Kirker Davis LLP is a boutique family law firm in Central Texas with a focus on high-end family law cases. We handle divorces involving professionals, family-owned businesses, custody matters, and complex litigation. The Firm’s core business philosophy is based on fidelity to the practice of law and a commitment to client service.
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Oftentimes, when people hear “Estate Plan” they assume it includes just a Will. However, an Estate Plan is comprised of much more than just a Will. That being so, drafting a Will is oftentimes the best place to start. A properly drafted 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 significant considerations. One of the main benefits of a Will is its ability to reduce potential family conflict after your death.
A Will is a legal document expressing your intentions regarding how you want your assets to be managed and distributed upon death. In Texas, certain formalities need to be followed in order to make a valid Will.
First, Texas recognizes two types of written Wills:
Notably, a Will has no legal effect until it is admitted to probate; a judge must find it to be valid and enforceable. In fact, any assets that are passed through a Will or through the laws of intestacy (see below) need to go through the court-supervised process known as probate. This process can be extremely time-consuming and expensive and proper estate planning can minimize its role after your death. When there is a Will, during probate that Will is authenticated, assets are located and appraised, debts are paid, and the estate distributed.
If you have previously executed a Will, the Will you wish to be enforced should indicate that it is your “last” Will and that you revoke all other prior Wills. A Will may be impliedly revoked if it was last seen in the testator’s possession and cannot be located. A Will may be contested up to two years after it has been admitted to probate.
If you die without a Will, it is called dying “intestate.” If you die intestate, Texas courts will determine your heirs. Typically, heirs include any children, including those from past relationships. Notably, Texas courts do not consider your significant other, friends, or stepchildren as heirs. Your grandchild will not inherit from you unless their parent (your child) dies before you do. In addition to identifying your heirs, the probate court must classify any property you own as either real estate or personal, community or separate. Dying intestate can be a time-consuming and costly process, with fees paid from your estate. While a Will is not a method by which to avoid probate entirely, it ensures that your property passes to the individuals you select in a manner that you dictate.
A legal trust refers to an arrangement by which an individual (i.e., the grantor, trustor, or settlor) creates a trust. Another individual, the “trustee,” holds legal title to the trust property for yet another individual, called the “beneficiary.” In some circumstances, the grantor and trustee will be the same individual. For example, a parent could be both the grantor and trustee of a trust which contains a piece of real property for a child beneficiary. Certain trusts even permit the grantor to be both the trustee and the beneficiary.
A revocable living trust refers to a trust that an individual creates during their lifetime, as opposed to one created upon their death pursuant to the terms of their will. Any beneficiaries named in this living trust will receive the trust property upon the grantor’s death. A revocable living trust is quite flexible: the owner can change the terms at any time, remove beneficiaries, designate new ones, and more.
By contrast to revocable living trusts, irrevocable trusts cannot be revoked or modified once they have been signed. The main benefits of irrevocable trusts are that they can minimize the grantor’s estate tax liability and offer asset protection from lawsuits and creditors.
In Texas, all trusts are presumed revocable unless expressly provided for otherwise. Moreover, revocable trusts are becoming increasingly popular to avoid the probate process. This is more common in states that don’t have independent administration as Texas does.
Another important distinction to understand is the difference between inter vivos (living) and testamentary trusts. An inter vivos trust is effective during the Settlor’s lifetime, whereas a testamentary trust is created through a Will and, therefore, is only effective upon death and the Will being admitted to probate. All the elements of the trust must be contained within the four corners of the Will. Inter vivos trusts are further classified as those that are revocable or irrevocable (see above).
We offer comprehensive estate planning services, including the creation, review, and modification of Wills and trusts. To create or modify your Estate Plan, contact Kirker | Davis LLP and schedule a meeting with an attorney today.