Understanding the Fundamental Differences between Living Trusts and Irrevocable Trusts

February 15th, 2013

Many people recognize the value of a trust because of its ability to prevent the delay and expense associated with the probate process, but some do not know the difference between an irrevocable trust and a living trust. The distinction between these types of trusts has critical importance in terms of ownership of assets, legal consequences and tax implications. Texas estate planning attorney Tom Reino assists clients in developing comprehensive estate plans that include appropriate types of trusts specifically tailored to the unique situation of his client. Mr. Reino has provided an overview of differences between an inter vivos trust (living trust) and an irrevocable trust.

Living Trust (i.e. Revocable Trust, Inter Vivos Trust)

A living trust is a trust that you have the power to terminate at any time. Individual terms, such as the indicated trustee of the trust, may be modified through a trust amendment. If you decide that you no longer wish the trust arrangement to exist at all, you may cancel the trust in its entirety by using a trust amendment and restatement. While living trusts offer an enormous amount of flexibility in terms of reclaiming and exercising control over property in the trust or changing the beneficiary or trustee who manages the trust, there are disadvantages to living trusts so they are not right for everyone.

Because you retain the ability to terminate the trust and exercise control and ownership over the assets in the estate, the assets remain your property for both debt enforcement by creditors and tax purposes. Because you maintain ownership and control over the assets, the assets may be subject to debt collection procedures by creditors. The property in a living trust will also all be calculated among your assets for Medicaid planning purposes if you move into a nursing home or similar eldercare residential facility. A final disadvantage of a revocable trust is that the assets will be subject to state inheritance tax as well as both federal and state estate taxes.

Irrevocable Trust

An irrevocable trust is one that cannot be changed, amended or terminated once executed or may become irrevocable once the person who makes the trust passes away. While an irrevocable trust does not allow the same exposure of the trust assets to seizure by creditors and will not be considered among your assets for Medicaid planning purposes, there are other disadvantages to an irrevocable trust. The trustmaker loses all control and ownership over the assets. If one’s wishes change with regard to who should manage the trust or who should be included among the beneficiaries, the grantor has no ability to change these terms once the trust becomes irrevocable.

At our Arlington estate planning law firm, Thomas D. Reino carefully evaluates your estate to create an estate plan that is appropriate for your specific situation. If you have questions or need estate planning documents prepared, we invite you to contact us at 817.303.2133 or send us an email at tom@tomreinolaw.com so that you can set up an initial consultation.

Distribution of an Estate in Texas without a Will: Texas Intestate Succession

February 6th, 2013

While an estate plan that includes a trust or will provides the most common options for ensuring your intentions are carried out regarding your estate, many people never get around to having estate planning documents prepared. In other cases, people use computer programs, typing services or paralegals who prepare estate planning documents improperly, and their estate planning documents are determined to be invalid. In either case, the Texas law of intestate succession will determine how one’s estate will be distributed. We have provided an overview of how intestate succession works in Texas if the decedent does not have a will.

If a decedent is unmarried and dies without a will, the decedent’s children or their descendants (i.e. grandchildren, great-grandchildren, etc.) will be distributed to your children. The distribution between one’s children will be an equal share to each living child or (descendent of a child). When there are no children and a decedent was unmarried, Texas intestate law will direct that assets pass to the next closest biological relative as follows:

Two Surviving Parents: If you have two surviving biological or adoptive parents, each surviving parent inherits half of the estate. Step-parents do not inherit under Texas intestacy law.

Single Parent and Siblings: When a decedent who passes away is survived by a parent and siblings or descendants of siblings, the parent inherits half the state and the other half of the estate is split equally among the siblings.

Single Surviving Parent No Siblings: If a person dies with only a single surviving parent and no surviving sibling or descendants of siblings, the surviving parent inherits the entire estate.

Siblings with No Surviving Parents: When a person dies with no surviving parents, the surviving siblings or their descendants share the estate equally.

No Surviving Parents or Siblings: When a person dies with no surviving parents or siblings or descendants of either, the estate will be divided into two equal shares. One share will be provided to any paternal relatives and the other share to any maternal relatives starting at your grandparent’s generation. The Texas probate courts will continue to search back through generations until a surviving relative is discovered.

