What is Estate Planning?

Estate Planning

If you have property or children (or both), you need to invest in an estate plan so that your family and friends know how you want your children cared for and how you want your property distributed.
At the Houston, Texas estate planning law firm of The Bonner Law Firm, we get to know our clients and their needs and objectives. Then we put together a set of documents that work as one unit to assure your wishes are known. Depending on your requirements, those estate planning documents include:

  • Living Trust: When your property is placed in a living trust, you retain the power to control all the assets in the trust while protecting those assets from the time and expense of probate.

  • Will (Living or Testamentary): Your will can direct that all property be "poured over" into the living trust, assuring a smooth transfer to your beneficiaries.

  • Health Care Directive: Your health care directive gives your family guidance in the event that you are unable to make your own health care decisions.

  • Powers of Attorney: Acting with the health care directive, powers of attorney appoint someone to act for you in business and financial matters if you are unable to act for yourself.

The estate planning attorneys at The Bonner Law Firm structure living trusts, irrevocable trusts, charitable devises and bequests, and wills to maximize the transfer of assets to your beneficiaries. Thoughtful estate planning can be a gift that saves your family confusion and disagreements at a time of grief.

We provide estate planning services such as wills, trusts and estate administration. Additionally, we also offer counseling and products for those persons whose needs may best be served by acquiring an annuity and /or long term care insurance.

What is Estate Planning?
  • A legal process where a person’s property and finance objectives are arranged with their healthcare decisions to achieve long term family planning goals.

  • At The Bonner Law Firm we will work with you to accomplish the following goals while simultaneously taking into account certain tax consequences:

  1. Conserve your existing estate by optimizing tax saving opportunities for transfer of property upon your death;

  2. Transfer part of your estate to persons or entities of your choice during your lifetime (ie: lifetime gifts) to reduce the size of your estate;

  3. Make plans for the management of your estate if and when you should become incapacitated; and

  4. Transfer the balance of your property to persons or entitles of your choice at your death.

What does an Estate Plan Include?
  • Our Estate Plan package generally includes a Will, a Trust, a Power of Attorney and an Advanced Healthcare Directive. We also draft and execute necessary corollary documents.

  • A Will is an instrument by which a person records their desires regarding distribution of property and their specific wishes after death. Two major disadvantages of relying on a Will alone to manage your Estate Planning goals include:

  1. A Will is not effective in the event you become incapacitated;

  2. A Will subjects your loved ones to a lengthy, public and expensive probate process.

  • A Trust is a legal relationship between its creator ("settlor"), its manager ("trustee") and its beneficiaries. A Trust can be drafted to achieve any legal purpose during the settlor’s life and will determine the management of your estate in the event you become incapacitated or pass away.

  • Durable Powers of Attorney allow you to nominate the person of your choice to make decisions regarding your finances and healthcare decisions in the event you become incapacitated.

  • An Advanced Healthcare Directive allows you to make specific decisions regarding your end of life wishes in order to eliminate the "Terri Schiavo" problems of today’s medicine.

What types of questions will I be asked before an Estate Plan can be completed?
  • How would you like to plan for your family’s future and who will be the beneficiaries of your estate?

  • What are your wishes should you become incapacitated?

  • Who will raise your minor children should you be unable to care for them?

What is your Estate?
  • Basically, everything you own! Your Estate includes all of your real estate, bank accounts, investments, insurance policies and any other assets you acquire during life.

Who needs Estate Planning?
  • Everyone. Whatever the size of your estate, the management and distribution of your assets is an important part of providing for loved ones. Estate Planning will help eliminate or significantly reduce your estate tax obligation on your passing.

What happens without an Estate Plan?
  • Your loved ones are forced to endure a public court process known as Probate. This is a proceeding where the court will oversee the distribution of your Estate.

  • If you don’t have a Will, the court will pay your debts off and will then distribute your remaining assets according to statutory guidelines, not according to your own wishes!

  • If you have a valid Will, the Court will pay your debts and will oversee the distribution of your assets according to the provisions in your Will.

  • As mentioned above, a Will is only effective upon your death. It is not operative if you are alive but incapacitated.

What is Joint Tenancy? Can I hold my property as joint tenants with right of survivorship to avoid probate? Are there any other problems with Joint Tenancy?
  • Joint tenancy means that when the first owner dies, title automatically passes to the surviving owner.

  • The simple answer is no. Here is why:

  1. If you hold property as Joint Tenants with your spouse, Probate proceedings will be initiated on upon the death of the surviving spouse. Additionally, holding property in joint tenancy with your spouse prevents your family from optimizing estate tax savings available to married couples.

  • Yes. If you hold property in Joint Tenancy with someone other than your spouse, you may cause the "unintentional disinheritance" of your children. This can occur because, on your death, the surviving Joint Tenant has no obligation to provide for your children or your spouse because they hold the property outright.

In general, what are Estate Taxes and how do they work?
  • On June 7, 2001, President Bush signed the Economic Growth and Tax Relief Reconciliation Act of 2001, which made significant changes to Federal estate, gift and generation-skipping transfer taxes.

  • Generally, the government assesses estate taxes when the gross value of your estate exceeds the applicable federal exclusion during the year of your death. Currently, the following exclusion amounts apply:

Year Decedent Dies

Applicable Exclusion

2006, 2007 and 2008

$2.0 M

2009

$3.5 M

2010

$0. Sunsets.

2011

$1.0 M

This means that if your gross estate is less than the applicable exclusion amount during the year of your death, your estate will pass to your heirs estate tax-free. If your estate exceeds this amount, your estate will pay significant estate taxes prior to distribution to your heirs. Click here for more information about estate and gift taxes from the Internal Revenue Service (IRS).

Can I implement an Estate Plan to reduce or eliminate my Estate tax obligations?

  • Absolutely.

  • Married couples should contemplate drafting their estate plan together to include a trust instrument to take advantage of the Federal exclusion for both parties.

  • Everyone should consider strategies aimed at reducing the size of your estate by removing assets from your estate. Two common examples of removing assets from your estate during life include:

  1. Making annual gifts of $12,000 or less to persons or entities; and

  2. Placing life insurance policies into irrevocable life insurance trusts.

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