate planning attorney to discuss how to address these concerns.  Documents that should be considered include a Statutory Durable Power of Attorney, a Medical Power of Attorney, a HIPAA Release, and a Directive to Physicians and Family (Living Will).

Oftentimes when I meet with clients desiring to do estate planning, little thought is given by the client to how smoothly the processing of their estate will go after they are gone.  So here are a few things to keep in mind as you begin the estate planning process.

First, you’ll need to take some common sense measures.

Confirming Your State of Mind.  The most common argument a family member will make when disputing a will or trust is that the writer, or testator, was not of sound mind. Based upon your age or medical condition, consider having your doctor and a psychologist evaluate your physical and mental health just before finalizing your will, so that you can avoid this allegation.

Separate Legal Counsel.  If your family has business affairs or complex legal arrangements, seek your own legal counsel, separate from other family members to protect your interests and the interests of those you wish to give gifts to.

Corporate Fiduciary.  Consider hiring a corporate entity to serve as executor or trustee instead of family members. Corporate executors or trustees are less likely to be seen as abusing their fiduciary powers; whereas a stepparent or favored child may unwittingly cause suspicion or jealousy among your other heirs.  Corporate fiduciaries typically charge a fee, but this can be a small price to pay to avoid disharmony and potential litigation.

Distribution.  Try not to play favorites. The general rule here is to ensure that all of your children and/or your spouse are treated equally. There’s not much room for argument when three children each get 1/3 of the house, business, or other property. If you distribute some of your property while you are still living, have legal documentation reflecting what you gave or sold to your heirs and make it clear whether those are to be offset against any bequests in your will or trust.

Disinheritance.  Make your intentions clear by defining which people will not inherit property, or which will get smaller shares of your estate. Avoid the whys and wherefores – these only encourage bad feelings and potential contests.  I have found that it also helps if you communicate your intentions to those who appear to be receiving less than others while you are living.  Communicating this in a family meeting and on several occasions is ideal, as long as it does not seem to be “rubbing it in.”

Business & Property Contracts.   If you have a business, particularly one that is doing well, you should have a buy-sell agreement prepared that provides for how ownership and management will occur when you die.  This is a critical document that many businesses fail to prepare and often causes the collapse of the business when one of the owners dies.  These documents can also provide how withdrawal of one or more owners will be handled even if death is not involved.

No Contest Clauses.  These clauses provide that beneficiaries or heirs who challenge a will forfeit their inheritance.  Such clauses have been the subject of legal challenges in many jurisdictions and may have limited or no effect in particular states and situations.  However, they may still provide enough question that a beneficiary or heir will think twice before filing a legal challenge to your will or trust.

I hope these thoughts will give you some ideas to think about as you begin your estate planning or think about updating your plans.  If you have questions, contact your estate planning attorney.

I know you’ve heard this from me before, but at this time of year, it is especially important to check some of your important documents to be sure your children are protected.

First, your minor children.  You should have legal documents designating who you want to care for your children should you and your spouse both die.  Many people include this in their will or living trust.  But it is always a good idea to double check who you appointed to make sure they are still the people you want to designate.  If not, you should have a codicil to your will or an amendment to your living trust prepared.

But what happens if both of you are not killed in an accident, but are incapacitated for a lengthy time?  Who will serve as guardian then?  Your will does not come into play until you die.  So it is prudent to sign another document designating guardians for your children should this situation arise.

Next, is your adult children.  Once your child is over eighteen, they are considered an adult.  Even if they are attending college or living at home, they are considered an adult.  You might think that since you are paying all of your adult child’s bills, the doctors and hospitals will provide you all the medical information about your son or daughter.   Well, most likely they will be happy to accept your money, but they still won’t tell you anything that violates privacy laws.  And banks are unlikely to discuss your adult child’s accounts and investments with you either.

Well, surely there are exceptions for emergencies, right? There may be, but even in an emergency you are not guaranteed access to doctors or schools, and you will not have access to bank accounts.  Frankly, it is more likely your child will need assistance in a non-emergency situation.

No matter how dependent your son or daughter remains financially and emotionally for the next few years, the law regards him or her as having complete autonomy.  Your child is now an adult and needs the same protective documents that you do.  We all need people we trust to speak or act on our behalf if ever we cannot.  At a minimum, you and your adult children should have a Durable Power of Attorney, a Medical Power of Attorney and a HIPAA Release

If you or your child need to update or create any of these documents or if you just wish to meet to discuss what you need now, contact an experienced estate planning attorney.  I’m always glad to help if you contact my office.

Don’t delay.  Explain to your child why a Medical Power of Attorney, HIPAA Release,  and Durable Power of Attorney are vital legal documents that will ensure that someone they love and trust will be allowed to step in to manage their affairs and to be the voice advocating for them when he/she needs it most

The National Association of Estate Planners & Council is the association of choice for estate planning professionals with nearly 260 affiliated local estate planning councils, and their estimated 29,000 members with ongoing education and a forum for networking within the estate planning community.  Through The NAEPC Education Foundation, NAEPC is helping our councils become the centralized resource for the public for informative information about estate planning, the need to work with a qualified team of individuals, and how to find that team.

Estate planning is an often overlooked element of financial wellness, it is estimated that over half of Americans – 56% – do not have an up-to-date estate plan!

