Wills & Probate…
LAST WILL & TESTAMENT
I’ve been preparing wills and trusts for decades, and it’s a large part of my law practice. The initial client interview is probably the most important part of this process. People differ, and their legal needs vary considerably. A frequently asked question is: How much does a will cost? Unfortunately, I can’t answer that question until we have the initial conference. I need the answers to a lot of questions before I can describe your options, make recommendations, and determine fees.
The initial interview takes at least an hour. If married, both spouses normally should be present. It will save time if basic information is prepared in advance, so I suggest you print the appropriate Will Information Interview Form from this website, fill it out, and bring it with you. Currently, most clients don’t have to be concerned with federal or state inheritance or estate taxes. If that’s your situation, I may not need to know the extent of your wealth as much as the particular types of assets you own. However, you should have an educated guess of your net worth, by which I mean the total value of your assets should you die. This includes life insurance death benefits, cash, real estate, retirement plans, investments, and anything else of significant value, less your debts.
I’ll also need complete legal names, and possibly prior names, of anyone who may be mentioned in a will, trust, or power of attorney, including immediate family members, beneficiaries, executors, guardians, trustees, or agents. If you (or you spouse) have been married previously and/or have children from previous relationships, please bring that information with you, preferably typed or printed. It helps to know the ages of children and/or grandchildren as well. If you are married, but own any separate property (generally property acquired before marriage or by inheritance or gift), let me know, because your Last Will and Testament generally disposes of your one-half of the community property, plus all of your separate property. If you expect a significant inheritance, please let me know, as that may be a consideration in estate planning.
If you have minor children, you will probably want to name a guardian (and possibly a backup) in your will. I usually recommend choosing an individual rather than a couple (what if they divorce?). The last surviving parent has the right to name a guardian, and may choose to separate the day-to-day responsibility of raising the children (Guardian Of The Person) from the financial duties (Guardian Of The Estate). Give this some thought before you come in, but do not put off your Last Will & Testament just because you cannot decide on a guardian for your children. A separate document (Designation Of Guardian) can address that issue. Competent adults can also name a guardian for themselves (should the need ever arise), or exclude certain persons (like your estranged brother).
POWER OF ATTORNEY
A Power Of Attorney (POA) permits one person (the Principal) to appoint another person as his or her agent (Attorney-in-Fact). Obviously, the agent needs to be someone you trust, such as your spouse. A POA can often avoid the necessity of a formal guardianship, which is complicated, expensive, and requires a bond..
If you never get around to getting a Will, you will probably create a hardship and extra expense for your heirs, but that’s only after you die. However, not having a POA may cost you directly during your life. If you lose mental capacity, or perhaps become severely injured or ill, a POA may save you a lot of money because the legal alternative is a guardianship, which is usually difficult and expensive. It could be that a POA is even more important that a Will in many cases. It’s also easy and cheap. However, the agent you choose will have a lot of power, so he or she must be someone who has your complete and utter trust. Being an agent also brings with it a lot of responsibility, because the agent owes a fiduciary duty to the principal, which requires prudent judgment, caution about self-dealing, avoidance of conflict of interests, and good record keeping. Be sure to inform the person or persons that you want to name as your agent, and make sure they are willing and able to serve you. POAs can be revoked or amended, in which case be sure to notify the agent in writing that he or she no longer is your agent — and make sure your new agent has a copy of the revocation of the previous agent’s authority.
Texas has a statutory durable power of attorney. “Statutory” means that the state legislature has passed a statute which officially “blesses” specific language. “Durable” refers to the fact that a competent person can execute a POA that will still be effective when and if the principal loses competency. POAs may be limited or general, specific or comprehensive.
LIVING WILLS/HEALTH CARE POWER OF ATTORNEY
Another option I normally discuss in the initial will interview is a Living Will, or Directive to Physicians, which expresses your wishes concerning difficult questions such as whether you desire to be kept alive by artificial means if you face imminent death or an irreversible condition and prefer to being kept out of pain and hydrated while nature takes its course, rather kept alive by artificial means. Usually, we combine a Living Will with a Heathcare POA (HCPOA), which appoints an agent with the authority to make health care decisions for you if you cannot make those decisions yourself. We also include a HIPPA waiver, which removes any doubt that you want your health care agent to have access to your personal health information so that he or she can make an informed decision.
