To create a comprehensive estate plan, you must be familiar with all the laws and regulations in your state. For example, Texas is one of nine states that follows community property laws. What this means is that all assets acquired by spouses during the marriage while living in one of the nine states will be labeled as “community property,” regardless of which spouse purchased it. Our Dallas Fort Worth estate planning attorneys explain what community property is and how it may affect your estate planning process.

What Is Community Property?

When a spouse purchases assets in Texas during their marriage, the property is owned by both spouses 50/50. Therefore, when one spouse passes away, they can leave their share of the assets or property to whomever they wish. However – this can be a bit complicated when it comes to estate distribution.

For example, suppose Jack purchased a house in Texas a year after he married his wife Jen. Although Jack purchased the property, both Jack and Jen own 50 percent of the house since they bought it in a community property state. Each of spouse must plan, IN ADVANCE, for what to do with their 50 percent of the property. There is NO law in Texas that says a spouse automatically inherits the deceased spouse’s share of joint assets. To start planning, get in touch with out team at Crain & Wooley to protect your share.

Community Property Misconceptions

Many have the misconception that when one spouse passes away, the property will automatically transfer to the surviving spouse. However, this is an incorrect assumption. In reality, when one partner dies, the surviving spouse will only be able to keep their half of the assets. The deceased spouse’s half will be transferred according to legal documents, such as wills, trusts, and contracts. When a spouse passes away without legal documents that state their wishes, the court will then decide how their assets will be distributed.

Learn more about the misconceptions on community property in our blog post.

Have questions about how community property might affect your estate plan? Contact our Dallas Fort Worth estate planning attorneys today at (972) 945-1610 to schedule a consultation!

There are social and emotional benefits of charitable giving and there are also potential financial benefits to these types of gifts. Your estate plan can include these types of gifts both during your life and upon your death. In many instances, charitable donations have potential tax advantages. A knowledgeable attorney can assist you in determining how to plan for charity in such a way to maximize the benefit to charity, your family, and you.

For example, gifting to charity now may allow you to deduct cash contributions in 2021 up to 100% of your adjusted gross income for cash distributions to qualifying public charities (this used to be a 60% limit previously). To make sure gifts maximize your tax benefit, it is important that your donations are given to a recognized 501(c)(3) charity or recognized foundation, that you keep proper records, and if you are gifting anything other than cash that you understand how the value of your gift will be treated by the IRS.

Depending upon your specific situation and potential need for long-term tax planning, more complex charitable planning is appropriate and may include using one of several types of trusts that exist to facilitate charitable giving and maximize tax benefits.

For example:

• Charitable Remainder Unitrusts (CRUTs).
  • This arrangement allows a person to receive an income tax deduction the year they contribute to their CRUT; the person contributing to the CRUT can set up a variable income stream that pays them back for life; when the creator of this trust dies, the remaining assets go to the charities named in the trust tax free;
• Charitable Lead Annuity Trusts (CLATs)
  • The charitable beneficiary in this arrangement receives a fixed amount during the term specified in the trust; the person contributing to the CLAT names non-charitable beneficiaries to get the remaining assets at their death; when the creator of the trust dies, the remaining assets distribute back to the non-charitable beneficiaries;
• Charitable Remainder Annuity Trusts (CRATs)
  • Similar to a CRUT, except the assets distributed to the charity are fixed instead of variable; the person contributing to the CRAT receives an income tax deduction; when the creator of the CRAT dies, the charity receives the remaining assets;
• Charitable Lead Unitrusts (CLUTs)
  • Similar to a CLAT, except the assets distributed to the charitable beneficiary are variable instead of fixed and must be distributed annually.

Charitable planning is important! Don’t forget to include charitable considerations into your estate planning. As we look to the future and weigh POTENTIAL tax law changes, it is important to remember that, currently, there are strategies that exist to minimize negative impacts. Crain & Wooley stays abreast of all law proposals and is constantly monitoring ways in which we can lessen the potential impact for our clients.

Have questions? Ready to improve your charitable giving plan? Contact Crain & Wooley.