At our Arlington estate planning law firm, Thomas D. Reino carefully evaluates your estate to create an estate plan that is appropriate for your specific situation. If you have questions or need estate planning documents prepared, we invite you to contact us at 817.303.2133 or send us an email at tom@tomreinolaw.com so that you can set up an initial consultation.

Texas Estate Planning FAQ [Part II]

January 23rd, 2013

This is the second in a series of FAQs that address common questions we receive regarding estate planning issues at the Texas estate planning law office of Thomas D. Reino. If you are considering creating an estate plan, updating your estate planning documents or just have general estate planning questions, the best way to obtain detailed information is to schedule a consultation. We have provided answers to basic questions, but you can obtain more detailed information during your initial meeting with a Texas estate planning attorney in our office.

Why can’t I just use legal software to prepare my own estate planning documents?

Although you can use this type of software, there is significant risk associated with using these generic programs. Texas has very specific legal requirements for a last will and testament and other estate planning documents. These programs may not take into account the specific Texas substance and form requirements for particular estate planning documents to be enforceable. If a will is not prepared properly, the will may be determined to be invalid so that state intestacy law dictates how your property passes rather than your will.

Is it true that probate should be avoided at all costs?

While probate can be time consuming, slow and costly in many jurisdictions, Texas has a process called “independent administration” that avoids these pitfalls. While in some states the drawbacks of probate make it essential to have a living trust to avoid probate, this is not necessarily the case in Texas. This expedited process can take as little as three months depending on the circumstances and may be no more expensive than use of a living trust. The tax implications of a will and living trust are also similar so probate is not necessarily a process to avoid at all costs like it might be in some other states.

Do I need a durable power of attorney?

If you become incapacitated because of a coma or mental incapacity, a durable power of attorney for financial decisions permits you to designate someone as your “attorney in fact” to manage your financial affairs. The power of attorney can provide broad powers to dispose of property, manage assets, execute contracts and manage all your financial affairs with broad discretion, or the authorization can be narrowly tailored to a single task like executing a specific contract.

Will my heirs have to pay estate tax?

The federal estate tax is levied against the “taxable estate” transferred to one’s heirs. The value of one’s taxable estate is based on the fair market value of assets in the estate less liabilities and funeral costs. The majority of parties pay no estate tax because $5 million (adjusted for inflation) can be transferred without any estate tax liability.

What does intestacy mean?

If you do not have a will or trust, state law will determine how a decedant’s assets are distributed upon death without regard to a decedent’s wishes or intentions.

At our Arlington estate planning law firm, Thomas D. Reino carefully evaluates your estate to create an estate plan that is appropriate for your specific situation. While this blog post provides answers to some common estate planning questions, the best way to get more detailed information is to contact us at 817.303.2133 or send us an email at tom@tomreinolaw.com so that you can set up an initial consultation.

Texas Estate Planning FAQ [Part I]

January 9th, 2013

There are many questions we receive from those throughout Texas about estate planning and probate issues. The most effective way to obtain detailed legal advice on issues related to protecting your estate as well as disposition of your assets is to schedule a free consultation with a Texas estate planning attorney. However, we understand that sometimes it is helpful to have basic general information when considering whether to put together an estate plan or meet with a probate attorney. We have provided answers to frequently asked questions (FAQs) regarding a range of estate planning issues below.

Why do I need an estate plan?

An estate plan ensures that your wishes are observed in terms of disposition of your property at death and that your family is provided for because of your financial planning. Your estate plan also should include tools so that you can designate the type of extraordinary medical care you wish to receive and designate someone to make decisions regarding your medical and financial matters if you become incapacitated. Parents even use estate plans to designate a guardian for their children in the event they die.

Do I really need an estate plan if I already have a will?

While a will is a valuable estate planning tool, it does not cover all estate planning issues. Although your will may indicate how you want your assets distributed among your family and/or friends, it does not take effect unless you have passed away. This means that it does not address who will manage your financial affairs or make medical decisions for you if you become incapacitated. There are a range of documents that must be executed to have a complete estate plan, which typically should include at least the following: durable power of attorney, directive to physician (also called a living will), medical power of attorney, last will and testament and HIPAA authorization. Although there are other estate planning documents that may make sense given your individual situation, these are a good foundation if you are building an estate plan in Texas.

What kinds of medical issues can an estate plan cover?

