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Estate Planning

While nobody wants to think about death or disability, establishing an estate plan is one of the most important steps you can take to protect yourself and your loved ones. Proper estate planning not only puts you in charge of your finances, it can also spare your loved ones the expense, delay and frustration associated with managing your affairs when you pass away or become disabled.

Providing for Incapacity
If you become incapacitated, you won’t be able to manage your own financial affairs. Many are under the mistaken impression that one’s spouse or adult children can automatically take over for them if they become incapacitated. The truth is that in order for others to be able to manage your finances, they must petition a court to declare you legally incompetent. This process can be lengthy, costly and stressful. Even if the court appoints the person you would have chosen, the individual may have to come back to the court every year and show how he or she is spending and investing your money.

If you want your family to be able to immediately take over for you, it’s essential that you create the proper legal documents to designate a person that you trust so they will have the authority to withdraw money from your accounts, pay bills, take distributions from your IRAs, sell stocks, and refinance your home. Many people mistakenly think that a simple will can effectively protect you in the event that you become incapacitated, but a will does not take effect until you die.
 
In addition to planning for the financial aspect of your affairs during incapacity, it’s critical that you establish a plan for your medical care. The law allows you to appoint someone you trust - for example, a family member or close friend to make decisions on your behalf about medical treatment options if you lose the ability to decide for yourself. You can do this by using a medical power of attorney where you designate the person to make such decisions on your behalf. In addition to a medical power of attorney, you should also have a living will, which informs others of your desire not to be placed on life support in the event you become permanently terminally ill.

Avoiding Probate

If you leave your estate to your loved ones using a will, everything you own will pass through probate. While the probate process in Texas is far less burdensome than it is in many other states, the process can still be expensive and time-consuming, particularly if someone challenges the will.  Furthermore, all probate records are open to the public. There is also some period of time from the date of death until the will is admitted to probate and an executor is appointed that, technically, no one has the authority to handle the assets of the decedent.  As a practical matter, this issue may not arise. Nevertheless, if you are married and have children, you want to make certain that your surviving family has immediate access to cash to pay for living expenses until your will is admitted to probate and your executor is appointed and while your estate is being settled. With proper planning, your assets can pass on to your loved ones without undergoing probate, in a manner that is quick, inexpensive and private.
 
Providing for Minor Children

It is important that your estate plan address issues regarding the upbringing of your children. If you fail to plan, the decision as to who will raise your children and manage your finances will be left to the probate court.

If your children are young, you may want to consider implementing a plan that will allow your surviving spouse to devote more attention to your children, without the burden of work obligations. You may also want to provide for special counseling and resources for your spouse, if you believe your spouse lacks the experience or ability to handle financial and legal matters. You and your spouse should also discuss the possibility dying simultaneously, or within a short duration of time, with each other and your attorney. A contingency plan should include a list of persons you would like to manage your assets and name a guardian whom you would like to raise your children in your absence. The person, or trustee, in charge of the finances need not be the same person as the guardian. In fact, in many situations, you may want to purposely designate different persons to maintain a system of checks and balances.

You should give careful thought to your choice of guardian, ensuring that he or she shares the values you want instilled in your children. You will also want to give consideration to the age and financial condition of a potential guardian. Some guardians may lack child-rearing skills or the financial discipline that you feel are necessary. 
 
Another issue to consider during the planning process is whether you’d like your beneficiaries to receive your assets directly, or to have the assets placed in trust and distributed subject to conditions and circumstances such as age, need and even incentives based on behavior and education. All too often, children receive substantial assets before they are mature enough to handle them in a prudent manner.
 
Planning for Death Taxes
The IRS will want to review your estate at death to ensure you don’t owe one final tax: the federal estate tax. Whether any tax will be owed depends on the size of your estate and how your estate is structured. There are many effective strategies that can be implemented to reduce or eliminate death taxes, but you must start the planning process early to properly implement many of these strategies.
 
Charitable Bequests – Planned Giving
Do you want to make a gift to a charitable organization or cause?  Your estate plan can provide support for such organizations in a variety of ways, either during your lifetime or at your death. Depending on how your planned giving is set up, it may also allow you to receive a stream of income for life, earn higher investment yield, or reduce your capital gains or estate taxes.

Summary

A well-crafted estate plan should provide for your loved ones in an effective and efficient manner by avoiding guardianship during your lifetime, probate at death, estate taxes and unnecessary delays. Our firm can review your family and financial situation, your goals and explain the various options available to you.  Once your estate plan is in place, you will have peace of mind knowing that you have provided for yourself and your family.
  


N. Dean Hawkins & Associates, Inc. assists clients throughout the Dallas metropolitan area, including Dallas, Collin, Denton, Kaufman and Rockwall counties.



© 2017 N. Dean Hawkins & Associates, Inc. | Disclaimer
12801 N. Central Expressway, Suite 540, Dallas, TX 75243
| Phone: 972.934.2830

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