Alex Hunt: 0:08

and today we're going to be talking a little bit about estate planning. We have two previous videos podcasts on estate planning and we'll link those down in the comments. The focus of those was on first kind of the 18 to 24 college age, new adult demographic. Then we went on to talk a little bit about younger families, new parents, new marriages. Today we're going to take a little bit of a turn. We're going to talk about more of a established, older you know, talk a little bit less about children's issues, a little bit more about things like how does, how should my estate plan look at my business, business succession planning, what are some of the unique aspects that I need to look at? So, as always, this is intended to be informational. It's not legal advice. It's not intended to create an attorney-client relationship no-transcript.

Alex Hunt: 1:26

So, Bree, start us off first. What is an estate plan? What is estate planning and why should somebody care about?

Bri Holcombe: 1:37

it, yeah. So estate planning is basically taking an inventory of everything that you've accumulated throughout your life. You know this video is for some of our older individuals who are well-established and have created property and have built a family and have built a life. Planning your estate is about planning for your death and what should happen to your property when you pass, what should happen to your body, but also planning for incapacity, which is as we get older, you know we may fall into declining health, we may lose capacity, and we want to have family members or friends who can step up and step in in the event that those things happen.

Alex Hunt: 2:15

So what does an estate planning consultation with our firm look like, from start to finish, from the first phone call, the first website message to wrapping everything up and getting a binder with all of the documents?

Bri Holcombe: 2:31

Yeah. So the first step is our intake process, where you call and you say, hey, I'm ready to go ahead and get started. We gather some information on you, we make sure that we run a conflict check so that there's no conflict of interest in the attorney-client relationship and we schedule that consultation. In the consultation you can come in our office, you can do it by phone call, you can do it by Zoom, and we really talk about in-depth what your estate is comprised of, what probate assets you have, how many homes you have real property, vehicles, and also your non-probate property life insurance, retirement accounts, bank accounts and also your non-probate property, life insurance, retirement accounts, bank accounts. We go through everything and we discuss who should get those things, who's going to be in charge. We also walk through all the documents of incapacitation you know and planning for those things, if that were to arise.

Bri Holcombe: 3:17

What I do, once I've got all the information from you, is I send you drafts, drafts of each of the documents that we talked about, with your wishes laid out in them, got a big draft watermark on them, so they're not the original.

Bri Holcombe: 3:27

You can't go and sign them, but you look at them and you see if you have any questions. Oftentimes, when you get those documents, you're going to feel overwhelmed. It's going to have legalese and big words that you don't understand and you don't know. But that's why we're here we want to walk you through and guide you through those documents so you have an understanding of what each does and what the role for each person that you appointed is comprised of. Once you have all your questions answered, we'll bring you in for a signing ceremony where we provide two witnesses and a notary. We sign all your documents in their original form and then we provide them to you in our estate planning binder. We also provide you with a USB so that you can make copies and share them with loved ones who may need to have those documents.

Alex Hunt: 4:09

And I might be biased, because I see the work that our team does and it's just so outstanding, it's responsive, it's fast. But a lot of people might be inclined to go online and there are so many new websites that are popping up that will just you put in some information, like TurboTax for state planning, and it spits out an estate planning document, a will or power of attorney. Those don't get the blessing of a licensed Texas attorney. You're not able to answer, get questions answered from a licensed Texas attorney, particularly like somebody who lives in your neighborhood or has experience with you, know what you're maybe going through and whatever your life circumstance is.

Alex Hunt: 4:56

A lot of times those forms are just generic too. They're national forms, they're not Texas specific and the way the law works is that Texas has different requirements than the other 49 states in the District of Columbia and we need to have somebody that's looking at those and making sure that you are following Texas law. And it's worth a little bit of extra cost and I think that a lot of people would be surprised at how inexpensively you can get a comprehensive estate plan done. What are, what are, the documents in our comprehensive estate plan? We do things a la carte, but we also have a state plan package. What are the documents that people are going to get?

