In Texas, our probate laws are relatively simple and direct. While the primary goal of estate planning in some states is specifically to avoid probate, in Texas, if you have the right kind of pre-planning done probate can be simple and relatively cost efficient. Still, there are numerous occasions and situations when families want to avoid the process altogether. Some choose to avoid probate for privacy reasons or simply avoid wish to avoid probate because of the time and effort needed to properly administer the probate process.

For example, in a situation where the family’s only real asset is the family home, would you really want to go through the time and expense of probate if another (faster and cheaper) alternative was available? Well, if this is a situation like yours, there is an option recently adopted by the Texas State Legislature that is a tool for the purpose of allowing a type of pre-planning that permits an owner of real property (i.e., the family home) to effect the transfer on his/her death without requiring a probate action. 

This option is called a Transfer on Death Deed (“TODD”). A Transfer on Death Deed is a type of real estate deed that allows someone to bypass probate because the deed automatically transfers the real property upon death instead of becoming a part of the decedent’s estate. Think of it in this way – Jane owns her own home and when she dies wants to give it to her son, James. Jane can execute a TODD that says when she dies, the house automatically shifts ownership to James without the necessity of a probate action in court. 

There are some limitations on TODDs. First, obviously, it must be done during the property owner’s lifetime and while the owner is still able to personally sign the deed. Currently, an agent under a Power of Attorney may not sign such a deed for the principal. Second, if a TODD is used to convey the property, a Will is not sufficient to un-do the deed. In other words, if you change your mind about who you’ve made the beneficiary of the TODD, you can’t simply re-do your will but rather must either execute a new TODD or simply record a revocation.

TODDs are an excellent jump forward for simple estate planning without significant expense. They allow the owner of the property to record the deed that will take effect upon their death, continue to own the property throughout the course of their life, they can still convey the property, and generally enjoy the same benefits of ownership that they enjoyed without the deed.

The key point: a Transfer on Death Deeds allows an owner of property to transfer that property to a beneficiary without the expense of a formal probate action.

If you would like to learn more about creating a customized estate plan that fits your needs, contact Weldy Law, PLLC to schedule a free initial consultation.

The above blog is for informational purposes only and is not legal advice nor does any information or communication with this website create an attorney-client relationship.

To create and execute a Durable Power of Attorney (DPOA), you must be “competent,” also referred to as “of sound mind.” That means you must have the mental capacity to understand the benefits, risks and effect of signing the document. You can easily revoke your DPOA as long as you are of sound mind, but doing so after a question of competence has arisen is not as easy, so your understanding of the meaning and effect of the document before signing is vitally important.

What is a durable power of attorney? 

A power of attorney is a legal document that lets you (the “principal”) appoint someone (the “agent”) to act on your behalf in financial matters. A separate document, a Medical Power of Attorney (“MPOA”) is needed to designate an agent for medical decisions. A durable power of attorney (DPOA) remains in effect even after you become incapacitated, letting your agent continue to handle your affairs when you cannot. This is enormously helpful for the family if a person becomes unable to handle their own affairs.

Who decides if a person is “competent” to sign a DPOA? 

It is common for children or caregivers to disagree over whether the signer was competent when signing. These disputes can lead to lasting hostility between family members, and occasionally to court cases. So who determines whether a person is “competent” when signing the form?

Generally, the attorney representing a principal in the drafting of a DPOA for financial management typically completes a minimum determination of the mental capacity of the client to the extent the attorney can ascertain that the principal understands the purpose, uses, and risks of the DPOA.

Sometimes, however, you can predict that someone might want to challenge the DPOA after you become incapacitated. For instance, if your children don’t get along, or already disagree about your care and finances, they will probably continue after you become incapacitated. If you think this is likely, choosing to hire an attorney to help draft and execute your DPOA may be very helpful. Typically, a lawyer will go over your particular situation, help you decide what options to take, and if necessary, testify as to your capacity later on.

Other safeguards and preventative measures: include signing in front of witnesses, then having them sign statements that you appeared competent; getting a doctor’s written, dated opinion that you are of sound mind; and making a video of a statement of intent to create a DPOA. Keep any of these items with the original DPOA itself in a safe place.

Generally,a person is mentally competent as long as they can understand the rights, responsibilities, risks, or benefits involved in decisions, and the potential consequences of what they decide. Having a mental or physical disorder does not automatically mean a person is incapacitated; there must be a specific inability to understand and make decisions.

Some of these standards include:

• Ability to understand and appreciate quantities.
• Ability to plan, organize, and carry out actions in one’s own rational self-interest.
• Ability to reason logically
• Level of arousal or consciousness.
• Orientation to time, place, person, and situation.
• Ability to attend and concentrate.
• Short- and long-term memory, including immediate recall.
• Ability to understand or communicate with others, either verbally or otherwise.
• Recognition of familiar objects and familiar persons.

What if you think a loved one was not competent when the DPOA was signed? 