Living Trusts, also called Loving Trusts,are marketed nationwide, but are rarely desirable for Texans in my opinion. They do not avoid estate taxes! The primary selling point for a Living Trust is that it may avoid probate. However, the cost and trouble of creating a Living Trust and re-titling all assets you own now or in the future generally outweighs the advantages. Texas has a fairly modern Probate Code, which if utilized by having a properly prepared Last Will & Testament and related documents, usually is more practical and less expensive than going the Living Trust route.
Any of the above described instruments can be prepared and executed (signed in front of witnesses with the proper formalities) separately, or at the same time. However, you will often save money by asking me to “bundle” the charges for all the documents to be prepared and executed at the same time.
1. DO I NEED A WILL?
For most, the short answer is “Yes.” It’s not something we like to think about, but the old saying that “Nothing is certain but death and taxes” is pretty accurate. Death is certain, only the timing is unknown. When we die, most of us leave an estate, consisting of property owned at the time of death. A Will (Last Will & Testament) contains instructions by the testator (the person making the will) concerning how the estate will be divided among his or her heirs. A will also generally names an independent executor to serve without bond. The independent executor is the person who who is charged with the responsibility of carrying out the instructions in the will and is usually the person who selects the attorney to handle the probate.
Getting a will prepared is something we tend to put off, like a visit to the dentist. We know we really should get one, but dread the process, probably because it forces us to contemplate our own death.
Preparing a will is not as painful or expensive as you might think. In the long run, having a will makes things easier, quicker, and less expensive — for your family, friends, the court system — pretty much everyone. In fact, not having a will is rather inconsiderate when you think about it. While most wills are not complicated, they must be prepared carefully in order to be effective and carry out your wishes efficiently and inexpensively. Non-lawyers who attempt to draft their own wills may inadvertently leave big problems to be resolved by their loved ones at a time when they are already anxious and depressed. Also, each state has different requirements for a valid will. Filling out some form you found on the internet is very risky, and I’ve seen some colossal screw ups!.
2. WHAT PROPERTY DOES MY WILL DISPOSE OF?
Generally, all of your separate property (acquired before marriage or received during marriage by gift or inheritance) and your one-half of the community property if you are married. This is why married persons must each have their own will, which may or not be mirror images (reciprocal wills) of each other.
Assets that may not pass according to your will (Non-Probate assets), such as IRAs, 401(k)s, insurance policies, bank accounts — are paid to designated beneficiaries — provided they survive you. If you own these kind of assets, and are unsure who you’ve named as beneficiaries, you should try to obtain this information before you come in for your initial conference.
3. WHAT IS PROBATE?
After your death, few people will even know whether you had a will, and until the will is probated, it’s just a piece of paper. For your will to be given effect, it must go through a public legal process called probate. Usually, the Independent Executor named in the Will consults with a lawyer who finds out the circumstances and determines if the Will needs to be probated, and what type of probate procedure is best for the particular situation. If the will is to be probated, the lawyer will prepare and file an application to admit the will to probate, and a notice is posted publicly. In most cases, the Will is then “proved up” in the Court where the application was filed. Upon qualifying, the executor or administrator of the estate obtains Letters Testamentary, or Letters of Administration, which are proof of his or her authority to act on behalf of the estate. Using that authority, he or she will collect the assets, address debts and taxes, and distribute the remaining assets to beneficiaries named in your will. Often, the Independent Executor will be your spouse, who may also be the primary heir. In that case, probate is usually swift and uncomplicated. Of course, there can be complications. Creditors may file claims; close relatives who were not named as beneficiaries may contest the Will, but that’s in a small minority of cases.
4. WHAT IF I DIE WITHOUT A WILL?
If you die “intestate” (without a valid will), your estate will be distributed according to the laws of intestate succession. In that case, the law determines who will handle the probate process, who will inherit, and how your property will be divided. Courts can’t alter this division of your estate — they must follow the law. Because the rules of intestate succession will not necessarily follow your wishes, those persons you wanted to inherit your property might get less than you intended or nothing at all, and conversely, persons you did not want to inherit your estate, would. Also, the property in your estate may be tied up in court proceedings, which can be costly and time-consuming. Not only will this be frustrating to your heirs, but it will lessen the value of your estate. Most of the “horror stories” that give probate a bad name involve situations where the decedents did not have a valid will or wrote their own will without legal advice.
5. WHAT ABOUT MY MINOR CHILDREN?
Your will may designate a guardian to take care of your children under 18. Sometimes, it may be a good idea to choose separate individuals — a Guardian of the Person, who will actually raise minor children, and a Guardian of the Estate, who will be in charge of their assets, including what they inherit from you. You may also include a testamentary trust in your will, to be managed by a trustee chosen by you, to distribute the trust assets or income to your children in accordance with your wishes. For example, the trustee could be required to use the funds for your child’s health, education, maintenance, and support. There is also no reason why the same person couldn’t serve as both Guardian and Trustee, if that is your wish.