The loss of a loved one is a devastating time for family and friends. Although it is a time to grieve, a person close to the deceased will be responsible for making legal and financial arrangements, such as probate. Probate is a court process in which a deceased person’s property is passed to the beneficiaries listed in their will. But who is responsible for managing the probate process after a loved one’s death? Our Dallas-Fort Worth probate attorneys break it down for you below.

Who Is Responsible for Starting the Probate Process?

The person named as executor in the deceased’s will is responsible for, with the assistance of an attorney, filing an application for probate with court as soon as possible. After the application filing, the court will need to authenticate the will and confirm that it is valid. The court will request what is called a “prove-up hearing” to establish validity of the will.

Who Will Take Charge of the Probate Process?

Once the will is authenticated, the judge will appoint the “executor” or “administrator” to oversee the entire probate process and settle the estate. In most cases, the deceased person lists who they want their executor to be.

What If There Isn’t a Will?

If there isn’t a will, then the person died intestate. Dying without a will or legal documents to tell us what you intended to happen after you pass away is dying intestate. It is important to note that when a loved one passes away without a will, everything doesn’t automatically go to the surviving spouse or closest living relative. Loved ones will need to go to probate court to determine who the beneficiaries will be.

During probate, the court may require loved ones to go through heirship proceedings. During this process, a court appointed attorney will need to verify the deceased’s spouse and children. The attorney will also conduct an investigation to determine if there are other potential heirs and who should receive assets. Dying intestate can leave loved ones in a difficult situation that could be avoided with a will.

Learn more about dying intestate on our radio show here.

What Is the Executor In Charge Of?

The executor, with the assistance of their probate attorney, will be responsible for the following:

• Locating the deceased's assets
• Determining the value of the assets
• Notifying creditors of the person’s death and paying off debts
• Distributing the estate
• Filing the final tax return and more.

The probate process can be long and complicated, so an experienced attorney can help you get through every step in the most effective and efficient way possible. In fact, Texas courts typically require an executor to be represented by an attorney in probate because an executor cannot represent themselves or the interests of the beneficiaries and creditors. Texas law only allows a licensed attorney to represent the interests of others. Learn more about this in our blog post here.

Have questions about the probate process? Contact our Dallas-Fort Worth probate attorneys today at (972) 945-1610">(972) 945-1610 to schedule a consultation!

There are so many different types of trusts available that it can be hard to decide which option is best for you. The trust you choose should help you achieve your estate planning goals while protecting your assets and loved ones. Our team at Crain & Wooley has the answers you need to make the right choice.

If you need help preparing your trust, contact our Dallas-Fort Worth estate planning attorneys today at (972) 945-1610 to schedule a consultation!

Revocable Trusts

A revocable trust is a trust that can be changed or voided for any reason, at any time, as long as the grantor is still living and deemed mentally competent. The grantor is the individual whose assets are put into the trust / the person who created the trust. The grantor may also be referred to as the settlor, trust maker, or trustor.

Irrevocable Trusts

Unlike a revocable trust, an irrevocable trust cannot be changed without all of the beneficiaries consenting first. Since irrevocable trusts can't be modified, it may seem that they are never a good idea, but they can be beneficial in certain instances. It is best to speak with an experienced estate planning attorney to determine if an irrevocable trust is right for your unique circumstances.

Asset Protection Trusts

Asset protection trusts are another way to protect your assets from creditors. This is the most common way individuals protect assets when they are concerned about judgments or any other threats against their estate.

Charitable Trusts

A charitable trust can be created to benefit a specific charitable organization. This is considered an irrevocable trust that offers some tax benefits. When setting up a charitable trust, you would appoint an organization to be the trustee.

Insurance Trusts

An insurance trust is another form of an irrevocable trust. It can be established with only an insurance policy as an asset. This is a great way to avoid estate tax on any money that comes out of a policy when you pass away. It’s also an efficient way to ensure that your estate will be passed onto your beneficiaries.

Special Needs Trusts

Special needs trusts are created to benefit a loved one with special needs that keeps them from earning a living / maintaining full-time employment. Creating a special needs trust is a great way to provide financial support without jeopardizing any eligibility needed for government aid, such as Social Security Income or Medicaid.

