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How to estate plan for generational wealth in Texas
It might be every hardworking Texas resident’s dream to create generational wealth that will keep their family supported for years to come. Even if you’re a millionaire, it still takes careful planning to create substantial generational wealth that will last beyond when you pass.
The exact estate plan that you set up will depend on what assets you have to your name and how much you want to leave behind. In general, though, there are some things that people who wish to leave enough behind to jumpstart a tradition of generational wealth can do with their estate plans.
What’s one of the biggest takeaways for estate planning?
Before you start estate planning, it’s important to be intentional with your planning. Generally, you can either plan around the family you have that’s living at the time of your estate planning or you can plan into the future.
How long does the probate process take?
If you recently lost your mom or dad, you now may be in charge of settling their estate. You might feel overwhelmed by this task. You know the process may be complicated. You also know that the probate process can be lengthy. So how long exactly will probate take?
Understanding probate
First, you may not know exactly what probate is. It is the legal process involved in settling someone's estate. With a will, probate involves proving that the will is valid, distributing the assets as the will lays out and paying any applicable taxes. How long it will take your parent’s estate to go through probate depends on several factors. If their estate is simple and no one disputes their will, you could settle their estate within six months. If your parent had set up a living trust for their assets, those assets don't have to go through probate. However, the probate process could take more than a year if any of the following circumstances apply:
- If you live in a different state and can’t easily meet with an attorney helping with the estate probate administration
3 vital estate planning documents you need
Estate planning is a way to ensure your wishes come to fruition even when you are no longer able to carry them out or supervise their fulfillment. Yet, according to InvestmentNews, in 2017 only 36% of parents with minor children and 42% of adults in general in the U.S. had a living will or trust.
It is important to begin preparing for the future early to take care of your loved ones. As you do, there are certain vital estate documents you need to assemble.
1. Last will and testament
This is the document in which you specify the distribution of your assets. It is also where you appoint a guardian for any underage children in your charge.
2. Medical directive
Also referred to as a living will, an advance directive or a Directive to Physicians and Family or Surrogates (the latter two are Texas labels), this is where you spell out important medical decisions in case you are later unable to advocate for yourself. For example, if you fall severely ill or suffer an injury that keeps you from speaking or making choices, this document tells medical personnel your desires. Subjects you may address include if you agree to life support, if you are willing to donate your body to science and more.
4 signs your father’s will may not reflect his true wishes
If your father drafted a will before he died, he had more of an estate plan than most. In fact, according to a recent study, nearly 70% of Americans do not have even a basic will. Still, whether you stand to inherit considerable wealth or nothing at all, you want to be sure your father’s will reflects his true wishes.
Undue influence happens when an influencer pressures a person to draft a will in a way that benefits the influencer often to the detriment of traditional beneficiaries. Here are four signs someone may have exerted undue influence over your father’s will.
1. Too much participation
While there is nothing inherently wrong with having a friend, family member or someone else help draft a will, too much participation from a nonprofessional may be a sign of undue influence.
2. Recent or unexplainable changes
What is a special needs trust?
There are some valuable estate planning tools available to individuals who have disabled family members, friends or other loved ones. One of these, a special needs trust, goes hand-in-hand with means-tested government programs, such as Medicaid or Supplemental Security Income.
To be eligible for many types of public financial assistance, individuals must have limited income and assets. This is a problem in the estate planning context. After all, if you give cash or other assets directly to your loved one, you may inadvertently disqualify him or her from receiving government help.
Paying for supplemental expenses
To ensure your disabled loved one remains eligible for government assistance, the special needs trust you establish may not pay for his or her ordinary living expenses. Therefore, the beneficiary should use public assistance to pay for rent, food, utilities, medical bills and other necessary expenditures.
What happens if you die in Texas without a will and have a surviving spouse?
If you make no Last Will and Testament prior to your death, the state’s intestacy laws determine who inherits your estate and in what proportion. However, if you draft an enforceable will with the help of an estate planning attorney, you can determine exactly how you want your estate distributed, rather than leaving it up to the probate court. Otherwise, the following situations may apply if you have a surviving spouse:
Surviving spouse intestate situations
Texas intestacy law provides for the following five surviving spouse scenarios and their respective distributions:
- Surviving spouse, but no surviving parents, siblings or children: Your spouse inherits your entire probate estate.
- Surviving spouse and surviving children born to or adopted by you and (s)he: Your spouse inherits your share of the community property, plus one-third of your separate personal property. Your children inherit the rest of your probate estate. Your spouse also gets all your separate real property, but only during his or her lifetime. On his or her death, that property passes to your children.
It may be time to review and modify your estate plan
There’s nothing like the feeling you get when you finally create a comprehensive estate plan. Even though it forced you to think about the future, you’re now in better position to protect both you and your loved ones (as well as your assets).
However, there’s a big mistake lurking: neglecting to review your estate plan as time goes by.
It may not be something you enjoy, but there are times when you have to review and modify your estate plan. Consider the following:
- The passage of time: As the years go by, there’s a greater chance that your estate plan will no longer suit your needs. Review it every year for potential changes. It’s your hope that everything can remain the same, but you never know when you’ll have to tweak it.
- Divorce or marriage: When your marital status changes, so should your estate plan. For example, if you divorce your spouse, you probably want to remove them from your estate plan, as you don’t want them to receive anything in the event of your death.
Do you need a family limited liability company?
If you are fortunate enough to enjoy a supportive, loving and friendly family dynamic, you may consider starting a business together. Perhaps you and your spouse have the type of relationship where you work well together and complement each other when it comes to strengths and weaknesses, which would certainly contribute to your success.
You may also want to pass on the business to your children when you retire and want to protect it for that purpose. Another of your goals may be to protect your assets from creditors and/or have the ability to bypass probate after your death.
Would you consider forming a family limited liability company?
You may already know that a limited liability company provides members some protection from personal liability for the debts and legal obligations of the business without all the paperwork and legal requirements of a corporation.
This makes an LLC attractive to many people. If you happen to be a family-only owned business, you could form a family LLC, which also helps with your estate planning. A family LLC also allows you to provide profit distributions for generations of your loved ones.
Laying the foundation for your company's future success
Every business is different, and what you will need to do to ensure your Texas company's success depends on what you hope to accomplish, the type of business you plan to start and multiple other factors. The choices you make during the business formation process will impact your company for years to come. It's smart to know how you can make decisions that will lay the foundation for your future success.
There is a lot to think about and consider during the business formation stage, but you do not have to walk through it alone. There is significant benefit in having experienced guidance from the earliest stages of your business, lowering the chance of costly missteps or regrettable decisions. There is a lot at stake during this stage, but you can take steps now that will greatly benefit you in the future.
Your success starts now
Laying the foundation for your business starts with having a solid business plan. Starting a business without a plan is not a good idea, and it can cause you to drift off course down the road. Besides, investors and potential partners will want to see any plans and documents. The first step in the business formation process is to have a strong business plan in place. After this, the following tips can help you start strong:
Does your single-member LLC really need an operating agreement?
Instead of operating as a sole proprietorship, you decided to take advantage of the personal protections of a limited liability company. Since you are the only member, you may not think you need an operating agreement.
After all, aren't operating agreements meant to outline the relationship among members? Since you are the only member of the LLC, you shouldn't need to worry about one, right?
There's more to it than that
Outlining those relationships isn't the only reason for an operating agreement. Even a single-member LLC needs this document for the following reasons:
- An operating agreement helps separate you from your business. It makes it clear that the company is its own entity separate from you, which is important for a variety of reasons, not the least of which is protecting you from personal liability.
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817-645-1717
