Blogs from October, 2020

In Texas, a will written ENTIRELY in your own handwriting is called a holographic will. It is essential to understand that every single word of this type of Will must be written only in your handwriting. Texas courts have taken an approach that directs that when there is a handwritten Will, the court is to disregard all words not written in the person’s own handwriting. This means that the court would try to determine the Will’s intent by reading and interpreting only the portions of the will that were handwritten by the hand of the person themselves. 

It may not be hard to write down a few thoughts in your own handwriting, but what is difficult is to properly draft a Holographic Will that complies with all of the requirements of the law while also accomplishing your intent. Holographic wills are not recommended because there are many pitfalls to acting as your own attorney. Drafting a will without understanding the legal effect of each word and phrase that you include, or a word or phrase that you may leave out will cause unknown and unintended results. 

When you attempt to write your own Will without understanding the law and how your writing will be interpreted, there is the possibility that what is written may not legally be considered a Last Will and Testament. If the writing is not considered a legal Will, your estate will be distributed according to what the court decides instead of what you intended. There is a possibility that you will leave out important words and phrases such as wording that could shorten the probate process, remove requirements for bond, allow for quick sale of real estate, and much more. It is also possible that words that are used may create requirements for additional steps during the probate process such as proving that a number of specific gifts were distributed, including language that the court determines will require every person named to receive all the required legal notices under the law, or language that creates a requirement for official accountings to be submitted to the court that might not have otherwise been required. At the end of the day, you don’t know what you don’t know.

When you are attempting to accomplish something as crucial as stating your final wishes, hiring a qualified attorney can make the difference between leaving a legacy or leaving a disaster for the loved ones that survive you. Short cuts in estate planning may sound like a good idea at first, but the ramifications of short cut, like a holographic will, end up costing your estate a lot of time and money to correct. 

Spouses who are U.S. citizens can generally give property to each other during life and during death without having to pay any estate tax or gift tax. But what if one spouse is a U.S. citizen and the other spouse is not?

When only one spouse is a U.S. citizen, there are special rules that change how the both gift and estate taxed apply. Gift taxes and estate taxes are not the same tax. However, they do work together in tandem. Some examples of these lessor known rules are:

• A U.S. citizen can gift (during his or her lifetime) up to $157,000 to their non-citizen spouse annually without a gift tax applying. (26 USC 2523)
• If a non-U.S. spouse receives U..S assets at the time of the U.S. citizen’s death, $60,000 of value is excluded from the estate tax. Everything above that amount is taxed. (26 USC 2102)

To illustrate how different rules apply, consider a scenario where a U.S. citizen spouse dies, leaving the surviving, non-citizen spouse as the survivor. The value of the house owned by the U.S. citizen over $60,000 will be subject to the estate tax. Consider a $300,000 house owned in Texas. Each spouse owns 50% as their community property (worth $150,000). When the U.S. citizen dies, they leave their half of the house to their surviving non-citizen spouse (a value of $150,000). $60,000 of that value is excluded from estate tax, leaving a $90,000 value that is taxed at the applicable estate tax rate.

Taxes are complex and unforeseen complications are not uncommon. This is just one of many reasons why a person should make sure that they work with a qualified professional when planning their estate. There is more to planning than simply saying who gets what is yours after you die. The good news is there are solutions for married couples where a non-citizen spouse is involved, such as Qualified Domestic Trusts (QDOT), careful life insurance planning, and other legal tools that can reduce the impact of estate taxes that would apply without proper advance planning.

Are you planning with a non-citizen spouse? Have questions? Contact us today!

With our world becoming more globally connected, it is very possible that you own assets inside and outside of the United States. Some countries may recognize your U.S. Will. This may occur if the rules in your state meet all of the same minimum requirements of the other country in which your assets are located. This scenario is not common and is more often a coincidence than a formally planned coordination between countries. Interestingly, some foreign jurisdictions will not recognize a Will made in the United States even if it technically follows all of their legal requirements for forming a valid Will.

It can be difficult to make one document meet all the requirements of multiple counties and some people will choose to draft and execute Wills and legal documents in each country in which assets are owned. One specific solution could be to create a supplemental Will for the additional countries where foreign property is owned. If properly drafted, this approach could help prevent one Will from revoking another when multiple Wills exist.

Another approach could be to follow Will rules adopted by a few countries in efforts to streamline the distribution of international assets. A convention was held in 1973 by the International Institute for the Unification of Private Law (UNIDROIT) to provide for a uniform law regarding Wills that would allow a Will to be accepted in multiple countries. 21 countries are currently part of the Convention Providing a Uniform Law on the Form of an International Will. If you have assets in countries that are part of this convention, the great news is that with proper planning, you can take advantage of the benefit of a special international will being accepted in multiple jurisdictions.

As you can imagine, planning for the distribution of assets across international borders is rather complex and each situation is extremely unique. The good news is that with proper planning, international assets can be addressed as part of your comprehensive estate plan, and with accurate coordination of international laws and legal tools, you will be able to leave an effective and intentional legacy that includes international assets. 

If you currently have international assets or plan to acquire international assets, contact us ASAP so that we can help you avoid international planning missteps.