There are a range of health care issues that may be covered by your estate plan including the following:

HIPAA Authorization: The Health Insurance Portability and Accountability Act is a federal statute that restricts who may have access to your medical records and information and prescribes penalties for violating your privacy. If you prepare a HIPAA authorization, it permits you to designate who may have access to this information so that your medical provider and insurance company will share information with the individual that you designate.

Medical Power of Attorney: A medical power of attorney permits you to designate someone to make medical decisions on your behalf if you become mentally incapable of making decisions or unconscious. This document will authorize someone to act in your interest in making health care decisions if you are incapacitated by severe injury like a car accident or suffer incapacity because of age.

Directive to Physicians: If you suffer a terminal condition, a directive to physicians (also known as a living will) permits you to decline extraordinary medical measures or designate those measures that you find acceptable.

At our Arlington estate planning law firm, Thomas D. Reino carefully evaluates your estate to create an estate plan that is appropriate for your specific situation. While this blog post provides answers to some common estate planning questions, the best way to get more detailed information is to contact us at 817.303.2133 or send us an email at tom@tomreinolaw.com so that you can set up an initial consultation.

What Every Party Involved in Contesting a Will in Texas Should Know

December 22nd, 2012

One important consideration that must guide the drafting of a will in Texas and other states is the exercise of extra care where there are motivations for a party to challenge the will. While contested will proceedings are relatively uncommon, there are situations where the wishes of the decedent make it more probable that a will may be contested. These situations require that the party drafting the will anticipate the potential motivations to challenge a will and carefully draft with such motivations in mind. Generally, a will contest is more likely when an heir will receive less through the will than under Texas intestate law.

It is important to anticipate the possibility of a will being contested in the following situations:

• Children are not treated equally
• The devisor is advanced in age or mentally disabled
• Dramatic changes in their indicated disposition of assets
• Unpredictable atypical behavior by the devisor
• Favoring of a distant relative or non-relative over a close relative
• Unreasonable extensive limitations imposed on the bequests

While these do not represent all possible situations where there is a higher probability of a will contest, these are common scenarios that provide motives to challenge a will. Arlington probate attorney Thomas D. Reino understands that contested probate proceedings are complicated by the fact that the parties in dispute may be close relatives. Sometimes we are able to resolve such disputes through skilled negotiation to avoid the lingering animosity and damage to family relationships that can result from acrimonious litigation.

There are certain issues that must be considered before any potential will contest including the following:

Who May Challenge a Will in Probate: Texas law permits any “interested party” to contest a will in probate proceedings including spouses, heirs, devisees and any other party that may have a legitimate claim against the estate or a property right in the estate.

Potential Adverse Impact of a Will Contest: Some wills contain “no contest” provisions that can impose severe penalties on those who unsuccessfully challenge the terms of a will. These clauses must be identified and the consequences of contesting the will evaluated if a will contains such a provision. A party who does not prevail when contesting a will that contains such a provision may face harsh consequences like forfeiting any form of inheritance.

If you are considering contesting a will in Texas, you should seek legal representation from an experienced Texas probate attorney. Once the process of probating a will has been initiated by filing an application for probate, you must file a will contest stating a basis for challenging the will, which may include but is not limited to the following:

• Mistake
• Lack of capacity
• Undue influence
• Fraud
• Revocation through a subsequent instrument (e.g. later will) or physical act (e.g. burning the will)

At our Arlington probate law firm, Thomas D. Reino represents clients on both sides of contested will probate proceedings. If you are involved in contested probate proceeding in Texas, we invite you to get more detailed information by contacting us at 817.303.2133 or sending us an email at tom@tomreinolaw.com so that you can set up an initial consultation.

Using a Spendthrift Trust to Protect Heirs from Creditors and Divorce Judgments

December 7th, 2012

Many parents have a son or daughter who struggles with personal demons like drug addiction, alcoholism or gambling addiction.  If you are engaged in estate planning, an heir that has been through rehab programs with limited success can lead to concerns about how to protect this heir from making bad decisions.  While you may feel conflicted because you do not want to exclude your loved one from inheriting part of your estate, you also may feel that the decision to leave a lump sum of cash or assets to your troubled heir will only make matters worse.  The funds inherited may be used to finance the vices of a troubled heir and be quickly squandered away.  Texas estate planning attorney Thomas D. Reino frequently helps clients address these conflicting concerns by crafting a “spendthrift trust.”

