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News and Notes

January 1, 2017

10 STEPS TO GETTING STARTED WITH YOUR ESTATE PLANNING With the Estate Planning tax exemption being dramatically reduced from five million to one million dollars or lower at the beginning of 2013 now is the time to review your estate planning documents. Procrastinating about your estate planning? If you’ve been postponing it because you’re just not sure how to get started, here are some steps to help spur you on. 1. Set a deadline. We all know how life can get in the way of something like this. Plan to have it done by the end of the year or by your next birthday or anniversary. 2. Become an educated consumer. It is much better to become educated about the basics of estate planning on your own time than to pay an attorney or other professional to educate you. Save your money for questions about your specific situation. There is good general information readily available online and in books written specifically for consumers. 3. Organize your financial information. Create a personal balance sheet. Make a listing or spreadsheet of your assets, their market values, any debts against them, the resulting net values and how they are titled. Gather the actual deeds and statements so your attorney can see them. (See www.talbotlawfirm.com for a financial checklist.) Include your home and any other real estate; other titled property such as a car or boat; bank accounts; interest bearing accounts (savings, money market, CDs); stocks, bonds, mutual funds and other investment accounts; retirement savings including profit sharing, IRAs and pension plans; business and partnership interests; life insurance policies and annuities; receivables (people who owe you money); items of special value such as coin collections, antiques, artwork, jewelry; an estimate of your personal property; and a listing of all debts other than those connected to the assets listed above (credit cards, personal loans, unsecured lines of credit). Be honest about this. Your attorney can only plan with the information you provide. If you provide incomplete information, you will have an incomplete plan. 4. Make a list of all the people you want to inherit from you (spouse, children, grandchildren, nieces, nephews, siblings, a life partner to whom you are not married, special friends, etc.). Include their full legal names, dates of birth, current addresses and how they are related to you. Be sure to note if there are any special needs involved (child, parent, even a pet). You may also want to include a charitable, educational or religious organization. 5. Think about how and when you want these people and/or organizations to inherit from you. Treating all of your children equally is not always the fair thing to do; for example, one child may have done very well in business and another may be just getting by on a teacher’s salary. If you are married, you will want to make sure your spouse has enough money to live out the rest of his/her years securely. If this is your second marriage, you will want to make sure your children will also inherit from you. Some people like to distribute the full inheritance right away, others in installments. Still others prefer keeping the inheritance in a trust where it will be protected from creditors, divorce, and irresponsible spending. 6. Think about whom you want to be your executor (if you have a will) or your trustee (if you have a trust). Automatically naming your oldest child or naming all of your children to act together is not always the best idea. The person(s) you name to take on this responsibility should be someone you trust, whose judgment you respect, and who will also honor your wishes. If you don’t feel you have good candidates (they live too far away, they’re too busy, they aren’t responsible enough or your children have a history of disagreeing with each other), consider a professional to be your executor or trustee. If you have minor children, you will need to decide whom you want to raise them if you should die before they reach legal age and whom you want to manage their inheritance until they reach the age(s) you want them to inherit. 7. Think about whom you would want to make health care decisions for you if you become unable to make them for yourself and if you have specific instructions about your care or a certain facility (hospital, assisted living facility, home care or nursing home). 8. Write down your thoughts and questions as you go along so you will remember to discuss them with your attorney. You do not have to make all these decisions on your own. Most estate planning attorneys have counseled many families and they have seen the results of proper and improper planning. An experienced attorney will be able to guide you with these decisions, but he/she does not know your family like you do. If you give some advance thought to these matters, it will help your attorney to help you. Keep in mind that estate planning is a process. It may take several meetings with your attorney to get things the way you want them. You will also need to update your plan from time to time as your situation changes over your lifetime. 9. Yes, you do need an attorney. An experienced estate planning attorney has the technical expertise to draft documents correctly and will know how to make your plan work for you, the way you want. They also understand the legal requirements in your state. Laws vary greatly from state to state, and a do-it-yourself program or kit may not tell you everything you need to know. A simple mistake or omission can have far reaching complications that will only come to light after you are gone. 10. If you are concerned about the expense, tell the attorney your concerns. Perhaps you can pay in installments. Maybe you can do more of the work upfront to save the attorney some time (and save you some money). If he/she can’t do it on your budget, perhaps you can get a referral to someone who can. Start with what you can afford (a will and term life insurance, for example) and upgrade later when possible. Yes, this is a big project and it can seem overwhelming. But remember why you are doing this: you love your family and you want to do what is best for them. Once your estate plan is in place, you will have the best benefit of all—peace of mind.

