Do you have a valid will that will ensure your wishes are accomplished?

Without a will, you have no choice as to who will administer your estate, who will be the guardian of your minor children and who will receive your property in what proportions or when.

To make a valid Will in Texas, you must have legal capacity, testamentary capacity, testamentary intent and certain formalities must be followed.  If a Will does not meet all of the requirements set forth by the statutes, 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.


5 Top Financial Things To Do For Second Marriage

1.  Full Disclosure

Before you get married, you and your fiancé should discuss all aspects of your financial situations with one another. On a piece of paper, write down your:

  • Credit History. Have you ever been late on payments, or had any judgments against you? Have you ever declared bankruptcy?
  • Debts. How much do you owe to credit cards? What other debts do you owe?
  • Assets. Include your annual earnings, the value of your home, cars, investments, and retirement plan funds.
  • Obligations under a previous divorce decree. Make sure your intended is aware of any child support or alimony payments you are required to make (including how much), as well as any disability, life, health or long-term care insurance that your settlement says you must keep in effect. You should also let your partner know if your ex-spouse has rights to any of your future retirement plan earnings.

When you’re done, exchange papers with your fiancé. Expect your answers to trigger discussion about who is responsible for debts incurred before the marriage, whether you will share assets earned by one of you, and how you will meet financial obligations from a previous marriage.

Your next step is to consider drafting a prenuptial agreement. A “prenup” is especially important if you 1) are bringing significant assets into the marriage, 2) expect to inherit a business or other assets in the future, or 3) have children from a previous marriage.

2.  Protecting Your Assets

Typically, those who remarry are older and wealthier than the first time they married. As such, you often have more interest in protecting assets you bring to the marriage. Many high-earners also are interested in protecting assets they’ll earn during the marriage. A prenuptial agreement will ensure that your assets will remain separate from your spouse’s, and that the spouse cannot claim a portion of your assets if you divorce.

3.  Protect Your Children

Prenuptial agreements also can be useful if you have children from a prior marriage and want to ensure that your assets pass to them when you die. Generally, unless your spouse specifically waives his or her right to the assets in a valid agreement, he or she may claim a portion of your estate when you die.

Take John, for instance. A successful internist, he was 45 years old when he married his second wife, Melanie. To protect his two children from a previous marriage, John established a trust and named the children as beneficiaries. That way, the $2 million in assets he’d earned before his second marriage would go to the children when he died and not to Melanie.

But John’s plan may be sabotaged if Melanie decides to sue for a share of the money when he dies. Virtually every state has a law that entitles a surviving spouse to a portion of the estate — even if your will or a trust says otherwise. If Melanie does not expressly waive her right to the money in a prenuptial agreement, John’s children could lose a third of their inheritance should she demand part of the money.

If you’re like most, however, you want to do both: to provide for your spouse and preserve assets for the kids. To do this, consider a Qualified Terminal Interest Property, or QTIP, Trust. This trust lets your surviving spouse enjoy access to the assets during his or her lifetime, but enables those assets to pass to your children upon the surviving spouse’s death.

4.  Inheritances and Other Assets

Most states consider inheritances the property of the heir. Just be sure you keep the money in a separate account, or it might be considered community property if you divorce. Generally, any income or other property acquired during the marriage will be deemed community property also.

5.  After the Wedding

Now that the wedding’s over, it is particularly important that you revisit your financial plan. You should review:

  • Insurance. Do you have enough? Now that a new family is counting on your income, you may need to increase your life and disability insurance. If you are in your 50s or older, you should also purchase long-term care insurance, because odds are high that you or your spouse may need such care in the future.
  • Beneficiaries. Have your beneficiaries changed? Too many newlyweds fail to update the beneficiaries of their life insurance policies, trusts, company retirement plans, and IRAs. If you’re not careful, you’ll leave money to your ex-spouse instead of your current spouse!
  • Wills. A new marriage virtually requires a new will.
  • Assets. Do you need a post-nuptial agreement? Do you need to add a waiver to your prenuptial agreement? Talk with a lawyer to find out.