Texas estate planning laws like those in other states permit a Grantor to insert provisions to provide for a family member while protecting the inherited funds or resources from mistakes arising out of the irresponsibility or immaturity of the beneficiary of the trust.  A spendthrift provision in a trust essentially provides that the beneficiary cannot be required to use the assets in the trust to pay the beneficiary’s creditors.

The protection provided from the beneficiary’s creditors only remains effective if the trustee adheres to an “ascertainable standard’ when making distributions from the trust.  In other words, distributions cannot be made for just any frivolous purpose so most spendthrift trusts permit disbursements to be made for education, health, support or maintenance.  When the trust specifies this type of specific legitimate grounds for making a disbursement to the beneficiary, the trust arrangement meets ascertainable standards so the safe harbor from creditors is maintained.

The assets in a spendthrift trust are protected from the spouse of the beneficiary in case of divorce and creditors seeking to enforce a debt or recover damages from a court judgment.  When you are engaged in estate planning, these valuable protections of the assets left to a beneficiary make a spendthrift trust a laudable provision even where you are not concerned about the decision making ability of the beneficiary.  The alternative to a spendthrift trust is leaving all of the assets directly to the beneficiary, which may make them available to involuntary transfer by a creditor or a spouse in a divorce proceeding.

At our Arlington estate planning law firm, Thomas D. Reino carefully evaluates your estate to create an estate plan that is appropriate for your specific situation.  While this article provides a brief overview of the benefits and requirements for a spendthrift trust in Texas, the best way to get more detailed information is to contact us at 817.303.2133 or send us an email at tom@tomreinolaw.com so that you can set up an initial consultation.

Can You Include Your Pets In Your Will?

November 13th, 2012

In our lives it is very hard to completely predict the occurrence of something, especially on a daily basis. Each and every day we wake up with an idea of how our day will go, what our tasks will consist of, and even that of what we plan on eating. However, as we have come to terms with in one way or another, not everything always goes to plan, and things tend to occur on their own accord. Similar to that of the trials and tribulations we can expect to meet each day our lives are quite unpredictable with us here one moment, and gone the next.

The Facts of Life

With our lives being so fragile as it is, and us unfortunately not able to predict our tomorrows it is extremely important that you sit down, and take out time to make a will for your estate and assets. By creating a will you are not only making your property, and assets divisible on your terms in a legally binding document, but also making sure that your estate is cared for in later generations. One aspect of property that many individuals today are including in their wills is that of their pets.

What About Your Pets?

Today, pets can very commonly be seen in many wills, but how are pets actually handled within a will. Similar to that of children, guardianship is awarded to either a family member, or another primary caregiver that is chosen based on the premise of whether or not they can, and will take care of the pet’s welfare. In many instances that a pet is a portion of a will funds will actually be set aside that give the new primary caregiver some support in paying for food, grooming, medication, and some healthcare aspects.

Before you start drafting your will it is extremely important that you seek out an experienced probate attorney to help you sit down and evaluate things from multiple perspectives in order to make sure your family, assets, property, and especially pets are taken care of in the event that something happens in your life and you are unable to properly take care of them anymore.

In this day in age you need an individual you can count on, and at the Law Offices of Thomas D. Reino you get what you see. For more information on business law, or to get business law legal council please contact us by either phone at 817.303.2133, or by fax at 972.264.0891.

Can My Will Include A Charity?

November 6th, 2012

In our lives it can certainly be said that we will experience many varying aspects that the world has to offer. Whether they are good, or bad, we deal with these aspects, and eventually take away a lesson, or insight from them that ultimately contribute to our character, and future decisions. Finally, as our days come finally to an end we care to share these insights and lessons with those we love in hope that when they reach the same aspect of life they will make a decision that best fits them and their lives.

Citing A Charity, or Organization

By having and holding a will to your estate you can expect that your family will take away more than just the possession that are stated in your will, but also a personal, and sentimental understanding of things as well. One aspect of a will that many individuals are unfamiliar with is that of whether or not a charitable organization, or other type of organization can be mentioned as a beneficiary in your will. In many instances individuals will either become involved in either a university, charity, church, or outreach program either from volunteering or holding a position in.