National Estate Planning Awareness Week was adopted in 2008 to help the public understand what estate planning is and why it is such a vital component of financial wellness.  Assisted by Rep. Mike Thompson (D-CA) and 49 additional members of the House of Representatives, H. Res. 1499 named National Estate Planning Awareness Week on September 27, 2008.  A full copy of the resolution text can be found at http://www.naepc.org/about/education-foundation/documents.

NAEPC’s goal is to work with affiliated local councils to reach every American annually with a reminder about the need for estate planning.  Remember:

YOU need estate planning TOO!

Inheriting wealth can be a burden and a blessing. Even if you think a family member may remember you in their will, there are many aspects of receiving an inheritance that you may not have considered. Here are some things you may want to keep in mind if you are about to receive an inheritance.

Take your time. If someone cared about you enough to leave you a sizable inheritance, then you will likely need time to grieve and cope with their loss. This is important, and many of the more major decisions about your inheritance can wait.  You may be too overwhelmed to give your options the careful consideration they need and deserve. You may be able to make more rational decisions once some time has passed. If you receive money, just place it in a bank account and don’t worry about investing it right away.  Take a breath.  But note below some decisions and actions should be taken shortly after you hear of the possible inheritance.

Don’t go it alone. There are so many laws, options and potential pitfalls. The knowledge an experienced professional can provide on this subject may prove to be vitally important. Unless you happen to have uncommon knowledge on the subject, seek help.  You are also likely to be inundated with requests for help from friends and family you didn’t even know you had.  An experienced professional can remove some of the pressure on you from these people.  Responding that you will have to check with your professional advisor is sure to get you at least some relief or time to more rationally consider these requests.

Do you have to accept it? Sometimes inheritances can be more of a burden than they are beneficial.  If you receive property that needs environmental clean-up or property you may not be able to easily sell, you may just be accepting constant headaches.  Disclaiming some (or all) of the gift may be worth contemplation.  But if you are thinking about this, be aware that there are time limits within which you must make that election to disclaim.  Consult your estate, probate or tax professional as soon as possible.

Think of your own family. When an inheritance is received, it may alter the course of your own estate plan. Be sure to take that into consideration. You may want to think about setting up trusts for your children – to help ensure their wealth is received at an age where the likelihood that they’ll misuse or waste it is decreased. Trust creation may also help you (and your spouse) maximize exemptions on personal estate tax.

Income taxes. If you’ve inherited an IRA, it is extremely important that you weigh the tax cost of cashing out against the need for instant funds. A cash out can mean you will have to pay (on every dollar you withdraw) full income tax rates. This can greatly reduce the worth of your bequest, whereas allowing the gains of the investment to continue to compound within the account, and continuing to defer taxes, may have the opposite effect and help to increase the value of what you’ve inherited.  Again, it is very easy to make a mistake in handling an inherited IRA, so contact an experienced professional immediately.

Stay informed. The estate laws have seen many changes over the years, so what you thought you knew about them may no longer be correct. The assistance of an experienced financial professional may be more important than ever before.

The bottom line is to take a breath, place your inheritance in a safe place for a while and in the meantime, contact your experienced professional advisors for advice and direction.  You make the final choice, but it is always wise to have those choices reviewed by experts in the field.

Often times survivors of a decedent are afraid of probate, fearing the small amount in the estate will be eaten up by all the creditors and probate fees.  But in Texas, the legislature has created several protections for a surviving spouse and family.

First, most property accumulated during a couple’s marriage is considered to be the property of both of them equally, i.e., community property.  Property owned by one party prior to marriage, and gifts and inheritances received by one of the parties during the marriage are generally considered separate property.  However, characterizing a couple’s property at death can be tricky because of some of the exceptions to these general rules.  Additionally, if a couple has a prenuptial agreement or a postnuptial agreement related to the character of their property, that may supersede these general rules.  But this first step of characterizing all of the couple’s property as community or separate property is critical to how it will be treated during probate.

The second protection for the surviving spouse and family is called a Family Allowance.  This allowance is intended to provide for the surviving spouse, the decedent’s minor children and the decedent’s adult incapacitated children.  The amount allotted by the court is to be an amount sufficient to maintain those individuals for a period of one year after the date of death.  A number of factors are evaluated in determining this family allowance.

If a couple owns its primary residence, the surviving spouse has the right to occupy that “homestead” during the surviving spouse’s lifetime.  This right exists even if the home was left to someone else under decedent’s will and even if the home was characterized as the decedent’s separate property.  Additionally, the guardian of decedent’s minor children may apply for a court order authorizing the guardian and minor children to occupy the homestead.  The surviving spouse (or guardian of minor children) will have certain financial obligations regarding the home while they occupy it.  Upon the death of the surviving spouse (or end of the court order regarding the minor children) the home will revert to the person or persons who have legal title to the property.  If the couple did not own the home they lived in, provision is made for an “allowance in lieu of homestead.” The allowance amount is less than the actual amount of the probate homestead, but it is meant to ensure that the surviving spouse of even the smallest estate does not walk away with no ability to provide for their future.

Finally, Texas law allows the set-aside of a certain amount of personal property that will be exempt from creditors’ claims. The law includes a detailed list of items that will qualify as personal property that can be set-aside – it does NOT apply to everything.  If the specific items listed in the law are not included in the estate, a cash amount can be provided.  The amount varies depending on whether the surviving spouse is single or has a family.  The cash amount usually is less than the actual amount of the exempt personal property, but it (like the allowance in lieu of homestead) is meant to ensure that the surviving spouse of even the smallest estate does not walk away with no ability to provide for their future.

