A will sets out how and to whom a person’s assets will be distributed after they die. Assets can be left outright to heirs or in testamentary trusts (which spring into being at death. A Texas will which provides for an Independent Executor to serve without bond can save a lot of time and expense. It is important for people moving to Texas to review their documents and make them Texas-friendly so that the process can be efficient. A will from another state can, of course, be probated in Texas, but it will likely take a little more time and expense to do so.
A living trust is another estate planning tool that sets out how and to whom a person’s assets will be distributed after they die. If a trust is fully and properly funded, this happens without the need to probate a will. This means deeding real estate into your trust, retitling accounts, assigning personal property and other assets, and coordinating beneficiary designations to match your wishes.
You still sign what we call a “pourover will” that basically says any assets in your personal name should be “poured over” into your living trust after your death since that’s what holds your inheriting instructions.
You as Grantor/Trustmaker serve as your own trustee, but your successor trustee can step in to manage the trust assets in the event of your incapacity or death. Instead of probating a will at your death, a trust administration takes place, so it still requires work and the help of an attorney. For clients who own property in multiple states, this plan can save a lot of time and money, as the Texas probate court only has authority over Texas real estate. For someone who dies with a Texas will and owns property in another state, the executor would have to probate the will in Texas and then do an “ancillary probate” in each other state in which the deceased person owned real estate. A living trust also offers privacy, but only if the trust is fully funded.
As a parent of one college graduate and two college students, I strongly recommend that you speak with your adult child about getting at least the following documents in place:
Statutory Durable Power of Attorney
This power of attorney allows the agent you name to step into your financial shoes if you need them to. You can make it effective upon your incapacity (which you require a doctor’s note for them to act) or you can make it immediately effective (which is what I normally recommend). You should trust the people you name or you shouldn’t put them on this document. If it is immediately effective, you can ask your agent to take action on your behalf if you need to be out of town on business. This makes life a lot easier for business people who have busy schedules.
HIPAA Release and Authorization
This document lists who can access your health information and who can be in the hospital room hearing test and surgery results from the doctor if you’re in a coma. We always want to include those people listed in your Statutory Durable Power of Attorney (as that is who must verify bills to pay if they need to act on your behalf) as well as those named on your Medical Power of Attorney. If there are family members that you’d want to hear the information, but not make a decision regarding treatment, you can list them in this document so they don’t feel excluded or out of the loop in a tragic situation.
Medical Power of Attorney
The Medical Power of Attorney contains a list of the agents you trust to make medical decisions for you if you can’t tell the doctors what you want. You cannot appoint co-agents for this document under current Texas law.
Directive to Physicians
This is sometimes referred to as a Living Will. It sets out your wishes regarding end-of-life treatment. If there is no hope of recovery and you have a terminal condition or irreversible condition, you can set out what you want done in case you are in such a state that you can’t tell the doctors your wishes.
Declaration of Guardian (of Estate and Person)
This is the backup document for your powers of attorney listed above. If the worst happens and someone needs to care for you, place you in a care facility, or pay your bills, hopefully, they can use your powers of attorney. However, if your documents are so old that they’re no longer being honored OR you get dementia and either revoke the documents or present a danger to yourself or others, someone who cares about you will have to go before the probate judge and asked to be declared your legal guardian. By executing a Declaration of Guardian when you are of sound mind, you are letting the probate judge know who you trust to be declared Guardian of your Estate (to pay your bills and protect your assets) and Guardian of your Person (to make medical decisions, choose your assisted or nursing care facility, etc.). Having this document in place makes it more likely the judge will appoint the people you trust. Without this, chances are higher that the court may appoint an entity or person that may not have been your preferred choice.