Every State has laws that determine who receives the Estate of one of its residents upon their death. A properly prepared Will avoids this court-determined distribution and provides for the orderly distribution of a person’s assets upon his or her death, and is an important part of every estate plan, regardless of the individual’s estate size or complexity of their assets and family circumstances. A properly drafted Will lets each individual appoint “fiduciaries” to serve as Executor or Trustee under their Will whose duties are to ensure that the person’s affairs are properly administered in accordance with their Will. It can also eliminate many problems and misunderstandings in the final settlement of a person’s financial and personal affairs. Whether a Will is relatively simple, or complex depends upon many factors, including make-up and value of estate assets, marital status and health of family members, as well as the person’s wishes for the transfer of his or her estate. A Will also helps avoid legal pitfalls in the transfer of title to a person’s real estate or personal property. Most importantly, a Will enables a person to decide exactly how the property he or she has acquired during their lifetime will be distributed upon their death (and upon the deaths of their beneficiaries), and to choose those whom they wish to enjoy their estate, including charitable or religious organizations they wish to benefit. Possible estate, gift and “generation-skipping” transfer tax liabilities for both the person and his or her family members are also addressed in the person’s Will. Although most Wills are required to enter the Probate Court process in the State of the person’s residence in order to become effective, many states, including Texas have fairly streamlined probate procedures. A person’s Will has no effect during their lifetime, or afterwards until accepted by the Probate Court.

To help each client better understand his or her plan, we prepare a customized chart to visually depict the operation of the client’s Will upon his or her death. For clients with modest estates that do not require involved planning, a relatively simple plan is sufficient to meet their needs. However, for those clients with substantial estates or involved family circumstances, more complex planning is required. The client may also provide the chart to his or her financial and accounting advisors to provide an easily understood visual summary of the client’s plan for the advisor’s file. The chart also provides a ready future reference for the client or advisor. Basic examples of these charts are included in the “Importance of a Will and General Estate Planning Topics” located in the “Getting Started” section.

A Revocable Management Trust (sometimes called a “Living” Trust) plan provides an alternative to a plan based upon a Will, especially used in States that have complex or costly Probate Court procedures. This Trust plan receives a great deal of publicity as a means of “avoiding probate.” A person (Trustor) transfers most if not all of his or her property to a Trustee (usually the Trustor) who then holds title to and manages the property for the benefit of the Trustor (and his or her spouse) for life, and thereafter, the Trustor’s chosen beneficiaries (usually children, etc.). For federal income and estate tax purposes, property placed in the Trust is treated as still being owned outright by the Trustor (and spouse). Therefore, the trust does not avoid income tax or estate tax, nor does it file an income tax return. It is, however, useful for management and investment purposes and may avoid the need for a guardianship in the event of the Trustor’s disability. When a Trustor owns real estate or mineral interests in another State and transfers them to the Trust, no probate proceeding in those states is required upon the Trustor’s death. These Trusts are also especially useful upon a Trustor’s terminal illness or other incapacity, and in keeping accurate records of property ownership upon second marriages. Any estate planning techniques used in a Will plan may also be accomplished using these Trusts in much the same manner. However, the decision to use a Will or Living Trust as the basis of a person’s estate plan should only be made after discussing the alternatives with a qualified estate planning attorney. Since there are advantages and disadvantages associated with each type plan, the decision should not be based upon information provided by promoters of Living Trusts who state that a Living Trust “is appropriate for everyone”.