In an estate where the surviving spouse or family might otherwise end up with very little or nothing, these protections serve a very real and appreciated purpose.  However, as is evident from carefully reading the descriptions above, it is important that the surviving spouse and family received knowledgeable and experienced counsel regarding the probate process.  Otherwise, the protections intended may not be put into place.

This is a reprint of a great article I posted in my blog back in 2012.

  One of my favorite columnists, Pamela Yip, has written another great article regarding the need for estate planning and how the lack of proper planning can cause your family severe financial and relational problems.  This column in the Personal Finance section of the Dallas Morning News is titled “Death, money and payback.” It is set out in its entirety below.

Challenges to wills fraught with emotion

By PAMELA YIP

Personal Finance Writer

pyip@dallasnews.com

Published: 06 April 2012 08:00 PM

Dave Plunkert/Special contributor

When it comes to dealing with an inheritance, make no mistake: It’s fertile ground for a family war.

Often, one child feels cheated out of his share and ends up challenging the will.

“You would be amazed at the number of calls we get on the topic and the frequency it arises in client discussions,” said Norm Lofgren, estate planning and tax lawyer at Looper Reed & McGraw PC in Dallas. “Death, money and payback do strange things to folks.”

Those seeking to challenge a will need to know upfront: It won’t be easy.

To begin with, “there’s really not much you can do until the person passes away,” said Jay Hartnett, partner at the Hartnett Law Firm in Dallas, which specializes in estate and trust litigation. “You can’t contest someone’s will until they’ve died, until it’s been offered for probate.”

Hartnett also said much depends on the circumstances involved in the challenge.

“If someone is 40 years [old] and is doing a will, it’s very difficult to contest the will,” he said. “But if you’ve had someone who’s had an estate plan their whole life and then in the last three months of their life, they suddenly change their estate plan completely and leave it all to one child and cut all the others out, that generally screams that there is some issue out there.”

Will challenges often occur in “second-family” situations, Lofgren said.

“Dad divorces, remarries younger woman, Dad dies and children from Dad’s first marriage are unhappy that the second wife receives more under Dad’s will than the children think appropriate,” he said.

“I can’t tell you how many times I have cautioned a couple in second-family scenarios that the second wife is not the mother of the children from the first marriage, and, when Dad dies, there is a potential for a will contest.”

Hartnett advises parents not to cut a child out of their will. “Anytime a parent decides to cut one of their children out, they can pretty much guarantee themselves that there’s going to be a will contest,” he said.

In Texas, there are several ways to contest a will:

Show that the person drawing up the will lacks “testamentary capacity.”

“Testamentary capacity simply means that the person executing the will knows that they are making a will, the effect of making the will, the general nature of their assets and their next of kin, and is able to make a reasonable judgment about these factors,” Hartnett said.

Estate planning attorney John Bauer of Shackelford Melton & McKinley in Dallas explains it this way:

“Mom’s got to know that she’s got a house and basically $100,000 in the savings account and she’s got a car and she’s got three kids. She has to understand those all at the same time. If she’s not mentally competent, then the will’s invalid.”

Show that the person drew up the will under “undue influence.”

That is, the individual signed a will “that they would not have signed but for the improper influence of another person,” Hartnett said.

Bauer’s example: “If the daughter is putting a lot of pressure on the parent and, because of that, Mom relents and she names the child [as sole beneficiary], that’s undue influence.”

But Bauer said the person making the challenge has to prove the undue influence. “She’s got to prove it by the preponderance of the evidence that that indeed happened. That’s a tough proof to make,” he said.

Show that technical details weren’t followed or that the will was forged.

“Was it done under the proper law?” Bauer said. “In other words, when you do a will, you have to do certain formalities. Was the will signed before two witnesses? You have to be 18 or older when you sign the will, and the witnesses have to be at least 14 years of age.”

The timing of a challenge also is critical. A will can be contested before or after it has gone through probate, Hartnett said, but you usually have only two years to file a challenge once one is probated.

“A person who thinks they may need to contest a will should contact an attorney as soon as possible after the loved one passes away,” Hartnett said.

Here’s another critical fact regarding timing of a challenge:

“Before the will is filed for probate, it’s up the executor of the will to prove that the person was of sound mind, above the age of 18 and the two witnesses were above 14,” Bauer said. “Once the will has been admitted to probate, then it’s up to the challenger to prove that the person was incompetent or someone wasn’t of the right age.

“If you think that Mom was incompetent, the time to do it is beforehand because they have to prove by the preponderance of the evidence that Mom was competent.”

A recent change in Texas law benefits heirs.

“In 2007, the Texas Probate Code was amended to provide that an executor of an estate had to notify the beneficiaries of a will that it had been admitted to probate and provide the beneficiaries with a copy of the will,” Lofgren said. “This was a good change to make sure that all of the beneficiaries were apprised of the probate and had a timely chance to oppose the probate.”

Challenges to wills sometimes come not from children, but from a distant relative of the parent, said Ellen Dorn, estate planning attorney at Fanning Harper Martinson Brandt & Kutchin PC in Dallas.

“What I’ve seen is that when a controversy about a charitable bequest arises, it is far more common for that concern or challenge to be raised by a distant relative and not by a child,” she said.