March 1, 2017

WHAT IS PROBATE ADMINISTRATION? Probate administration authorizes an applicant to “step into the shoes” of a decedent in order to collect estate property, inventory assets; pay or reject debts; file and pay estate taxes; and distribute any remaining assets to beneficiaries. A person’s estate does not automatically transfer to a relative upon their passing in most instances and requires probate.

May 1, 2017

PROPERTY TAX NOTICE PROTEST DEADLINE- It's time for appraisal tax notices to go out this year. If you find the value has increased (meaning a higher tax burden) you can contest the increase. The Appraisal Review Board (ARB) takes protest through May 31st with hearings scheduled in June. Some counties allow you to file your protest on online while others require that you mail in the protest form.

July 1, 2017

CNN MONEY (LESSON 21 - ESTATE PLANNING) In Lesson 21 Why do I need a will? Do I need a living will and health-care proxy? Why should I assign power of attorney? Does a trust make sense? What's the best way to give money now? 1. No matter your net worth, it's important to have a basic estate plan in place. Such a plan ensures that your family and financial goals are met after you die. 2. An estate plan has several elements. They include: a will; assignment of power of attorney; and a living will or health-care proxy (medical power of attorney). For some people, a trust may also make sense. When putting together a plan, you must be mindful of both federal and state laws governing estates. 3. Taking inventory of your assets is a good place to start. Your assets include your investments, retirement savings, insurance policies, and real estate or business interests. Ask yourself three questions: Whom do you want to inherit your assets? Whom do you want handling your financial affairs if you're ever incapacitated? Whom do you want making medical decisions for you if you become unable to make them for yourself? 4. Everybody needs a will. A will tells the world exactly where you want your assets distributed when you die. It's also the best place to name guardians for your children. Dying without a will -- also known as dying "intestate" -- can be costly to your heirs and leaves you no say over who gets your assets. Even if you have a trust, you still need a will to take care of any holdings outside of that trust when you die. 5. Trusts aren't just for the wealthy. Trusts are legal mechanisms that let you put conditions on how and when your assets will be distributed upon your death. They also allow you to reduce your estate and gift taxes and to distribute assets to your heirs without the cost, delay and publicity of probate court, which administers wills. Some also offer greater protection of your assets from creditors and lawsuits. 6. Discussing your estate plans with your heirs may prevent disputes or confusion. Inheritance can be a loaded issue. By being clear about your intentions, you help dispel potential conflicts after you're gone. 7. The federal estate tax exemption -- the amount you may leave to heirs free of federal tax -- changes regularly. The estate tax hit $3.5 million in 2009, but was phased out completely in 2010, but only for a year. Unless Congress passes new laws between now and then, the tax will be reinstated in 2011 at $1 million. 8. You may leave an unlimited amount of money to your spouse tax-free, but this isn't always the best tactic. By leaving all your assets to your spouse, you don't use your estate tax exemption and instead increase your surviving spouse's taxable estate. That means your children are likely to pay more in estate taxes if your spouse leaves them the money when he or she dies. Plus, it defers the tough decisions about the distribution of your assets until your spouse's death. 9. There are two easy ways to give gifts tax-free and reduce your estate. You may give up to $13,000 a year to an individual (or $26,000 if you're married and giving the gift with your spouse). You may also pay an unlimited amount of medical and education bills for someone if you pay the expenses directly to the institutions where they were incurred. 10. There are ways to give charitable gifts that keep on giving. If you donate to a charitable gift fund or community foundation, your investment grows tax-free and you can select the charities to which contributions are given both before and after you die.