6. WHAT’S A LIVING WILL?
A Living Will, or “Directive to Physicians,” is a document that instructs your physician regarding “end of life” decisions, such as to withhold or withdraw life-support if you become terminally ill and certain conditions are met. If this is your wish, you should consider signing a Living Will. Many people find it convenient to execute a Living Will at the same time that they execute a Last Will & Testament. Commonly, we combine a Living Will with a Health Care Power of Attorney and a HIPPA waiver.
7. WHAT IS A HEALTH CARE POWER OF ATTORNEY?
A Health Care Power of Attorney (HCPOA) is often executed in addition to a will and Living Will. A HCPOA permits you (the principal) to name an agent to make health care decisions on your behalf if you are unable to make them. A HCPOA is usually combined with a Living Will.
8. WHAT IF I BECOME INCAPACITATED?
A general statutory POA may give your agent the authority to manage your property on your behalf, either immediately or in the event you become incapacitated, depending on how it is drafted. These are inexpensive instruments which usually are designed to avoid very expensive and time consuming guardianship proceedings. However, because your agent could possibly misuse the POA, he or she should be someone in whom you have absolute trust.
9. WHAT IS A LIVING TRUST?
A Living Trust is not a good idea for most Texans, although it may be used in appropriate situations, such as to hold legal title to out-of-state real estate. A Living Trust is a document executed during a person’s lifetime, usually together to a “Pour-over Will.”. Property in the trust passes according to the terms of the trust and is not subject to probate. While Living Trusts are sometimes promoted as offering estate tax advantages, this is incorrect. Even if you have a Living Trust, a will is still necessary because it’s virtually impossible to be certain that every single asset owned at the time of death has been conveyed to the trust. Some assets may not even be known to exist, such as a financial settlement reached as a result of a wrongful death. You should consult with an attorney about the best approach for you. For the vast majority, a will and a statutory durable POA are cheaper and preferable to Living Trusts. The seminars where Living Trusts are promoted are often offered “free,” but if the participants fall for the marketing pitch, the actual cost of the Living Trust is usually far more than a proper will and related documents, which are still needed anyway. The promoters tell their audiences not to listen to attorneys’ criticism of their product, because lawyers want you to hire them to draft wills, and these living trusts eliminate the necessity for wills! Once bought, the sponsors of the seminar are gone, leaving no one to answer questions and no one to remind their customers that all assets purchased thereafter must also be put into the trust for it to stand a chance of doing what they were designed to do.
10. HOW MUCH DOES A WILL COST?
I can’t know what you want or need without first interviewing you. Consequently, I can’t quote or estimate a fee until I know what I’m going to be doing. It’s like asking a car dealer how much does it cost to buy a car. In the initial office conference, attorneys will usually spend a lot of time explaining options and the complexity of those choices. You, the client, makes the choices, which has a lot to do with the cost.
11. ADDITIONAL COMMENTS ABOUT PROBATE
I find it helpful to think of probate as the legal process which passes title to assets that belonged to a deceased person to the heirs of the deceased. Many people fear probate because they’ve heard all kinds of horror stories, usually from other states that have totally different probate laws. Generally, these fears are not justified, especially if the deceased had a will drawn by a competent attorney who took the time to educate his client regarding his/her choices.
Some assets do not pass pursuant to the terms of a will, such as bank accounts which are often payable on death to a surviving spouse or child. Insurance policies and retirement plans are other examples. Lawyers refer to these assets as non-probate assets. It helps to know the details regarding these assets to advise clients, and to determine what type of probate is going to be necessary and how difficult or time-consuming it may be.
More often than not, my clients are primarily concerned with who will inherit their worldly goods. It should come as no surprise that people generally favor their spouses and children, but lawyers are concerned with how smoothly and inexpensively the transfer of those assets will be. Generally, it’s important that the will names an Independent Executor with backups, and usually, bond should be waived. I worry about estate taxes, guardian and trustee choices, spendthrift trusts, estate liquidity, separate property, and other things that my clients often have not contemplated. The more you have, the more complicated your will is likely to be, and the more planning and expense you should expect.
Most of my clients want all these issues discussed and dealt with, but express a desire to “keep it simple.” Unfortunately, it’s not always simple. I attempt to balance reasonable simplicity with appropriate complexity. I generally offer suggestions, but the decisions are left to the client.