“What you see instead are great-nieces and -nephews — people who knew Aunt Suzie and Uncle Bob were well off, they were very loving, they were very hospitable, they had no kids, and of course they would name their nieces and their great-nieces and nephews in the will,” Dorn said. “They’re disappointed when they see that no, maybe a little token gift is given to the kids, but the bulk of the estate is going to charity.”

Will contests are emotionally charged, and you should think carefully before going ahead with one.

“The advice I would give someone contemplating a challenge is to ask themselves why do you want to challenge the will,” Lofgren said. “Does the will reflect what Dad or Mom wanted to do with their own stuff? Is the money sought really worth destroying your family?”

If you are single and not financially responsible for anyone else, having an estate plan might not seem critical. Nonetheless, estate planning can ensure that your wishes are followed both before and after you pass. One element of an estate plan is a will or trust, through which you would specify who will inherit your assets. Perhaps more important for many single people are the financial and health care powers of attorney, which allow you to determine who will help you handle your finances and manage your medical care if you should need help with those tasks during your life. Whether you have never been married, have outlived your partner, or are divorced, having an estate plan in place can ensure that your wishes are honored when you are no longer able to voice those wishes yourself.

If you fail to leave proper documents that specify what to do with your assets at your death, this will be determined by state law. Most states would apportion the assets first to the decedent’s spouse, then to any children, and finally to the closest blood relatives. But you might have friends that you consider family. You might consider a sibling’s children like your own and want them to inherit your assets. You might have a long-term partner that functions as a spouse. You might want your assets to go to a charity.

If you should become incapacitated and have not prepared a financial or medical power of attorney, the state would again make key decisions on your behalf. A court could appoint a distant relative or stranger to act as your agent, but you may have a partner, family member, or friend whom you would trust to make financial or medical decisions on your behalf. A financial power of attorney names the person who you desire be given legal authority to conduct your financial affairs, and a medical power of attorney does likewise for your health care matters.

Though estate planning is often associated with traditional families, single people also need a complete a will or trust and powers of attorney documents. Some easy planning now can ensure that your assets end up in the right hands and that decisions about your assets and health care are made by the people you trust the most.

Death certificates in Texas are generally prepared by the funeral home handling the deceased person’s body.  Often times the family will obtain the death certificates they need from the funeral home. The number of death certificates you will need will vary greatly depending on the amount and number of assets that the person had at the time of death. Most insurance companies, banks, & many creditors will request a death certificate. In Texas, you generally do not need a death certificate to open a probate case.

After a short time has passed, additional copies of the death certificate can only be obtained from the Texas Department of State Health Services.  These can be ordered by mail or online at https://www.dshs.texas.gov/vs/reqproc/deathcert.shtm.

If you have a special needs child, adult child or you provide for such a person in your will (for example, leaving funds to a special needs person who may be your nephew, granddaughter, or the child of someone you designate in your will), you should consult with an attorney familiar with the government benefits such people typically receive and how to protect them with Special Needs Trusts.  If you do not, you may inadvertently disqualify such person from receiving those government benefits even if they have been receiving them for years.

Reprinted below is an article I posted in 2014 regarding planning for special needs.

How to plan for when your special needs student wants to live independently

Reprinted from Dallas Morning News blog

By Robin LeoGrande/Special Needs Insider

Here’s a new idea for students with special needs in North Texas: Having housing available to meet transition plans that include moving into more independent housing options soon after students graduate high school (or “age into adulthood”). This would enable graduates move into independent living with the friends they want to live with and the supports they need.

Families of any age student with special needs should plan for where their student will live as an adult.

So how does a family plan for transition into independent housing? Here are some suggestions.

1. Estimate at what age the student would like to live independently.
2. Ask yourself: What are the three most critical independent living skills that the student needs to learn? Practice at home and include appropriate goals in the Individual Education Plan. As these skills improve, add more skills to learn.
3. Have a plan to save money to help your child live independently. Whatever a family can afford will help.
4. See an attorney about creating a special needs trust.
5. Contact your school about getting on the waiting lists for the Medicaid Waiver programs.
6. Build a network friends with and without disabilities with your child. This will be important to create a home of friends and have a natural support system in the neighborhood.
7. Complete this short survey on my website, Community for Permanent Support Housing, so you can stay informed of the housing options becoming available in North Texas.

Robin LeoGrande is co-founder and president Community for Permanent Supported Housing (CPSH), an all-volunteer, charity serving North Texas (Collin, Dallas, Denton, Ellis, Kaufman, Rockwall and Tarrant Counties).

If you own a vacation home, it may have great significance to you from a personal, family, financial and emotional perspective.   How and whether that home will be passed on to others is a serious concern that can result in extremely disruptive and financially ruinous differences among your family.  Thus, planning for how, when and whether that home will pass to your loved ones is essential.

For example, some of your family members may have very strong emotional attachments to your vacation home, while others may not.  Some of your family members may be able to afford to travel to and use the vacation home frequently, while others may not.  Some of your family members may be able to afford to pay their share of ongoing taxes, insurance, maintenance and repair of the home, while others may not.

Following are some important points to consider in succession planning for your vacation home.