No doubt, marriage can be one of the most emotionally rewarding choices you can make in your life. But don’t ignore the financial implications of your impending union. Proper planning can be key to your continued happiness.

4 Benefits of a Revocable Trust


A revocable trust is a legal document in which you transfer your property to another party (the Trustee) who holds and manages it for the benefit of yet another party (the Beneficiary). A revocable trust becomes effective the moment it is signed. Consider the following analogy. A revocable trust can be compared to a suitcase. In it, you place all of your assets. You carry the suitcase and manage its contents during your life (assuming you are the trustee of your trust) and upon your death, the suitcase and all of its contents are automatically delivered to your loved ones, without court proceedings. Having obtained and filled the suitcase, the analogy continues, you may specify who carries it, including who carries it when you become incompetent or when you die and who receives the contents upon your death, assuming that you want the contents distributed then. The terms of the trust specify what you intend.

WHAT ARE THE BENEFITS OF A REVOCABLE TRUST? There are many good reasons to form a revocable trust:

  1. Avoiding probate. By creating a trust and transferring all your assets into it, you can avoid the process of probating a will at the time of your death. (This goal becomes particularly important if you own properties in more than one state. With a trust, you can avoid probating the will in all the states where you own property).
  2. Privacy. A trust allows you to maintain privacy about your beneficiaries and the assets in your estate. The creation and funding of a trust are private matters and not matters of public record, unlike wills and probate proceedings.
  3. Trustees. You may want the assistance of another person or institution to manage your assets now or in the future, when you are less able to do so yourself. By the same token, you may want this management assistance for some or all of your loved ones after your death. In your trust, you will be able to set out provisions in which you appoint specific agents to serve in these positions.
  4. Avoiding will contest. If you have reason to believe that there might be squabbling over your estate, a trust is a strong statement of your intentions, which is harder for contestants to attack.                                                                  IF I CREATE A TRUST, DO I STILL NEED A WILL? When we prepare your revocable trust, we will also prepare a simple will for you as an additional safeguard. If you die without all your property in the trust, this will can then be probated and “pour over” your probate assets into your trust, hence the name “pour-over” will.

Living Trusts in Texas: It’s all in the details!

If you have a living trust, you must remember that all of your assets should be owned by the Trust rather than by you personally. This is not a difficult process but it requires attention to the details. Are you in the habit of that? Living trusts are popular because it allows your heirs to avoid probate.

However, probate in Texas is simple and inexpensive. In Texas, there is a relatively easy procedure called an “independent administration” if your will has the proper language. An independent administration can often be completed within three months if no estate tax return needs to be filed.

If you choose to have a living trust, it’s all in the details! When you open a bank account, you must explain the trust to the bank and make sure the trust is the owner of the account. If you receive property by purchase or inheritance, you must purchase it in the name of the Trust or transfer it to the Trust immediately.

What if you miss the details? Because the benefits of a living trust (such as probate avoidance) apply only to the assets in the trust, if you miss the details your estate will have to go through probate. We have had clients whose relatives had a living trust but an asset was not in the living trust. Therefore, the will had to be probated and the living trust was all for naught.

Remember, if just one bank account is in your name alone instead of in the trust, then your estate will have to go through probate and incur all the costs of probate, on top of what you have paid to have a living trust.

What is a Lady Bird Deed?

