Blogs from February, 2019

We often get asked about joint bank accounts, and how an account owner’s death impacts the ownership of said account. There is a lot of misinformation surrounding what the right of survivorship designation can and cannot accomplish. In the January 2019 Texas Bar Journal, Gerry Beyer highlighted Hare v. Longstreet in order to bring clarity to the relationship between bank accounts and rights of survivorship. Mr. Beyer stated, “most people would assume when opening a joint bank account that checking a box next to a phrase that said “with right of survivorship” and then initialing beside it would be sufficient to create survivorship rights. However, the Texas Court of Appeals in Hare v. Longstreet held otherwise. The court explained that the signature card lacked language substantially similar to the language required by Texas Estates Code §113.151 (b) (“On the death of one party to a joint account, all sums in the account the date of the death vest in and belong to the surviving party as his or her separate property and estate.”) Merely stating that the account has the right of survivorship is insufficient to make it so.”[1]

This case is a perfect example of a person’s intent being determined in a courtroom after that person has passed away! There is no way to know the decedent’s true last wishes regarding the joint bank account because he or she has passed away. When there is a question regarding the correct beneficiary for an asset after an owner’s death, financial institutions almost always default to holding the funds and letting the court make the final decision. We advise our clients to obtain a very clear understanding of each beneficiary form they attach to their accounts and assets. Each entity and financial institution can vary in their policies and procedures. A comprehensive estate plan is the most effective way to make sure your assets transfer to the appropriate person or entity upon your death.

At Crain & Wooley, we work in partnerships with you to make sure your desires are clear and easy to follow for all who come after you. Do you have questions about rights of survivorship or other beneficiary designations? Email us your questions.

[1] BEYER, G 2019, ‘ESTATE PLANNING AND PROBATE LAW’, TEXAS BAR JOURNAL, JANUARY 2019, PP. 34.

Did you know that there is a 40% tax that may apply when you give gifts to your grandchildren or great grandchildren? This federal tax is called the Generation-Skipping Transfer tax (GST tax). The GST may apply on gifts made during life and after death. It is separate from (and may be in addition to) federal estate and gift taxes.

The reason this tax exists is because there was a concern that some people would avoid taxes by gifting to multiple generations all at once or via trust and would therefore avoid the multiple transfer taxes that would normally apply. Multiple transfer taxes apply in situations where a parent leaves assets to a child (taxed at that parent’s death) and then when that child dies and leaves assets to their children. Without the GST tax, someone could leave familial assets to multiple generations or to a trust and avoid additional taxation.

The GST tax exists to prevent wealth from avoiding additional transfer taxes by skipping over generations of beneficiaries. For example, the GST tax exists to tax property a second time that would have otherwise been taxed once at a person’s death if the deceased person left assets to generations younger than his or her children.

The good news for many people is that the current GST will not apply even if you decide to leave assets to your grandchildren. If you give less than $11,400,000 to a grandchild, then the 40% GST tax will not apply. Your gifts would have to surpass $11,400,000 before the GST tax would apply.

Are you unsure of the tax implications surrounding your estate plan? Speak with one of our attorneys and set your mind at ease.

Have you looked at the back of your Texas Driver’s License lately? No? Go ahead and get it out of your wallet. I’ll wait . . .

See those first two boxes? In an emergency, first responders can look at the back of your license to get critical information. You can check those two boxes. Then, under the “RESTRICTIONS” section, you can use a fine-tip, permanent marker to write the name(s) and phone number(s) of your Medical Power of Attorney Agent(s). This will let paramedics and doctors know that you have a Medical Directive and that your agent(s) should have a copy. For example, if you are incapacitated but have specific wishes per your religion that you would like to have communicated, the doctors can contact your agent(s).

A Combination Medical Directive to Physicians, Medical Power of Attorney, and HIPAA Release are just a few of the many helpful documents that we will craft for you as a part of your comprehensive estate plan. Please, make an appointment with us today so that we can ensure that all of your wishes are properly documented and communicated.