• Have an open discussion with your intended beneficiaries to find out their interest in ownership of the vacation home.  Discuss their ability to pay expenses and look after the property, as well as their expected use of the property.
• Find out what the potential tax burden associated with the vacation home will likely be, and consider how this liability will be funded.  Remember taxes or fees may be due at the time of transfer as well as on an ongoing basis.  If there is a liquidity issue, consider available options, such as life insurance if the tax burden will not easily be payable by your beneficiaries or estate.
• If you are contemplating making a gift of the vacation home to family members during your lifetime or on death, legal and professional advice should be sought on how best to plan and structure the gift.
• Consider applicable options in your situation to passing down your vacation home, including providing a flexible mechanism in your will allowing your beneficiaries the option to purchase the vacation home or receive it as part of their share of the estate.
• Consider a co-owner agreement for joint owners/beneficiaries of a vacation home.
• Consult a professional advisor before purchasing a vacation home located in another jurisdiction, particularly in another country.  If you already own one, seek professional advice on succession planning options.

Reprint from my November 2011 post.

This subject isn’t exactly estate planning, but it is something an increasing number of clients face.  I saw this article on the topic of dealing with parents or other loved ones who are losing their ability to drive safely and how you convince them it might be time to stop driving.  First and foremost, prepare before bringing up a very sensitive subject.

(ARA) – When families are gathered together this holiday season, you may start to notice changes in an older relative’s driving behaviors and begin to have some concerns. You are not alone.

With the number of drivers 70 and older increasing – and one in five Americans caring for an older loved one – the number of adults dealing with concerns about their older relative’s driving abilities is on the rise and many are unsure on how to address their concerns.

Resist the temptation to bring up this sensitive topic: Do your homework first

“Taking time to prepare can alleviate concerns and help you start out on the right foot with a thoughtful, positive conversation,” says Jodi Olshevski, an expert on aging for The Hartford, an insurance company. “Once you get the facts and educate yourself about the resources available, you will be in a better position to help.”

Just because your loved one is older, it doesn’t automatically mean you should be concerned about their ability to drive. Plenty of people over the age of 70 get around just as easily as their more youthful counterparts.

If you’re worried, you should find out if your concerns are valid. Learn the warning signs, get in the car and observe the older driver. “Choose the right messenger – the person who has the best rapport with the driver, and choose the right time – which is most likely not during family gatherings,” says Julie Lee, vice president of the AARP Driver Safety Program.

Warning signs

If you’re concerned about your loved one’s ability to drive, the first thing you should do is get in the car to observe them firsthand. A comprehensive list of warning signs for older drivers and other resources for older drivers can be found at www.safedrivingforalifetime.com. Here are some examples of the types of things you may want to look for:

Fairly minor warning signs: Vehicle dents and scrapes that weren’t there before, single mistakes that appear to be more of a fluke than a pattern.

More serious warning signs: Trouble making left-hand turns, driving in the wrong lane of traffic, stopping in traffic for no reason, consistent and frequent mistakes.

“Making a single, minor driving mistake doesn’t mean that a person needs to stop driving,” says Olshevski. “Families need to look for patterns of warning signs and an increase in frequency and severity of the warning signs.”

Initiating the conversation

Ideally, families should initiate the first conversation about safety long before driving becomes a problem, advises Lee. Car accidents, near misses, self-regulation of driving and health changes all provide opportunities to talk about driving skills.

There’s nothing that can make this conversation an easy one, but there are ways you can promote productive dialogue. If you determine that there’s reason for concern about your loved one’s ability to drive, approaching the situation in a thoughtful and nonthreatening way is important.

“Comments about how much more congested traffic has become recently or about an accident in the news can be a good way to start a conversation about driving safety,” says Lee.  In addition to offering safety courses for older drivers at www.aarp.org/drive, AARP also offers an online seminar for those who may need to approach the topic of driving with older family members at www.aarp.org/weneedtotalk.

Starting the conversation is often the most difficult part and your approach can set the tone for how it proceeds. Here are a few suggestions for starting the conversation in a nonthreatening way that will make the older driver more comfortable expressing his or her feelings.

* “Did you hear about the car accident in the news today?”
* “Have you asked your doctor about the effects of your new medication on your driving?”
* “That was a close call yesterday. I worry about your safety on the road.”
* “I’m worried about you getting in a car accident with all the ice and snow on the road.”
* “I’m glad that you’ve cut down on night driving. I would never want you to drive when you’re not comfortable or feel that it’s too risky.”

Some other tips for a productive conversation include:
* Prepare for the conversation and do your homework.
* Choose the right messenger and the right time.
* Be supportive, positive, factual and nonthreatening.
* Have transportation alternatives ready.
* Note that it might take more than one conversation to address the issue. Let the person know you’re there whenever he or she is interested in chatting about the subject.

Remember, there is no one-size-fits-all solution when addressing problems your older driver may be having behind the wheel. Some issues can be remedied with improvements in physical fitness, increased attention and driving safety classes. Other situations may call for more immediate action.

To learn more about initiating a productive conversation about driving with your loved one, visit The Hartford’s website and download a free guidebook titled “We Need to Talk: Family Conversations with Older Drivers.”

A Will is a legal document that has several functions.  It typically allows you to identify your beneficiaries, designate the way in which your property will be distributed, nominate an executor to manage your estate and distribute it according to the wishes expressed in the Will.  It can also disinherit people, nominate a legal guardian for any minor children, provide for trusts to hold your gifts to some or all of the beneficiaries and describe special terms and definitions to be used in construing the Will.

