Friday, August 06, 2010

Texas Estate Plan Problems: It's About More Than Tax Avoidance

The typical "estate planning" experience is one in which people go in and meet with an Texas estate planning attorney, sign some documents, put them on a shelf or in a drawer, and never look at them again.

IF your parents went through this process, and this sounds familiar, I have got some bad news: it probably won't work when you need it (death or incapacity). When these plans have not been reviewed after a couple years, it is likely that you could be dealing with the Harris County probate court or receive your inheritance in the wrong way.

With the much-publicized "pause" of the estate tax, many families mistakenly believe they have nothing to be concerned about in regards to setting up their estate. Nothing could be further from the truth.

This happened for a friend of mine, who happened to be a very successful lawyer in her own right!

When her father-in law passed away, even though they had set up a trust, her father-in-law's lawyer never transferred his assets into the trust and never made sure her in-laws did it themselves either!

You see, unfortunate as it is, your parents' estate plan is likely to fail.

You might think that the scenario above sounds like legal malpractice. Actually, I am very sad to say, this is NOT malpractice; it is "all-too-common practice". And, it means your parents' estate plan, like my friend's in-laws', is likely to fail.

Not to mention, your parents' estate plan most likely leaves your inheritance to you completely unprotected.

I know of a client who inherited over a million dollars. Shortly afterwards he was sued and had a million dollar judgment levied against him. He never saw a penny of that million dollar inheritance. By the time he paid off the judgment, it was gone. Ouch.

Your parents' estate plan leaves your inheritance at risk.

If you inherit funds, it is common practice to integrate those funds directly into the family accounts. But what happens if there is divorce? Well, those funds will be split evenly...which may not have been the intent of your parents when they left you the money.

Your parents' estate plan leaves you unable to do what they'll need you to do.

I know of a client who called her lawyer for help when her mom was on life support (not us). Mom had planned back in 1997--and always intended to update her planning documents. She never got around to it. Sadly, her health care directive did not have the most up-to-date provisions, which meant that this client could not get access to her mom's medical records. Because of this, it took 3 weeks to get her mother moved to a respiratory center where they could have possibly weaned her off life support had she gotten moved more quickly. Would Mom have lived if she had been moved sooner? We'll never know.

What I do know is that you never want to be rendered helpless because your parents' documents are outdated. And it doesn't have to be this way.

Get a guarantee your parents' plan will work when you need it most.

When you have your parents' estate plan reviewed by our Houston estate planning law firm, you will know with certainty you will have everything you need if you have to take care of your parents. You will know that you will not have to deal with a long, expensive court process in the event of their death or incapacity and that dealing with things after they are gone will be as easy as possible.

Plus, you can ensure that what you receive from them is totally protected from divorce, lawsuits and estate taxes. What could be better than that?