Blind Trust

A blind trust is a form of a living trust where grantors and beneficiaries have little to no prior knowledge about any of the assets within the trust. This is a great option for those who anticipate conflicts of interest. You would ultimately have full discretion over all the assets and distribution.

Which Trust Is Right for Me?

Trusts have many benefits, such as avoiding probate, the reduction of taxes, and more. However, choosing which trust is right for you is not an easy task. Thankfully, you don’t have to go through the estate planning process alone. Our team at Crain & Wooley has the skills, knowledge, and experience needed to help you with your unique situation. We are committed to transparency, integrity, and compassion in all of the estate planning cases we handle for clients, so you can rest assured that your case is in capable hands.

Contact us today at (972) 945-1610 to schedule a consultation!

Planning appropriately for family land is integral to preserving legacy and generational wealth. During my career, I’ve seen the best and the worst-case scenarios surrounding how best to plan for generational land transfer.

The most mind-blowing case I have encountered was when hundreds of acres of land went more than 100 years with no official probate or heirship proceedings. This land had to be apportioned to almost 100 possible heirs, and tens of thousands of dollars were spent in court (wasted) to establish who owned what portion of the acreage. Here are my three tips on how to avoid a situation like this!

1. Stop procrastinating. If you know that grandma and grandpa’s estate was not settled correctly leaving you and your cousins to “share” some land that’s still in grandma and grandpa’s name - don’t wait another minute to get it straightened out. The longer you wait, the more likely it is that infighting will break out, witnesses will move away or die, essential paperwork will be lost, more heirs will need to be involved, and the cost to fix everything will increase exponentially.
2. Don’t use online forms. If I have said it once, I’ve said it a thousand times: If you try to save money using online legal forms, especially deeds, you’re very likely going to spend exponentially more when correcting mistakes.
3. Don’t assume all states are the same. Both estate planning and property laws are broadly the same in every state, but small idiosyncrasies exist and can make a big difference. The most common problem I see in Texas is that people assume there is an automatic right of survivorship in Texas deeds, but that is rarely the case.

Beyond, these tips it is important to stay abreast of federal and state laws that impact the inheritance tax, capital gains tax, changes to generational skipping trusts and more. Currently, there is a lot of TALK in Washington, DC about changing some of these tax structures, but nothing has been enacted as of 9.29.2021. Crain & Wooley will update clients as soon as we hear what, if any, action is taken in Washington impacting financial planning or estate planning laws.

Plan for family land by contacting Crain & Wooley today.

Many people under define / underestimate their status as a small business owner. We often hear statements like this at the office:

• I only own 2 rent houses.
• I only do bookkeeping as a side gig.
• I only have 1099 / contract employees.
• I only lease these 50 acres to a local farmer.
• I only am helping my brother launch his business– am only a 25% owner.
• I only….
• I only….
• I only….

All of the above statements and many others just like them equal business ownership and need to be planned for in a very specific manner

If you are a small business owner, you probably spend a lot of your time in the day-to-day work of your business and when you take time to work on your business, you are spending time figuring out how to stay open and stay profitable. One of the last things on your mind (if it is on your mind at all) is what will happen if I am disabled or when I die?

The problem is that you are likely to be disabled at some point, even if only temporarily, and you will die one day. Both of these events pose major risks for your business, your employees, and your loved ones if you have not thought about AND planned for what happens in the event of your disability and death.

Risks of not having a business succession plan:

1. Business momentum will be lost, including up to, total cessation of the entire business.
2. Business value will drop QUICKLY and possibly entirely during a period of reduced or no operation.
3. Employees may not be able to be paid.
4. Business payments/deposits may not be able to be received/deposited.
5. Business vendors may not be able to be paid.
6. The business will not be able to be sold (if applicable).
7. Courts will likely need to be involved to determine who has authority to act in the absence of the business owner.

What you should be planning for in a business succession plan:

1. Who can run the business in the absence of the owner?
2. How can immediate access be given to the person(s) who have been selected as temporary or permanent successors?
3. What will happen to the business in disability or death?
4. How will employees and other expenses be paid?
5. Will the business be sold at your death, and if so how and who receives the proceeds?
6. How can lengthy, expensive, and potentially difficult court proceedings be avoided?