To make a valid Will in Texas, you must have legal capacity, testamentary capacity, and testamentary intent, and follow certain formalities.

• Legal capacity.  In Texas, legal capacity is defined as the person being 18 years of age or older, being or has been married, or being a member of the armed forces of the United States.
• Testamentary capacity.  To have testamentary capacity one must be of “sound mind.”  This means that at the time the person makes their Will they have the mental ability to understand:
  • they are making a will;
  • the effect of making a will;
  • the general nature and extent of their property;
  • their next of kin and the natural objects of their bounty (e.g. their relatives and loved ones);
  • the fact that they are disposing of their assets;
  • have sufficient memory to collect in their mind the elements of the business transacted and hold them long enough to form a reasonable judgment about them.
  • Testamentary intent.  Closely aligned with testamentary capacity is testamentary intent.  That is, the person making the Will must intend that the document they are signing is making a revocable disposition of their property to take effect at their death.  The actual wording in the Will is often looked to as evidence of such intent.
  • Formalities.
    • Texas recognizes two types of written Wills.  Texas does not recognize oral wills.
      • An attested Will is the most common type of Will. To be valid, it must be in writing, signed by the person making the Will, or another person at the direction of the person making the Will and in their presence, and attested by at least two credible witnesses over the age of 14.  The person making the Will must be present when the two witnesses sign their names to the Will.
      • A holographic or handwritten Will is a Will that must be written entirely by the person making the Will, and it must be signed and dated. The Will does not need to be witnessed by anyone else.  But it is important to note that no writing by others or typing may be part of the Will.
• Self-proving Affidavit.  The Texas Estates Code provides the person making a Will with the option of adding a self-proving affidavit to the Will.  This is an affidavit containing certain representations that is signed before a notary public by the person making the Will and the two witnesses to the signing of the Will.  When a Will is probated, the self-proving affidavit substitutes for in-court testimony of witnesses as to the validity of the Will, which saves considerable time and expense.

If a Will does not meet all the requirements set forth by the Estates Code, it will be declared invalid, meaning that your estate could be distributed according to a statutory formula rather than the way you would have preferred.  Preparing a Will may seem rather simple, but if not prepared by an attorney focusing his or her practice on estate planning, mistakes can easily occur and misleading statements can be included without proper explanation or definition.  To save your estate additional expenses of probate and to ensure that your wishes are carried out as you intend it is best to consult with an estate planning attorney in preparing and executing your Will.

I will often have people call to update their will.  When I meet with them they usually have a copy of the will to show me.  I will usually ask them if they know where their original will is located.  Most know – or think they know – but it always amazes me how many people aren’t sure where it is.

In these times, photocopies and digital copies are very common and generally accepted as “legal” for most purposes.  However, in some circumstances the original is required.  An individual’s will is one such circumstance.  Upon the death of an individual, in order to probate a will, the original document must be presented to the Clerk of Superior Court.  Copies of the will are generally not accepted, or at the very least require more complex and costly procedures be followed to establish the terms of the will.  At first glance, this may seem like a harsh result, but when you consider the rationale, this law actually does make sense.  There is a presumption that when the original will cannot be located, it was intentionally destroyed for purposes of revoking the will.  It is too great a burden to expect the maker of a will to locate all photocopies and to destroy them as well.  Therefore, the original must be produced.

So, do you know where your original will is?  And if you do, will your family know where to find it once you pass away?  The best places to keep your will is someplace “safe.”  Opinions vary on just where that is and to some extent it depends on how an individual handles their own affairs.  Some people prefer a fireproof safe kept in their home, a safety deposit box at a bank, or in the vault of the County Clerk.  There are advantages and disadvantages to each of these options.  The main thing is to make sure your executor knows where you are keeping the will or at least make it easy to find upon your death.  And if you are using a safety deposit box at a bank, make sure your executor will have access to it upon your death by adding them to the signature card at the bank and providing them with a key or letting them know where to find a key.

This may seem like basic recordkeeping to many people, but you would be surprised at how often family members know their loved one had a will, but they just cannot locate it.  There have even been situations where years after the decedent’s death a family member stumbles upon the will, after the property has already been divided up according to intestate succession (the law for estate distributions for individuals who die without a will).  Don’t let this happen to you!  Put your will in a safe place where your loved ones can locate it when the time comes.

Occasionally people will tell me something like, “I’ve had my will done since my first marriage.”  That always gives me concern, because if what they meant is that they and their first spouse did estate planning documents and then they divorced, the terms of those documents have been radically changed by that divorce.

Durable Power of Attorney – An agent who is the spouse of the principal loses their authority to act as agent upon the dissolution of the marriage by court decree of divorce or annulment or some other court decree declaring the marriage void.  To prevent this result a provision providing otherwise must be included in the Durable Power of Attorney.

Life Insurance Policy – Designation of a spouse as beneficiary is ineffective if the marriage is later dissolved by divorce or annulment.  To prevent this result the divorce or annulment decree can designate the former spouse as beneficiary or the insured can redesignate the former spouse as beneficiary after the decree.  This provision also does not apply if the former spouse is designated to receive the proceeds in trust for a child or dependent of either former spouse.

Multi-party Accounts – Dissolution by divorce, annulment or a voiding declaration of a court will nullify the provision in favor of the former spouse or any of the former spouse’s relatives who are not also relatives of the decedent.  Similar provisions to those set out above allow for this result to be overcome.

