What is estate planning?
Estate planning means making a plan for how you want to divide your property after you die. Part of estate planning is deciding in advance who should be in charge of your medical and financial affairs if you are unable to make important decisions for yourself. An estate plan documents stating how you want your property to be distributed after you die. A plan can include any combination of a will, powers of attorney, special deeds for real estate, a set of documents called advance directives, and other estate planning forms.
Estate planning begins with a will.
A will sets forth your intentions as to how your property should be distributed after you die, who should be guardian of your minor children and other important choices. A will can also reduce family conflict and streamline probate, which refers to the court process of distributing property to heirs upon death.
Don’t assume that your spouse will get all of your property when you die. If you die intestate (without a will), Texas law will determine your heirs based on close blood relationships. Heirs include all of your children, including those from past relationships. Heirs do not include your significant other, friends, or stepchildren. Your grandchild won’t inherit from you unless the parent (your adult child) dies before you. Along with identifying heirs, the probate court must classify your property as real estate or personal, community or separate. Dying intestate is a lengthy and expensive process, with fees and court costs paid from your estate. A will isn’t a way to avoid probate, but it does ensure that your property will pass according to your wishes and with minimal court involvement.
Named Beneficiaries, Joint Owners, Payable on Death Accounts
With or without a will, some assets are not included in probate. Insurance proceeds, retirement funds, bank accounts payable on death and similar assets pass to the beneficiary you named on the contract or account when you opened it. Joint bank accounts, as well as real property held jointly with a right of survivorship, pass to the other joint owner(s). Check to make sure that the beneficiary information on each of your accounts is up to date.
Powers of Attorney and Advance Directives
These give another person the right to act on your behalf if you become incapacitated. They can be revoked at any time, and expire when you die.
A Power of Attorney (POA) can be broad or limited, depending on what you authorize your agent to do. Powers can include business and financial decisions, purchase and sale of property and many other decisions. If it permits the sale of real estate, the POA must be recorded in the deed records where the property is located. Note: A General Durable Power of Attorney allows your agent to do almost anything in your name except make medical decisions. Be fully informed before signing any power of attorney.