The Possibilities Within Your Will Pertaining To Charities, and Organizations

The answer is yes, you can include a charitable organization, or another organization within your will that will be able to receive a portion of your estate whether it is that of some financial aspects, or it could be some of your belongings that could be used in some facilities, or projects that are associated with the charity, or organization. Today, many individuals actually have a charitable organization cited within their will that have the ability to either receive donations at either all at one particular point, or over a period of time as well that can be continued from generation to generation.

Remember, when you are drafting, and finalizing your will make sure to consider including charitable, or other organizations in some aspect within it. By doing so you can not only continue to make a great contribution regardless of what or how much is donated, but also set an example to your loved ones pertaining to the matter in the future as well.

In this day in age you need an individual you can count on, and at the Law Offices of Thomas D. Reino you get what you see. For more information on business law, or to get business law legal council please contact us by either phone at 817.303.2133, or by fax at 972.264.0891.

Can Your Heirs Handle Your Possessions?

October 11th, 2012

In our lives we deal with many different forms of responsibility that require different things from us. While some require us to be more involved, and dedicated to something others can be simple and virtually pointless. However, one aspect of responsibility that we have been taught, and have learned from the time we are born until presently is the respect that is required towards not only our belongings, but also the belongings of others. By doing so we can expect that what we put in we get out especially when it comes down to the quality of care that many of our possessions require of us.

As we all know when it comes down to the matter of a will and its significance it makes an estate divisible on the terms of an individual who drafts, and creates the will. Usually, divisible property that is within a will can be that of a home, vehicles, other property, financial assets, land, or even pets. However, one issue at hand that many individuals today are facing that draft wills is whether or not the individual they intend to leave something to actually has the capacity, and ability to care for their property that they are giving them.

Today, we are beginning to see a trend in upcoming generations, which is that of entitlement and the belief that they deserve something that the majority of the time they have not worked for, or earned. Unfortunately, the behavior towards the majority of the items they posses are that of neglect and apathy, which many of our older generations are beginning to see. Another idea that many individuals who create wills are beginning to consider is whether or not they individual they intend on living financial assets to is financially sound, and well-rounded enough to do so properly.

However, never to fear, especially with an experienced Texas probate attorney by your side while drafting, and creating your will. When you are having doubts on whether or not your loved ones can significantly handle caring for your cherished belongings when you have passed a probate attorney can help you look at options such as a trustee, or assemble circumstances that pertain to the care, and preservation of your belongings.

In this day in age you need an individual you can count on, and at the Law Offices of Thomas D. Reino you get what you see. For more information on business law, or to get business law legal council please contact us by either phone at 817.303.2133, or by fax at 972.264.0891.

“Do I Need A Will?”

October 9th, 2012

Change is one variable in our lives that can never be certain, or expected to say the least. All throughout our lives we go through a variety of change whether it is that of our age, maturity, education, or experiences that ultimately make up the individual who we truly are at the end of the day. However, we can expect a few things in life such as life, and death. Unfortunately, we never truly know when we will finally meet our last days on earth and say our final farewells to our loved ones.

While the cycle that life has and holds for us are solidified from the time we are born we are given options, and opportunities pertaining to our lives after we are dead and gone. One of these particular aspects is that of a will. Yet, what actually is a will? A will is a testament created by you that pertains to your estate, possessions and assets after you have perished. Typically, a will dictates to whom these particular aspects of your estate will be awarded to whether it is a family member, a friend, or another loved one. Today, however, many people actually do not have wills, which can create issues for your estate and your loved ones later down the road.

Without a will the state will usually divide up your estate accordingly according to probate and estate laws, which vary from state to state. So, the answer is yes, it is highly advised that you do create a will. But, where do you actually start in doing so? In order to make sure that your will is not only created and drafted to your liking, but also meets its legal credibility and requirements it is highly advised that you seek out an experienced, and dedicated probate attorney from the beginning. With a Texas probate attorney at your side you can expect that your estate and belongings will be cared for accordingly.

Although many people do not actually have a will in this day and age it is extremely important that you create one in order to make sure that your loved ones are cared for even after you are gone.

In this day in age you need an individual you can count on, and at the Law Offices of Thomas D. Reino you get what you see. For more information on business law, or to get business law legal council please contact us by either phone at 817.303.2133, or by fax at 972.264.0891.