Wills – Dissolution by divorce, annulment or a voiding declaration of a court will result in the Will being read as if the former spouse and each relative of the former spouse who is not a relative of the testator had failed to survive the testator.  To prevent this result requires a court order or an express provision in a contract relating to the division of the marital estate entered into between the testator and the former spouse.

Revocable Trusts – Similar provisions apply to nullify provisions in revocable trusts in favor of a former spouse and the former spouse’s relatives who are not relatives of the divorced individual.  The same non-applicability provisions for Wills apply to revocable trusts.  In addition, an express term in a trust executed by the divorced individual can overcome this provision.

There are additional details and nuances in Texas law regarding these laws.  So as soon as your divorce decree is final, and assuming that decree does not prohibit such changes, you should immediately update your estate planning documents and beneficiary designations.  You should also advise any banks, life insurance companies and investment companies with whom you have accounts of the divorce decree and its pertinent provisions.  A meeting with your estate planning attorney should be scheduled as soon as possible

The Dallas Morning News had a great column this week written by Virginia Hammerle on terms heard when talking about probate.  I am reprinting below that entire article.

Cracking the code

The special language of probate

LEGAL TALK TEXAS

At least 99 percent of you will, at some point, have your life touched by a probate estate.  If you are very unlucky, then you might even be appointed as an executor or administrator. This article is a clip-and-keep for when that time comes.

Here is your key to the mysterious terminology of Texas probate.

Decedent: the person who just passed away.

Estate: the assets and debts of the decedent.

Probate: the court proceeding to handle the decedent’s estate.

Texas Estates Code: the source of all wisdom in the world, according to more than one Texas probate judge.

Will: a written document either signed by a decedent or completely in the decedent’s handwriting and signed by decedent, that disposes of the decedent’s estate upon death. Hopefully not based on an internet form.

Executor: the person appointed by the court to execute the terms of a will in a probate estate.  There are two flavors: independent and dependent.  The independent Executor acts without court supervision.  The Dependent Executor has to obtain court permission before performing any duty or taking any action.  Generally speaking, if the estate is solvent, then it is much better to be an Independent Executor than a Dependent Executor.

Administrator:  the person appointed by the court to handle an estate when there is no valid will.  An Administrator’s life is always more difficult than that of an Executor, simply because there is no will.

Letters Testamentary:  This is a document prepared by the county clerk that states the executor or administrator is authorized to act.  Most third parties demand to see original Letters Testamentary; thus the executor usually orders at least six.  The Letters are technically good for only 60 days, and new Letters may have to be requested when the old ones expire.

Devisee: the person the decedent designated in writing to inherit an asset.

Heir:  This is someone who inherits as a matter of law because the decedent did not leave a will.  Heirs and Administrators go hand-in-hand into the wilderness of “no will.”

Fiduciary:  the executor or administrator.  A fiduciary’s duty is the highest duty in law.  Think of it as the rope used to legally hang a crooked executor or administrator.

Citation: a formal notice issued by the court clerk about the probate.

Notice to Creditors: a formal notice given by an executor or administrator to all secured creditors, and some unsecured creditors.  This is the first of many probate pitfalls, because if notice is not timely given, then the executor or administrator can be held personally liable for damages.

Inventory:  a list of all probate assets, together with values as of the date of death.

Estate Tax Return, Decedent’s Income Tax Return, Federal Fiduciary Tax Return:  the reason every probate estate has a CPA on retainer.

And that should be enough to get you started down the probate path.

Virginal Hammerle received her J.D. (Juris Doctor) from SMU in 1982.  Find more articles at hammerle.com.  To receive the monthly email newsletters, send your request to legaltalktexas@hammerle.com

The information contained in this article is general information only and does not constitute [legal advice.]

As with so many aspects of planning for our futures, many people try to hide their head in the sand when it comes to planning for living a long life that might involve a period of time when our expenses are high and our resources are not as robust was we would like.  So take your head out of the sand and think about these planning ideas for the long term.

1. Life Insurance or Annuities.  Life insurance products have changed dramatically over the years.  In addition to protecting our families during our earning years, insurance products can also be used as a resource in later years if an unexpected need arises.  An insurance expert can discuss how one product might be able to change over time to serve different purposes for you.  Long term care can be built in to life insurance policies or separate long term care policies can be purchased.  Medicaid qualifying annuities are also available.  In many of these products any money that’s not spent on care during your life gets passed to heirs as a death benefit.

2. Long-Term Care Insurance.  As noted above, insurance products are available specifically to help cover the cost of long term care.  A large percentage of us will spend at least some time in a facility for which long term care coverage will apply.  This insurance product helps provide for the cost of long-term care. Long term care is not simply for a nursing home at the end of life.  If you have an extended rehab from surgery, you may need qualifying care for several months before returning to your normal life.  Long-term care insurance is for people who can’t perform basic daily activities and need someone to help them. Many people don’t feel comfortable relying on family members financially so start planning now to have money available for your long-term care.

3. Medicaid.  Medicaid covers long-term care costs for people whose income and assets fall below a certain level. It can only be used when you have no other financial resources to cover the cost of your care and your options may be limited by the programs that are available to Medicaid patients. It’s a good idea to save as much money as possible in your younger years so you’re not fully dependent on Medicaid to help you in your later years.  If you think you might eventually need government assistance to pay your medical expenses, you should contact an attorney who specializes in this area.  Many people think they know what they need to do and end up impoverishing themselves unnecessarily.  Through careful and expert planning many assets can be retained for the other spouse or family members.  But don’t wait until the last minute and don’t do planning on your own in this area.

