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.

Long-term care and nursing home costs can quickly become overwhelming. If you are planning long-term for your loved one, Medicaid may be able to help you ensure your loved one gets the care they deserve.

However, you may find yourself asking, does Medicaid cover nursing home expenses? Read more to find out.

If you need guidance with your elder care plan, contact our Dallas-Fort Worth elder care lawyers today at (972) 945-1610 to schedule a consultation!

What Is Medicaid?

Medicaid is a government program that helps families in various ways including assistance with long-term care services. As of July 2019, more than 65 million people were enrolled in the program. This program also provides many services that are not covered through Medicare or even private health insurance.

Many people have heard horror stories related to Medicaid and long-term care costs. Since nursing homes are expensive, some families have lost all assets (including their home) when paying for nursing home care, even with Medicaid. However, Crain & Wooley can help individuals plan in such a way as to protect up-to 100% of their assets while having peace of mind that their long-term care expenses are taken care of. Proactive estate planning is key. Having a plan in place before your loved one needs long-term care is critical to planning success. Our team at Crain & Wooley can help you.

Want to know the difference between Medicaid and Medicare? Get the information you need in our blog post.

Does Medicaid Cover Nursing Home Costs?

Unlike commercial health insurance and Medicare, Medicaid covers long-term care for both nursing home care and community-based services. One in every three Americans 65 or older will need nursing home care, and two in three nursing home residents receive care through Medicaid. Medicaid offers coverage for many nursing homes and communities that enable seniors and people with disabilities to live independently.

Medicaid also provides other elder care services, such as personal and attendant aid that help seniors stay independent. Many of the services provided by Medicaid aren’t available through other insurance programs and are far too expensive for most seniors and their families to pay out of pocket.

How Do I Know What Is Right for My Loved One?

You need an experienced elder law attorney on your side. At Crain & Wooley, our team has helped families throughout Texas prepare for elder care costs. We can walk you through the process, explain your options, and help you get peace of mind knowing your loved one is covered.

Contact our Dallas-Fort Worth elder care attorneys today at (972) 945-1610 to schedule a case review!

It’s important to have a comprehensive estate plan if you want to make sure your assets are distributed correctly when you pass away. When a person passes away without an estate plan, the intestate succession state laws will determine how their estate will be distributed upon their death.

Don’t let the state be the one who determines how your bank accounts, real estate, or other assets will be distributed. By following these four simple steps, you can develop an estate plan that will fulfill your wishes.

#1: Contact an Experienced Estate Planning Attorney

The first step to developing a comprehensive estate plan is to contact an experienced attorney. Estate plans consist of extensive legal documentation, so it’s important that you have the guidance you need to ensure the documents are valid and will in fact, help you distribute your assets accordingly.

Many people like to turn to DIY estate planning. However, an online program can only work properly in a few instances. Plus, you won’t know if yours works until it’s too late. When it comes to protecting your family, it’s best to ensure that your estate plan is comprehensive to the court and will distribute your assets like you want them to.

Need help creating an estate plan? Contact Crain & Wooley today at (972) 945-1610 to schedule a consultation!

#2: Evaluate If a Will or Trust Is Best for You

A last will and testament is the most traditional estate planning tool. Many of us are familiar with this option as it has been in existence since our country was founded. In fact, we took our will law from old English law. A will MUST go through the probate process to have legal effect. A living trust is a more recent (in terms of the law) estate planning option that allows individuals to avoid the probate process.

A living trust is a legal document in which your assets are placed during your lifetime. They are then transferred to designated beneficiaries after you pass away. When creating a trust, you would need to select a representative or “successor trustee” that will help transfer assets to your beneficiaries.

Trusts can be extremely beneficial for property owners since they can help avoid probate and taxes. Trusts can help your beneficiaries save both time and money. It is best to speak with your attorney to determine if a trust can benefit your loved ones.

Without a will or trust in place, the government will be the one who decides how to distribute your assets according to state laws – which might not align with your last wishes. For such reasons, it is vital that you work with your attorney to draw up a will that will list your beneficiaries (who you would like to receive your assets).

