What Is An Estate? An estate is the money (including stocks, bonds, etc.) and property, both real estate and personal items, that you own at the date of your death.
What Is Estate Planning? Estate planning is the written plan that a person uses through creating documents (such as a will, medical/durable powers of attorney, trusts, etc.) which outline how that person wants his or her estate to be handled and distributed upon his or her death. At the very least, you should have the following estate planning documents in place: 1) A Will; 2) Statutory Durable Power of Attorney; 3) Medical Power of Attorney; 4) Directive to Physicians (Living Will).
Methods of Estate Planning
Wills/Powers of Attorney
Part of your estate planning process should include a will and various powers of attorney. These tools are commonly used in the estate planning process, and ensure that your loved ones have a road map and directions regarding your care in the event of your passing or incapacity.
Common Types of Wills
The simple will is a document that covers a very basic disposal of a will maker’s (also called the “Testator” or, more archaic, “Testatrix”) property upon their passing. It also appoints someone to act as the “Executor” of the estate. Essentially, the Executor is the person who will be in charge of ensuring that the directions in the will are carried out according to the Testator’s wishes. This person also interacts with the Testator’s creditors, and winds up all outstanding matters that have to do with his or her property, personal debts owed to him or her or payable by him or her, and any other business matters. The simple will does not cover estate tax matters, but is usually used by persons who do not have an estate that exceeds the estate tax exemption. In this type of will, the Testator may also create trusts for his or her children, as well as establish a guardian for his or her children if they are minors or lack mental or physical capacity upon his or her death.
The living will is a document that outlines your wishes with regard to the use of life support in the event that you become so ill that life support may be warranted, and you cannot communicate your wishes to your doctor.
Wills That Include Tax Planning
Wills that include tax planning are often used by persons who have money, property, and other possessions that are so great that they would want to consider using estate planning methods that enable them to avoid the estate tax upon the event of their passing. In this instance, the Testator would be able to give away certain items during his or her life time, or use certain items during his or her life time, but upon death, said items would pass according to the will provisions in a manner that would allow the estate to save or avoid estate taxes.
Handwritten (“Holographic”) Wills
Handwritten “Holographic” Wills are wills that must be written completely in the Testator’s handwriting, and outline how the Testator wants his or her property distributed upon his or her passing. In order to be valid, the law requires that very specific rules be followed in the drafting of this type of will. If the laws are not followed, then this type of will will likely be invalidated, and the Testator’s property would then be disposed of according to Texas law.
Powers of Attorney
Powers of Attorney are often used in order for persons to ensure that they have a trusted person in place to act on their behalf in the event of their incapacity, be it mental, physical, or otherwise. Powers of attorney in Texas enable someone that you appoint to make medical, financial and other decisions for you regarding your person and your property, and can be very important and useful in the conduct of your affairs.