4. Personal Savings and Investments.  Some people will be able to use their own assets for long-term care by calculating an amount of money to set aside to pay for their care, or by savvy investment plans over the years. Just make sure you understand the Medicaid guidelines that might affect your spouse and other family members.  As with Medicaid planning discussed above, it is a good idea to consult with an elder law attorney when doing this planning.

Each option has its advantages and disadvantages and can be very complicated to understand. Make sure you talk to an attorney, insurance agent, and financial advisor to discuss what long-term care plan works best for you and your family.

Dealing with the death of a loved one is difficult enough without the added pressure of creditors calling you to collect on the deceased person’s debts – most frequently credit card debts. But can a bank collect a credit card debt owed by your deceased loved one?

The answer depends on a range of factors, from whether it was a joint account to where the deceased person lived.  Here are some of the key factors.

1. Are family, friends or heirs responsible for debts?

When you take out a credit card in your name, you’re agreeing to repay whatever you borrow. Whether you’re alive or dead, that obligation doesn’t generally extend to your family or friends.   In short, while your heirs can inherit your worldly possessions, they don’t inherit your credit card balances and they don’t have to pay them. Exception? If someone else was jointly liable on the debt with you. Joint account holders are generally fully responsible for the entire debt, even if all the charges were made by only one of them.

Additionally, Texas is a community property state.  That means in most instances both spouses are responsible for debts of the other, even if they did not sign the original application.  But there are many fine points that may result in one spouse not being liable.  It is important to review the specifics with your attorney.

The fact that your heirs aren’t responsible for your debts, however, doesn’t mean your creditors won’t try to collect from them.  Some creditors will make an initial effort to collect and depending on the estate and the size of the debt, write off the debt if it appears it will not be readily collectible.  But those debts are also many times sold to collection agencies that may try to collect on them using sometimes questionable tactics.  If you are receiving claims for payment, you would do well to consult with your attorney.

2. Direct creditors to the executor

While heirs or family may not be responsible for your debts when you die, that doesn’t mean they just go away. Instead, the obligation transfers from you to your estate.  When a person dies, their estate is born. That estate will have someone, known as the executor or administrator, who will be designated by the will and affirmed by a court to handle all financial issues of the deceased, including their debts.  If you’re not in charge of an estate and get a debt collection request, direct the caller to the executor, then tell the caller you don’t want to be contacted about that debt again.

3. Notify creditors and credit bureaus

The executor of the estate should notify creditors as soon as possible of the death. In Texas the executor may be required to notify certain creditors and there may be benefits to be gained by providing such notice to all creditors.  They should also notify the big three credit reporting agencies – Experian, Equifax and TransUnion – and request the account be flagged with the statement “Deceased: Do not issue credit.” This will help prevent an all-too-common problem: identity theft of the dead. The executor should also request a copy of the deceased’s credit report. This is the best way to find out exactly what debts were outstanding.

The Social Security Administration should also be notified, particularly if the decedent was receiving benefits from it.  Payment of benefits will need to be stopped and some payments already received may need to be returned.

4. Find out who’s responsible

As mentioned above, people who request credit together are equally responsible for the entire debt. The same is true with a co-signer, who essentially guarantees the debt of the borrower. If the borrower dies, the co-signer becomes liable.

Authorized signers or additional cardholders on credit card accounts, however, aren’t liable. They didn’t originally apply for the credit; they were just allowed to “piggyback” on the account of the one who did. If that person dies, the authorized signers aren’t generally on the hook.

5. Stop using credit accounts

If you are an authorized user on a credit card account, don’t continue to use the card after the main cardholder dies. Since you’re not liable for the debt, this could be considered fraud.  A surviving spouse can ask for a card to be issued in his or her own name. It will most likely be a new card application, based on the survivor’s credit history, income, etc.

6. Don’t split up all the belongings yet

It’s natural to think that you should immediately start giving away the decedent’s property, particularly personal items.  Grandma’s antiques and jewelry away. But it’s a good idea to wait.  Only after the estate has settled its debts should the assets be distributed. Distribute stuff beforehand, and should the estate not have enough to pay its debts, the heirs could become responsible for the debt.

7. Ask creditors for help

If a surviving spouse is a joint account holder on the deceased’s credit card and is having trouble paying the bills, that person may be able to work something out with creditors.  Ask for options to give you time to get organized.

8. Common law property states are different

If you live in a common law property state (doesn’t follow community property law) the rules are different regarding the responsibility of surviving spouses.  Unless both spouses applied for credit together, the non-applying spouse who survives the applying spouse may not be liable for the resulting debts.  But if you are in such a state, you should consult your attorney about just what your liability is.

9. If an estate is insolvent, the debtors lose

Sometimes the estate has more debts than assets to pay them. If no one else can be found responsible for the debt, creditors will be forced to write it off.

10. When in doubt, contact an attorney

This stuff can get complicated, especially when community property law is in place. Contact your attorney to get help.

Ron Lipman is a Houston attorney that I have turned to for assistance on various legal matters.  He writes a column for the Houston Chronicle and recently addressed a question on inheritance rights in Texas.  Here is that article.