Sometimes, after a parent becomes incapacitated, a child or caregiver presents a new DPOA signed by a parent without the rest of the family’s knowledge. The family may be concerned that the parent was unable to understand the document, or was even tricked or coerced.

If this happens in your family, you may be able to challenge the document through a legal proceeding. To make a determination, a judge may question those who knew the person at the time, using the criteria listed above.

If the judge decides the person did not have the capacity to make the DPOA, the most recent prior DPOA will be effective. If there is no DPOA, you may need to set up a formal guardianship; however, generally Texas law prefers that other less restrictive methods are employed before authorizing a guardianship.

However, if the person indeed had the capacity to execute the DPOA at the time, the DPOA is valid. Even if you think the person made a bad choice, if they had capacity, it is the principal’schoice, and remains in effect.

If you are interested in learning more about a Durable Power of Attorney, Weldy Law, PLLC is here to help and welcomes you to schedule a consultation

The above blog is intended for informational purposes only and should not in anyway be considered legal advice.

Are you a parent of a child with special needs? You may need special estate planning. Why? What’s the benefit of estate planning that is geared specifically to meet special needs? One important reason is that if assets are left directly to your special needs child, either through a will or through intestacy, that inheritance received by your child can jeopardize his or her ability to receive benefits under government programs such as Supplemental Security Income or Medicaid.

A special needs trust can help preserve your child’s eligibility for public benefits while providing for supplemental needs that will enhance his or her life.

WHAT IS A SPECIAL NEEDS TRUST?

A Special Needs Trust also known as a Supplemental Needs Trust, is a discretionary trust created to hold the property of a disabled beneficiary and distribute supplemental funds to that individual in a way that preserves his or her eligibility for public benefits.

Below is a non-exclusive list of some types supplemental disbursements that are appropriate for a trustee of a special needs trust to make on behalf of a beneficiary:

• Health and dental treatment and equipment for which there are not funds otherwise available
• Rehabilitative and occupational therapy services
• Medical procedures, even though not medically necessary or lifesaving
• Medical insurance premiums
• Supplemental nursing care
• Supplemental dietary needs
• Eyeglasses
• Travel
• Entertainment
• Cultural experiences
• Expenses associated with bringing relatives or friends to visit with the beneficiary
• Vacations
• Movies
• Telephone service
• Television and cable equipment and services
• Training and education programs
• Reading and educational materials

Source: The Arc of Texas Master Pooled Trust

BENEFITS OF A SPECIAL NEEDS TRUST?

Supplemental Security Income (SSI), Social Security Disability Insurance (SSD), Medicare and Medicaid are government programs that offer support to disabled individuals.  SSI is a needs-based program that is only available to people who meet certain income and resource limitations. In most states including Texas, people receiving SSI are automatically entitled to Medicaid.

To qualify for SSI and Medicaid, a single person must own less than $2,000 of countable assets. Those with countable assets greater than $2,000 can lose their eligibility for benefits. That’s why it’s generally a bad idea to give assets, either as a gift or inheritance, directly to a loved one who is disabled and receiving government assistance.

WHAT TYPE OF TRUST WILL WORK?

Not all trusts will work to preserve a disabled beneficiary’s benefits. Support trusts, which direct that funds be used for the health, education, maintenance, welfare, and support of a beneficiary, can disqualify a disabled beneficiary because the assets in a support trust are counted as the beneficiary’s resource.

A Supplemental Needs Trust is a discretionary trust that allows a trustee to use trust funds to supplement, not replace, a beneficiary’s government entitlements. To maintain eligibility for needs-based support, the beneficiary cannot have control over the assets in the SNT. The beneficiary cannot manage the assets, have the right to demand distributions of income or property from the SNT, name the Trustee or change the terms of the SNT. The use of the SNT’s assets for the benefit of the beneficiary is determined at the discretion of the Trustee.

Beneficiaries of properly drafted special needs trusts do not have legal claim to the property in the trust. That means that the trust assets are not countable resources and do not affect the beneficiaries’ eligibility for benefits. As a result, the beneficiaries are able to continue receiving government benefits, while still enjoying the benefits of the property in the trust for supplemental needs.

A special needs trust may help you provide for your child without jeopardizing his or her eligibility for benefits under SSI and Medicaid. If you are a parent of a child with special needs, it may be in the child’s best interest to consider forming a special needs trust as an essential part of your estate plan.

If you have questions relating to Special Needs Trusts and would like to schedule a consultation to discuss the benefits of this form of estate planning please contact Weldy Law, PLLC.

The above blog is for informational purposes only and is not legal advice nor does any information or communication with this website create an attorney-client relationship.

Sometimes, the notion of “family” can be a difficult concept.  No matter if you hold the traditional view that marriage is a union of one man and one woman who should stay married ’til death do they part, or you believe in something vastly different, there’s no denying that the concept of “family,” as society at large sees it, has dramatically evolved, morphed and changed over the past 50 years.