A Lady Bird Deed is an enhanced life estate deed which is used to convey property to heirs and avoid probate.  Some interesting features of the Lady Bird Deed include:

  • The grantor retains homestead, creditor and tax exemptions
  • The Deed protects the grantor’s home from Medicaid claims during the grantor’s lifetime
  • The property passes to the recipient outside of probate without Medicaid claims and liens upon the death of the grantor
  • The grantor retains the right to sell or otherwise dispose of the property without the consent of the beneficiaries
You will not lose your Texas property tax homestead exemption; however, a home placed in a revocable or living trust (or similar type trust) loses the exclusion as a homestead and becomes a countable resource for the purposes of medicaid.  
Below are tax implications of the Lady Bird Deed:
**No Federal Gift Taxes 
Unlike other deeds, a Lady Bird Deed does not transfer any incidents of ownership in the property. Because the grantor does not actually transfer ownership of the property by executing a Lady Bird Deed, no federal gift tax issues arise.
**No Lost Step-Up in Basis for Capital Gain Taxes 
**No Lost Texas Property Tax Exemptions 
Lady Bird Deeds do not prevent the grantor from occupying the real property. Therefore, provided the property is the grantor’s homestead, he or she can continue to claim the homestead exemption, and over 65 or disabled homeowner exemptions permitted under Texas Tax Code $11.13
Below are potential drawbacks of the Lady Bird Deed:
**Law Could Change
Lady Bird Deeds are not without potential shortcomings. The law is subject to change. There is no guarantee that federal or state law will always permit the use of Lady Bird Deeds or that actions taken prior to such a change in law will be grandfathered. A recent example on point is HHSC’s December 2009 revised MEPD policy $F-3210 which states: “A home placed in a revocable or living trust (or similar type trust) loses the exclusion as a homestead and becomes a countable resource . . . .” 
**Title Insurability
In the vast majority of cases, when real property is purchased, sold or mortgaged title insurance is purchased to provide protection against defects in title. While there are approximately eighteen title companies authorized to sell title insurance in Texas, they each take a different approach to the risks they are willing to insure against. Because there is no uniformity in title coverage between insurers, holders of Lady Bird Deeds may run into obstacles when trying to obtain title insurance for the purpose of selling or mortgaging the property.

Do you need a pre-nuptial or marital property agreement? 5 Presumptions in Texas Marital Property Law

There are several presumptions within Texas marital property law that are effective unless the spouses alter them through the language of a property agreement. They are:

1.  In the event of a spouse’s death, the probate court must presume that all property in existence (without regard to what name is on the title for the item) is community property and each spouse owns an undivided 50% interest in it.

2.  In the event of a divorce, the divorce court must presume that all property in existence (without regard to what name may be on the title) is community property and the court has authority to divide it in a manner that the judge believes if fair.

3.  A reimbursement claim is to be paid if there has been a reduction in debt or payment for improvements from one estate (separate or community) that benefited another estate (separate or community).

4.  The income generated by a separate property asset is community property.

5.  The earnings of the parties during the marriage are community property.

The application of those rules may not always meet the objectives of the parties and, indeed, may not always be fair. Therefore, they are subject to modification through the terms of pre-nuptial or marital property agreements.

Remember Terri Schiavo: Importance of a Living Will

At 26 years old, Terri Schiavo was found unconscious on the floor.  When she arrived at the hospital, she was put on a ventilator to keep her breathing and was in a coma for more than two months.

When she emerged, she was unable to speak.  She had suffered severe brain damage because her brain was deprived of oxygen.  Multiple doctors diagnosed her as being in a persistent vegetative state.

What followed was a family battle between husband and family.  Terri’s family did not want to take her off the feeding tube and her husband who the court had appointed legal guardian contended that she did not want to be kept alive using artificial means.  Ultimately, this fight followed because no one truly knew what Terri’s wishes would have been.  On March 18, 2005, after an intense legal battle between husband and family, her feeding tube was removed.  This was more than 15 years after her husband found her unresponsive and without a pulse in their home.

Terri did not have a living will or directive to physician.  She did not have a legal document that stipulates one’s wishes for medical care should circumstances render a person unable to provide consent.  A Texas Directive to Physicians allows you to direct your physicians as to how you want your physicians to use artificial methods to extend your life in the event you are diagnosed with a terminal or irreversible condition.  It lets your family and doctors know your wishes.