Things to Consider When Preparing Your Estate Plan

Written By: Maria Ortiz

If you are at the beginning of your journey in preparing your estate plan, chances are you may feel overwhelmed or unsure of where to start. In this post, we will be discussing five key things to consider when preparing your estate plan. 

What is estate planning? 

Estate planning is the process of taking proactive measures to plan for an individual’s future, particularly regarding the distribution of an individual’s assets upon death. 

Why is estate planning important? 

Preparing an estate plan is the best way to ensure that important decisions regarding your estate, your dependents, and yourself are not left for a probate court to decide. Through an estate plan you are able to retain a degree of autonomy over your estate and leave clear instructions for how certain decisions affecting your estate should be made. 

The Lyda Law Firm offers estate planning packages for individuals and couples at transparent, affordable rates. Click here to learn more. 

Considerations 

1. Assets

One thing to consider when preparing your estate plan is which assets comprise your estate. 

First, it’s important to understand your ownership interest in the property. This is particularly important if you have jointly owned property or live in a community property state, such as Texas. If you own an asset as community property, you cannot devise it to a beneficiary without the joint owner’s consent. 

Second, you should confirm that the asset you intend to give is correctly titled. For example, sometimes clients will inherit a home from their parents, but never complete the legal paperwork necessary to ensure that the home is titled in their name. This creates problems later, when the client’s beneficiary is trying to exercise control over property that is not in the client or beneficiary’s name. 

2. Beneficiaries 

The second factor you should consider are your beneficiaries. Not only do you need to consider which beneficiaries you want to inherit your assets, but you should also consider how receipt of the assets will affect your beneficiaries. Be particularly mindful of negative consequences. 

For example, if one of your intended beneficiaries is currently receiving government aid, such as Medicaid benefits, a transfer to this beneficiary may be classified as income that could disqualify the beneficiary from receiving benefits. This could be an unintended consequence of failing to plan properly. 

Additionally, if you leave a significant gift to a beneficiary that is indebted, the gift may be redirected to pay off the debt. This is ultimately dependent on the type of debt as well as the applicable state law.  

For example in Texas, if one of your intended beneficiaries is subject to back-owed child support, any gift this beneficiary receives could be considered income for calculating child support payments. 

3. Executor(s) 

Third, you should consider whom you intend to appoint as executor of your estate. An executor is tasked with overseeing the administration of your estate upon your passing. This includes complying with court deadlines, resolving all debts of your estate, and distributing your assets to your intended beneficiaries. 

An executor should be capable of handling these responsibilities and carrying out his or her duties in good faith. 

Additionally, you should confirm that your proposed executor is qualified to serve in this role and satisfies the requirements under your state’s laws. In Texas, out-of-state executors are required to appoint a resident agent prior to qualifying as an executor. 

In addition to choosing a primary executor of your estate, you should also determine whom you would like to appoint an alternate executor in the event that your primary executor is unable to serve. 

4. Long-term care (for yourself and others) 

A fourth consideration when preparing your estate plan is whether you have sufficiently prepared for long-term care. If your estate plan is limited to a will, you have simply planned for the distribution of your estate assets upon your death. However, in the event you later become incapacitated, who would be responsible for making medical or financial decisions on your behalf? 

If you have not properly planned for this issue, the probate court may be responsible for answering this question. 

In addition to preparing your will, consider also preparing documents to appoint a Medical Power of Attorney (MPOA) and Durable Power of Attorney (DPOA). 

A MPOA will be responsible for making medical decisions while a DPOA will be able to make financial decisions on your behalf in the event you become incapacitated. By appointing someone to serve in these roles, you will ensure that someone you trust is making these decisions regarding your health and financial well-being. 

As well as preparing for your long-term care, be mindful of the long-term care needs of your dependents. For example, if you are the parent of minor children, you may need to designate a trusted adult to serve as the guardian of these children in the event of you pass before these children reach the age of 18. 

5. Non-probate Assets

A final thing you should consider when preparing your estate plan is whether you are able to transfer any assets through a beneficiary designation. 

Some assets allow you to transfer property upon your death without that property having to pass through a probate court proceeding. These assets can include retirement plans, such as 401ks and IRAs, life insurance proceeds, bank accounts, and other property that is subject to a transfer on death deed.  

Assets that transfer based on a beneficiary designation are considered non-probate assets. 

It is important to identify which property will transfer as a non-probate asset and which property will be covered by your estate plan. 

Contact us to get started planning for your future. 

For more information about estate planning, check out this post which discusses the essentials of estate planning and provides a detailed discussion of the documents included in our firm’s estate planning packages. 

If you would like to learn more about how you can get started in planning for your future, contact us at the Lyda Law Firm. We are eager to assist you with your matter and work with you to develop an estate plan tailored to fit your unique needs.