This past year, we have helped more clients than I would like try to retain business assets that once belonged to a loved one who passed away. If you are business owner and have not formally created a business succession plan – do not keep putting this on the bottom of your priority list.

“Only put off until tomorrow what you are willing to die having left undone” ― Pablo Picasso

Contact Crain & Wooley to create a succession plan for your small business.

Probate is known for being a long and complicated process that many people try to avoid. If you want to save your loved ones from the hassle and expenses of probate, you might be wondering if a will is all it takes to get the job done.

Our Dallas-Fort Worth estate planning attorneys explain if you still need to go through the probate process if you have a will.

Can a Last Will and Testament Help Avoid Probate?

Unfortunately, no. A will requires the probate process to be completed. Before your loved ones can inherit your assets, they must, with the assistance of an attorney, submit an application for probate in the probate court within four years after you pass away. If you fail to probate a will within the four-year time period, then it will become even more costly to wrap up the decedent’s estate.

If your current estate plan only consists of a will, there are other documents that can help your loved ones avoid the probate process when you pass away.

Get answers to common questions about wills and probate in our blog post here.

How Can I Avoid Probate in Texas?

It is possible to avoid probate with careful estate planning. Avoiding probate can not only reduce legal fees but can expedite inheritance distribution. One of the most common ways to avoid probate is through the use of a revocable living trust.

Assets can be placed in a revocable living trust without negative tax consequences. When assets are placed in a trust, the trust creator can still use the assets during their lifetime. However, upon their death, the assets in the trust are passed to the trust beneficiaries listed in the trust document. The transition of assets is often seamless and does not require beneficiaries to complete the probate process.

If you want to develop a comprehensive estate plan that will help your loved ones avoid probate after you pass, contact our Dallas-Fort Worth estate planning lawyers today at (972) 945-1610 to schedule a consultation!

The probate process isn’t as predictable as it used to be. Around 2014, Texas completely overhauled its estate and probate laws, mostly for the better. However, the courts have had a few years to find ways to make the clarified process as clear as mud. The way our common law system works (in this state and in this country), is that our legislators write the laws for people to follow. When the legislature inevitably fails to write a law to cover every situation, the courts’ job is to fill in the blanks and/or interpret the laws for each situation.

Even before Covid, many outlying situations forced the probate courts to make interpretations. These interpretations, sometimes on minor procedural issues, differ from judge to judge, even in the same county. Covid certainly exacerbated the situation, as it did with many other things. This means that you, as the executor for “will A”, will have a completely different experience than the executor for “will B”. Why? Judicial discretion.

In my daily practice, I have seen Judicial discretion impact families in numerous ways. How? Some judges allow out of town witnesses to attend hearings via video conference while others require in-person appearances. Some judges are well-versed in probate proceedings while others are new to the probate court and require additional evidence and testimony. Courts enact procedural changes at their discretion. Recently, two days before a scheduled hearing, the court emailed me regarding a major procedure change that was being instituted ASAP.

What do these discretionary changes mean? Unfortunately, these changes mean probate cases take longer and cost more to settle. 2021 has seen an increase in the number of probate cases across the state of Texas, it is very important to hire an attorney and start the probate process as fast as emotionally and reasonably possible. Between the number of cases in the probate court system as well as the last-minute procedural change that seem to be happening all the time, you as the executor and the beneficiaries will be best served by acting quickly.

As recently as two years ago, I used to be able to provide definitive answers to commonly asked questions. Now my probate consultations go something like this: “Well, the law says [this], but the past few times I’ve been in that county’s court, they might require [extra procedures].” There is simply no way to know what discretionary changes are coming down the pipeline.

Working with a qualified probate attorney is key to successfully completing the probate process. If you or someone you know needs to start the Texas probate process, contact Crain & Wooley for a complimentary consultation.

