Every Texan (and probably every non-Texan) has heard that everything is bigger in Texas. The saying apparently originates as a reference to the stateâ€™s enormous geography but it could just as well reference Texansâ€™ enormous work ethic. After all, Matthew McConaughey wasnâ€™t wrong when he said that, â€œIn Texas, there is a certain honor of being a Texan that is doing something the best that you can.â€
Folks that live in the Lone Star State do, indeed, take great pride in doing the best they can which is why it is so tragic when simple oversights ruin their hard work. This is all too common in estate planning, where so many moving pieces come into play, and it is extra tragic as mistakes donâ€™t cost the individual but cost the loved ones they leave behind.
If there is one thing Texans care about more than a job well done it is family, which is why it is crucial that you look out for the following five common estate planning errors.
1. Poor Handling of Real Estate
Parents looking out for their childrenâ€™s well-being often gift real estate or place property in a childâ€™s name. Rarely is this a good idea as doing so may trigger high capital gains tax that could have been avoided by making the transfer through a Will or trust. Whatâ€™s more, this gesture exposes the property to both your childâ€™s or their spouseâ€™s creditors and may also complicate insurance and property tax exemptions.
2. Forgetting to Fund Your Trust
A trust is nothing but fancy paperwork if it does not contain any assets. All too often, folks go through the hard work of designing a trust only to fail to re-title their assets in the trustâ€™s name. When this happens, your family may end up in a lengthy, expensive, and wholly unnecessary probate proceeding that ends up taking a big bite out of the assets your trust aimed to protect.
3. Failing to Execute Advance Directives
Advance directives, which include medical and financial power of attorney documents, allow you to designate trusted loved ones to handle medical and financial affairs on your behalf should you suffer incapacitation. Without these documents, unthinkable tragedy can easily evolve into irresolvable conflict as loved ones dispute the best way to care for your needs.
4. Using a DIY Service to Organize Your Estate
Online DIY estate planning services are not a replacement for an experienced estate planning attorney because they can only act with the information you provide. A professional, on the other hand, will know which questions to ask to ensure all relevant information is on the table. Parents with special needs children, for instance, may not realize that they can jeopardize access to public benefits by mishandling their childâ€™s inheritance. A DIY service will not catch such a tragic mistake while an experienced attorney will.
5. Not Planning at All
The single most common estate planning mistake Texans make is not having an estate plan at all. Every adult needs a plan to protect their assets and well-being because catastrophe never knocks. Should you die without a Will your lifeâ€™s work will be distributed according to Texas intestacy laws, not your own wishes. This is a costly process that often drives conflict because the family you leave behind may end up co-owning property, which often results in various parties hiring attorneys to sort out how to divide the property at issue.
To learn more about common Texas estate planning mistakes and how to ensure you avoid them, do not hesitate to contact the Hailey-Petty Law Firm either by calling (512) 910-8977 in Austin, (210) 570-2458 in San Antonio or by using the contact form on our website.