Although many individual’s opinions seem to be unwavering on these issues, generally, when legal problems arise, the issues have nothing to do with the perceived morality of the union and almost everything to do with the actual legal relationships of the people in the family.

In Texas, the law is usually pretty straightforward and simple. If you have valid estate planning documents (e.g. a Last Will & Testament, Powers of Attorney, or a Guardianship Declaration), in nearly every instance, the preferences you outlined in the documents will be acknowledged. But, if you don’t have an estate plan, it can be a big mess under Texas law.

Consider this typical scenario: You are on your second marriage and you have two adult children from your first marriage that somewhat get along with your spouse. You get sick, can’t make decisions and have no estate planning. Now, what? Who is in charge? Let’s take it a step further: after a short stay in the hospital, you die. Again, you have no Last Will. Where does your property end up?

In each of these situations, many would presume the spouse’s iron-clad right to make decisions and inherit all of the property of the deceased. But, its not always the case. First, in the situation in which you were hospitalized and alive, your children may not agree with the decisions of your spouse and hire a lawyer to ask a court to give them control over you and your medical decisions (in Texas, this is known as “Guardianship of the Person”). Though your spouse would legally have a right to be named as a guardian in priority over your children, that right isn’t always 100%, and occasionally the children can win the appointed. Similarly, at death in an intestacy situation, not only do you have to worry about who gets control of your estate but, perhapsmore importantly, your spouse and children are required to share your property. Even in situations where everyone gets along flawlessly, this can add great stress and strain to the relationship. Additionally, if you add any amount of disdain for one another, mistrust, or hurt feelings the family can be on the brink of demise.

But don’t be dismayed, there are a few simple solutions to these types of issues under Texas law. 

First, if you have children outside of your current marriage (meaning: kids from a prior relationship), you should strongly consider having a formal, written estate plan prepared immediately by a capable lawyer well versed in estate planning strategies. Don’t put the burden on your family to work it out themselves. In many cases, that doesn’t work out well and the cost of working it out later can rack up a large sum in legal fees.

Second, once you have your estate plan prepared, consider holding a family conference to discuss your desires and explain the plan to your children. While many clients choose not to do this generally because of  the desire to avoid immediate conflict or to maintain confidentiality, consider the discomfort of a family meeting lasting an hour compared to months of arguing between the living spouse and the remaining children—a conversation may be uncomfortable but it is likely a better alternative to leaving others to discuss and speculate on these issues after your death.

If you would like to learn more about creating a customized estate plan that fits your needs, give Weldy Law, PLLC a call and schedule a free initial consultation.

The above blog is for informational purposes only and is not legal advice nor does any information or communication with this website create an attorney-client relationship.

Sometimes, no matter how hard you try, your family is a ticking time bomb. Step-kids that can’t stand you, drama at every family event, or maybe just an uncomfortable peace that you never really trust. Unfortunately, it happens more often than not.

The pain is real and can last forever. While some people may work it out in time, many others are unable to move past the hurt, pain and tension. As a probate lawyer, I’ve seen grown, educated, and successful adults morph into sniveling little children because step-mom isn’t giving them exactly what they believe they’re entitled to when daddy dies (and, vice versa). In addition, in almost any instance where cooperation between the step-parent and children is needed, the disdain can turn into a lack of trust, which can lead to significant (and costly) legal action.

Unlike Thanksgiving dinner (or any other family event), cooperation between those closely related to you can be critically important to your legal well-being in certain situations. They include:

Disability. If you become disabled and your family needs to pursue a guardianship, Texas law requires that your spouse, adult children, and others are served with notice and provided an opportunity to object to any court action. If your spouse and your kids disagree on whether you should have a guardianship, this can lead to a time-consuming and costly fight. Guess who pays the bill for that fight? Right, just like going to dinner with them. They might pay, but usually, it’s you.

Death. In the event you don’t have a valid Last Will and Testament, in this situation, the fireworks can start quickly. First, dying intestate (i.e., dying without a Will) triggers a State law that says your surviving spouse gets a portion of your property and your kids get the other portion of your property (provided the kids aren’t legally related to the surviving spouse, like step-kids). Wait – let me say that again – all of a sudden, your spouse and kids (who can’t stand each other) are now co-owners of the property. That may not be the best idea. After all, the only recourse for co-owners to make decisions about the property is either (i) selling the property and splitting the money (ii) agreeing on the disposition of the property, or (iii) fighting it out in court. Not great options for people who already don’t like each other.

Fortunately, there are solutions. If you fall into the category of people discussed in this article, don’t fear. By visiting a qualified estate planning lawyer in your area, you can stop the battle before it starts by simply creating your estate plan. In most instances, these are very basic documents that expressly set forth your wishes for who is in charge of you, your property, and ultimately who gets your property when you die.

If you would like to learn more about creating a customized estate plan that fits your needs, give Weldy Law, PLLC a call and schedule a free initial consultation- 806-928-2087.

The above blog is for informational purposes only and is not legal advice nor does any information or communication with this website create an attorney-client relationship.