There are cetain basic estate planning documents that every Texas resident should have. They are as follows:
WILL
A person dying intestate (without a Will) in Texas can leave countless problems for those he leaves behind. The following is an outline of some of the most obvious:
Who takes the estate? Without a Will, a person's assets may not be left as he would want. If a person dies leaving a spouse who is the parent of all of his or her children, then the spouse will inherit all of the deceased person's interest in their community property. The result is not so pleasant if a person has children from a prior marriage. In that case the deceased person's children will inherit all of his or her interest in community property, and the surviving spouse then becomes a joint owner along with his or her stepchildren of all community property. Separate property is a different matter. Without a Will, a person's spouse will inherit only one-third of his or her separate personal property and a life estate in one-third of the separate real property. The deceased person's children will take the remaining share of the separate property.
Court Supervision. Unless an Independent Executor is named in a Will, a person's estate may be subject to being supervised by the Probate Court at considerable expense, delay and inconvenience.
Minor's share. Specific provisions for minors are routinely included in Wills to avoid complications. A minor's share of an estate must be the subject of a guardianship if the share is not payable to a trust established for the minor. If parents have not appointed a guardian for a minor child, the Probate Court will have to determine who the guardian of the minor will be, and the guardian will have to report to the Probate Court each year and render an accounting of any sums spent for the minor. In addition, the guardian must post a bond to guarantee that he or she will handle the funds properly. When the minor beneficiary reaches legal age (18), he or she has full rights to withdraw and spend his or her inheritance.
Estate taxes. If a married couple's combined estates are valued over the amount that is exempt from estate tax (now at $675,000.00), their Wills can be designed to minimize the effect of federal and state death taxes that are applied to their estates. By failing to take advantage of this legitimate planning tool, significantly greater death taxes will be due at the death of the survivor.
POWER OF ATTORNEY
A Power of Attorney is a document authorizing someone to act in the place of the Maker, and for the benefit of the Maker, with regard to financial affairs. By appointing someone to handle his or her affairs in the event of incapacity, the expense and inconvenience of a guardianship can be avoided.
HEALTH CARE DOCUMENTS
There are two documents that can be extremely helpful in situations when a person is ill.
Directive to Physicians and Family or Surrogates. This document (also known as a Living Will) is a directive for the withholding or withdrawal of life-sustaining procedures in the event of a terminal or irreversible medical condition.
Medical Power of Attorney. This document allows a person to authorize another person or persons to make health care decisions for him if, and only if, that person is unable to do so himself.
LIVING TRUSTS
A Living trust can accomplish the same objectives as a Will and Power of Attorney described above, and in some circumstances can be preferable. Establishing a living trust however, requires more work to set up at the time it is established and ongoing care to see that all assets are properly transferred to the trust. Generally, the legal fees to establish a trust a trust are greater than the cost of preparing a Will and Power of Attorney. Establishing a living trust is sometimes encouraged in order to avoid probate, which in most cases in Texas is not necessary. Texas has a streamlined probate system and as a general rule it is a procedure which does not need to be avoided.