Many people love to spend part of their summer vacation at the beach, enjoying the ocean and sunshine. But there may be unseen dangers crucial for beachgoers to remember. For example, the undertow is a current of water, often quite powerful, below the surface. It moves away from shore when waves are approaching it. It can easily knock a smaller person off balance and could be dangerous for those who are not strong swimmers. As a result, it is essential to take steps to protect family members from this danger. Likewise, there are several dangers associated with failing to put a well-thought-out estate plan in place. Without an estate plan, it could make your family members feel like they are drowning if you were to pass away.
Clients I've helped often talk about the peace of mind they feel knowing that they have protected themselves and their families from the unexpected. As an estate planning attorney in Austin, I help clients achieve that feeling of safety with a well-crafted estate plan.
Who decides who gets your stuff if you pass away without a valid estate plan? By default, much of your property will go to the individuals (heirs) spelled out in your state's intestacy law. Your assets will distribute in the proportions determined by the law. In effect, the state makes a will for you if you fail to do so. This may not seem like a significant concern. But, consider the potential consequences. A major one is that you could unintentionally disinherit loved ones you wanted to provide for, including your children.
The following are several situations in which you could unintentionally disinherit loved ones if you do not have a will or trust naming them as beneficiaries:
There are many other situations where intestacy statutes are unlikely to achieve your wishes. For example, a special needs child may need a more significant inheritance than a non-disabled adult child. The former may have more needs for care, and less human capital than the latter. Intestacy statutes provide no exceptions for these particular circumstances.
You can ensure that everyone you wish to benefit from your estate will do so in the way you want. They can receive the specific money and property you want them to have. You can do this by specifying the gifts you want each one to receive in your will or trust.
Outright gifts made according to an intestacy statute provide no protection for your spouse or children, which is often problematic. Once they receive a distribution from your estate, the money and property they have acquired may not benefit them. This is the case if they have creditors or ex-spouses who can reach it to satisfy their claims. In addition, perhaps one or more of your children are irresponsible with money (i.e., spendthrifts). They could quickly squander the money and property you have worked a lifetime to save. You could address these common problems by creating certain types of trusts. There are several possibilities to consider. Two of the most commonly used trusts are those that distribute money and property in certain percentages at specific ages. The other type is a discretionary trust.
The trustee will protect money and property from creditors until the trustee distributes it to your chosen beneficiaries. Creating a trust with distributions at specific ages will help to ensure that your beneficiaries will only begin to receive distributions at an age when you believe they will be sufficiently mature to handle them responsibly. Also, you can make the gifts in increments. Therefore, you can rest assured that your beneficiaries will not be able to exhaust their entire inheritance quickly.
The trustee of a discretionary trust has the authority to make distributions to beneficiaries. But the trustee does not have to make them. The beneficiaries do not have a legally enforceable right or entitlement to receive any trust funds. Therefore, creditors cannot access the trust's money and property held by the trust until the trustee makes a distribution. The trustee of this type of trust should be someone you have confidence will make wise decisions. Such as when and if they should make distributions giving that person a significant degree of control over the trust's funds.
Instead of being immediately available to provide for the financial needs of your family members, your money and property will have to go through probate. This process could last up to a year even if your estate is not very complex. This is true even if you have a will. Your heirs can avoid probate only if you die with no accounts or property in your name. Typically, you can accomplish this by transferring your money and property into a trust. Or naming a beneficiary for your accounts and other eligible property.
In addition, it is essential to remember that if you have minor children, a court will not immediately distribute to them (nor should they) money or property they inherit under state law or a will. Instead, minor children are not legally able to control the property. Unless you have named someone you have chosen to fill this role in your will, a court will appoint a conservator. The conservator will manage the inheritance for them until they reach the age of majority under state law. At that point, the conservator will distribute the assets to them directly.
Locating, screening, and appointing an appropriate person (who may not be someone you would have chosen) is time-consuming for the court. Further, until the administration process concludes, your children may not receive all of the money and property you wanted to provide to them. Lastly, while the court will supervise the conservator, there is no guarantee that the court-appointed individual will use the money and property for the benefit of your children in the way you would have wanted.
A carefully designed estate plan is like a life vest for your family in a rough sea. Losing a family member is never easy. But we can help you put plans in place to give you peace of mind you won't have without an estate plan. You will know that your grieving family will not be overwhelmed if you die. Schedule an appointment. Let's talk about the best estate plan to provide for the needs of your family and loved ones. If you prefer, we are happy to meet with you over the phone or by videoconference.
(By Appointment Only)
14425 Falcon Head Blvd
Austin, TX 78738