Parents with underage children can also name a guardian for them if both parents pass away.

#4: Complete Power of Attorney Documents

At Crain & Wooley, we consider a complete Power of Attorney document set to consist of: a financial power of attorney, a medical power of attorney, a declaration of guardian in advance, a global HIPPA release, and a directive to physicians (aka a living will).

These documents allow you to choose a person who can make decisions on your medical and financial decisions on your behalf if you are physically or mentally unable to.

For example, if a father appointed his eldest son to be his medical power of attorney, the son would be responsible for making medical decisions related to the father’s medical care if the father becomes incapacitated.

How Do I Get Started?

Estate planning touches every part of your life. It plans for everything thing you have worked for and everyone you care about. For such reasons, it is important that you consult with an experienced attorney to determine estate planning tool best protects your family, your assets, and your well-being in any given situation. Our Texas estate planning attorneys offer comprehensive, flat-rate services that serve clients of all backgrounds throughout their lifetime. We make estate planning simple to better prepare you and your family for the future.

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

As digital asset classes grow, more and more people are failing or forgetting to plan for their digital assets. Digital assets account for trillions of dollars of assets worldwide and neglecting to plan for your digital assets is a big mistake. For example, just considering Bitcoin alone, current estimates are that approximately $140 billion worth of Bitcoin are lost or otherwise stranded^[1] because people did not save and protect their digital keys. Without those keys, both you and those who survive you have no ability to access or use that digital asset.

Properly planning for your digital assets begins with recognizing that you own them. Some examples of digital assets include:

• Photographs, videos, and other digital media
• Spreadsheets
• Documents
• Graphics
• Programs
• Social media accounts
• Credit card reward programs
• Digital coins and currencies
• Blogs, articles, websites, and other writing saved and or distributed in digital formats
• Email accounts
• Copyrights
• Trademarks
• Passwords for digital accounts

Once you have identified your digital assets, you should document what you have and work to provide access to those assets for those who will survive you. At a basic level, this includes making an asset list and ensuring that you have tools in place to make that list available to your beneficiaries. However, simply listing your digital assets does not necessarily give access to those assets to your beneficiaries. It is vital that you have a plan in place to allow for actual access to those assets (for example, providing a way for your beneficiaries to have access to your passwords, digital keys, online or local asset locations, etc.).

Digital asset planning does not have to be overly complex, but it does have to be part of your estate plan to properly account for and distribute your assets to your loved ones. Don’t leave assets inaccessible to yourself and others. Proper planning eliminates problems later on both for you and your loved ones.

Contact Crain & Wooley if you have questions on how to incorporate your digital assets into your estate plan.

The IRS describes Basis as “generally the amount of your capital investment in property for tax purposes. Use your basis to figure depreciation, amortization, depletion, casualty losses, and any gain or loss on the sale, exchange, or other disposition of the property. In most situations, the basis of an asset is its cost to you. The cost is the amount you pay for it in cash, debt obligations, and other property or services.”

If you leave assets to beneficiaries when you die, the basis of the assets you purchased are stepped up. Your beneficiaries take the asset at the new basis of the fair market value of the asset at the time of your death.

If you buy a house for $200,000 and you die in 2025 when the house is worth $450,000, your child gets a step-up basis at your death. Your child’s basis in this example would be $450,000. This means that your child can sell the house for $450,000 and she will not have a capital gain.

If you give (deed) your house to your daughter while you are living, the basis your daughter receives in the house is different. Your daughter would not receive a step-up in basis and when she sells the house, she will have to pay the difference in the sale price of the house and your original basis (your original purchase price) to determine her capital gain. This is because gifts made during your lifetime to retain the basis of the property from when you purchased the property.

Because step-up basis only applies to gifts you make after death, it is often better to give your assets to your loved ones in death, via an inheritance, rather than in life if you are planning with the goal of reducing taxes and maximizing the value of your assets for your beneficiaries.

To learn more about the best ways to leave an intentional legacy for your loved ones, contact Crain & Wooley today.