An estate includes everything a person owns, including assets and outstanding liabilities at the time of death. Once all debts are fulfilled, what is left is known as net assets. In Texas, most people put off talking about estate planning, but by not having a plan in place, it can lead to the decedent's estate going into probate. Probate can be time consuming and expensive, but it can be avoided by utilizing one of the many financial devices available.
Joint ownership of properties gives the surviving spouse co-ownership or rights of survivorship. Having a signed beneficiary or transfer on death designation in place will cover pension payouts, IRAs, 401(k) plans, bank accounts, retirement accounts and life insurance policies. Gifting property and assets before death removes the potential for probate, but if the gifts are large, they may incur a federal gift tax.
There are many trusts that exist that will keep assets out of probate. Revocable living trusts name a trustee who can quickly settle liabilities and distribute remaining assets to beneficiaries. Irrevocable living trusts cannot be altered or terminated by the grantor once signed. These trusts are often used to set up funds that are not needed by the grantor, such as life insurance for minor children.
In Texas, those considering estate planning may want to consult with a qualified tax planning professional and an estate attorney. A lawyer who has a vast knowledge of asset distribution and probate laws can explain the steps needed to create a successful estate plan. By planning early and wisely, a benefactor can achieve peace of mind and ease the burden of estate settlement for his or her loved ones and estate representatives while avoiding the expensive and lengthy legal process of probate.
Source: bizjournals.com, "What an estate plan can do for you", Wonsun Willey, Feb. 1, 2018