August 1, 2017

NON-PROBATE BENEFICIARY DESIGNATIONS: Very often a new client will come to the office and ask about the need for living trust or revocable trust. Many years ago trust were being sold as a way to avoid probate administration. In many instances trust are no longer needed and the probate avoidance benefit that they were designed for can now be accomplished another way. First, I should mention that probate administration in Texas is not an expensive process. Beyond that there are ways to transfer assets through a beneficiary designation. Most financial instruments such as life insurance policies, annuities, IRAs and other tax-favored retirement accounts, employer-sponsored benefit plans, bank and brokerage firm accounts allow an account holder to fill out and turn in transfer on death (TOD) or payable on death (POD) form to establish or change beneficiary designation. By utilizing this process these assets become non-probate assets. What that means is that after the individual account holder passes away the beneficiary designation allows the asset to transfer automatically to a named beneficiary without court intervention. If you have not done so already you should make sure that all of your financial accounts and investments have both a primary and a secondary beneficiary. This is another way to avoid probate administration. For additional information please see an article on this topic at: http://www.marketwatch.com/story/make-this-estate-planning-move-right-now-check-your-beneficiary-designations-2017-06-29.

September 1, 2017

WHAT IS ELDER LAW? Elder law is an area of law that focuses on the legal needs of the elderly. Attorneys who specialize in elder law usually have expertise in matters related to: 1) Medicare, Social Security, veterans disability, and other government benefit programs; 2) Financial Powers of Attorney, which provide a person with the ability to make financial decisions on another person's behalf; 3) Health and personal care planning, including medical care directives, long-term care plans, and end of life decisions; 4) Retirement planning; 5) Wills, trusts and guardianships; and, 6) Quality of life and independence. Elder law attorneys act as the counselors and advocates for older clients who have a variety of different issues that we all face as we get older. It's important to have planned ahead for your golden years and to make sure you have professionals you can rely on in a time of need.

October 1, 2017

NEW CHANGES TO TEXAS DURABLE POWER OF ATTORNEY (Effective September 1, 2017) For the second time in two years legislation has changed the statutory power of attorney that has been approved for use in the state of Texas. Effective September 1, 2017 the power of attorney has changed once again. The 85th Texas Legislature made significant changes affecting probate, trust and guardianship law. Most bills become effective September 1, 2017, including a substantial rewriting of the durable power of attorney act. Financial Durable Power of Attorney Making acceptance of a power of attorney by a third party mandatory, although there are many limitations and exceptions to this. (Estates Code Sections 751.201 -- 751.213) Changing the statutory durable power of attorney form, meaning that attorneys will need to update their forms for use beginning September 1, 2017. (Estates Code Section 752.051) Defining when and how an agent accepts appointment. This determines when he or she owes fiduciary duties as agent. (Estates Code Section 751.022) Permitting the principal to delegate to the agent or another person the authority to name successor agents. (Estates Code Section 751.023) Providing that the agent is entitled to compensation and reimbursement of expenses unless the power provides otherwise. (Estates Code Section 751.024) Allowing opt-in (non-default) powers to change, amend or revoke a trust, to make a gift, to create or change survivorship rights, to create or change beneficiary designations and to delegate authority. (Estates Code Section 751.031) Imposing a duty to preserve the principal's estate plan. (Estates Code Section 751.122) Stating who has standing to bring an action regarding a power of attorney. Persons with standing include the principal, the agent, a guardian of the principal, a person named as a beneficiary to receive property on the principal's death, a governmental agency with authority to protect the principal, or another person who demonstrates to the court sufficient interest in the principal's welfare or estate. Medical Powers of Attorney HB 995 is REPTL's medical power of attorney bill. It revokes the authority of a spouse under a medical power of attorney if the marriage is dissolved and makes the disclosure statement a part of the medical power of attorney form itself. The statutory form must be used -- REPTL's attempt to make the form permissive rather than mandatory was rejected due to opposition from the medical industry. While the new statutory durable power of attorney form is effective September 1, 2017, the new medical power of attorney form must be used beginning January 1, 2018.