Estate Planning & Reverse Mortgages

It is important to understand how reverse mortgages work and have an estate plan in place that works WITH the reverse mortgage at the time of death. If you are considering a reverse mortgage, have a reverse mortgage, or are a family member of someone who has a reverse mortgage, you should know what options exist for keeping the house and what responsibility exists regarding paying off the reverse mortgage at the death of the borrower.

What is a Reverse Mortgage? 

A reverse mortgage is a loan that allows a homeowner to borrow money using that home as security for the loan. The borrower receives regular payments, a lump sum, or a line of credit in exchange for reductions in the equity in the borrower’s home. The title to the house remains in the name of the homeowner and the loan is repaid when the borrower no longer lives in the home. The borrower can use the payments, lump sum, or line of credit for things such as supplementing retirement income.

How Does a Reverse Mortgage Work? 

A reverse mortgage is a type of loan that allows homeowners to borrow money against the equity in their home. Here's how a reverse mortgage works:

1. Eligibility: To qualify for a reverse mortgage, you must be at least 62 years old, own your home outright or have a significant amount of equity in it, and live in the home as your primary residence.

2. Loan Amount: The amount you can borrow with a reverse mortgage is based on factors such as your age, the value of your home, current interest rates, and the specific reverse mortgage program you choose.

3. Repayment: Unlike a traditional mortgage, with a reverse mortgage, you do not make monthly mortgage payments. Instead, the loan and interest are repaid when you no longer live in the home. This can occur if you sell the home, move out permanently, or pass away. The loan is typically paid off using the proceeds from the sale of the home.

4. Home Ownership: With a reverse mortgage, you retain ownership of your home. The lender does not take ownership of the property. You are still responsible for property taxes, insurance, and maintaining the home.

5. Disbursement Options: You can receive the funds from a reverse mortgage in various ways, such as a lump sum, a line of credit, fixed monthly payments, or a combination of these options. It's essential to discuss the available disbursement options with your lender to determine what works best for your financial situation.

6. Counseling: Before obtaining a reverse mortgage, you are required to undergo counseling with an approved housing counseling agency. This counseling session helps ensure that you understand the terms and implications of a reverse mortgage.

It's important to note that while a reverse mortgage can provide additional income or funds for seniors, it is a complex financial product. It's advisable to consult with a reverse mortgage specialist or financial advisor to fully understand the implications and determine if it aligns with your long-term financial goals.

What Happens to the Home Loan? 

It is important for reverse mortgage borrowers and their families to understand that the amount the homeowner owes to the lender goes up as payments, a lump sum, or a line of credit are made available to the borrower. Interest and fees are added to the amount made available to the borrower. When the borrower sells the house, no longer uses the residence as their primary residence, or dies, the lender will control the home and any equity above the amount due in the reverse mortgage amount will be available to the borrower’s beneficiaries.

Who Owns the House in a Reverse Mortgage? 

In a reverse mortgage, the homeowner retains ownership of the house. The lender does not own the house. The reverse mortgage allows homeowners to borrow against the equity in their home without making monthly mortgage payments.

What Happens to the House After the Death of the Borrower? 

If the beneficiaries want to keep a house after the death of a reverse mortgage borrower, the beneficiaries must pay off the loan balance to keep the house. If the beneficiaries want to sell the house, they may be able to receive money from the equity in the home as long as they can sell the house for more than the balance on the loan.

Estate Planning with a Reverse Mortgage 

Estate planning with reverse mortgages should include discussing with beneficiaries whether they want to keep the house after the borrower’s death. If beneficiaries want to keep the house, it is important to consider how they will pay off the reverse mortgage. Estate planning with reverse mortgages should include discussions regarding life insurance that might pay the loan balance, options to gift the proceeds to beneficiaries during the borrower’s lifetime, taxes on the sale of the reverse mortgaged property, taxes on the equity left to beneficiaries, and how to maximize the value of a reverse mortgage for the borrower and/or the beneficiaries.

Reverse mortgage borrowers and their heirs need to understand how the loan works and properly plan for the loan in advance to maximize the benefits and reduce the downsides of reverse mortgages. Our Texas estate planning attorneys can help you and your loved plan with reverse mortgages.

Contact us today to coordinate your reversed mortgage with your estate plan.