Bri Holcombe: 5:44

Yeah, so the first document is your last will and testament. That's the document that takes effect only when you've passed. So it's not living now, it's living when you pass. It says here's what I want to have happen to my property when I die. Here's going to be the person who's in charge If I have minor children, here's going to be the individuals who take care of those minor children. And it's an important document because it it lays out your wishes and, rather than going through the process of not having a will and you know the law and Texas determining where your property is going to go you spell out your wishes. So that's one.

Bri Holcombe: 6:17

The second would be the appointment of disposition of remains. That's a document that says when I die, here's who's going to be in charge of my body and here's you know what I want to have happen whether you want to be buried, cremated. You know you want certain flowers at your funeral. We provide you with that space to do that and it also allows someone to make those decisions for you, if you have it.

Bri Holcombe: 6:40

For if you've passed the other documents, we plan for incapacitation, which is, you know, maybe you got into a car accident and you no longer have the ability to function, or you're just getting older and you don't want to make decisions. You don't want to deal with the credit card companies or your mortgage company. You want someone to come alongside you and assist you. So the first we have is a financial power of attorney, often referred to as a statutory durable power of attorney. A durable power of attorney this document says when I can't make financial decisions for myself, these people are going to come alongside me and make those decisions for me. They're going to help me and hold my hand, or I'm just going to surrender the power to them and say I don't want to do this anymore.

Alex Hunt: 7:21

And that's one of those terms that scares people away from doing this, because it sounds like the type of thing that I don't need and I certainly don't want to dive into, because it sounds like a scary legal.

Bri Holcombe: 7:35

It's scary to think I'm giving you know, access to an individual, everything that I have, finance wise, and you get worried that well, maybe they're going to take the money that's in my account and run. When you appoint these people as your agent, they have a fiduciary duty to act in your best interest, and if they're not, you've got remedies and ways to kind of combat that.

Alex Hunt: 7:56

And you can set it up so that they don't have any power, any authority, until something happens where you lose capacity or you know. So. It isn't like you're going to sign it. You're 40 years old and, all of a sudden, whoever you're sending us over to can make decisions on your behalf immediately. Something has to happen in the interim.

Bri Holcombe: 8:16

So we have two different types of powers of attorney one that's effective immediately and one upon disability or incapacitation. But different financial institutions, they actually want that power of attorney that's effective immediately rather than upon incapacitation, because it draws into question that event of incapacity and it makes them say well, are you, are you not, rather than just having the freedom to do things now? You know, I'm my parents' power of attorney, it's effective immediately, but I can't go to their bank account and withdraw all of their money. If I did, I'm screwed, for lack of a better word. So there are checks and balances in place that prevent someone from just taking the assets and running. We also have for our powers of attorney a little provision that says you can't change the beneficiary designations on my account. You know, when you were capacitated you laid out who you wanted those items to go to, and so we don't want somebody coming in and changing your wishes.

Alex Hunt: 9:09

So you mentioned before what the Texas law decides what happens in the absence of a will, and so we've got another legalese term intestacy. What does that mean? What does it look like? What happens if you don't have an estate plan in place?

Bri Holcombe: 9:27

Yeah.

Bri Holcombe: 9:27

So if you die without a will, the good news is that Texas law has taken care of what should happen to my property, but it's also a bad thing because it may not be what you want and what your wishes are are.

Bri Holcombe: 9:38

So if you were to pass, you know, and you just had one spouse, no children, or you had children of that marriage, your spouse is getting everything. If you pass and you have a blended family and let's say that you're on your second marriage and you have kids from your first marriage, it's going to be 50-50 between your current spouse and the children that you have. If you don't have any children, if you don't have a spouse, it's going to go to your parents or then possibly to your siblings and work its way down a tree. But it's important to have your wishes laid out, because that might not be what you want. Your parents might not be here if you pass, or you might not have children and you want to direct your funds to a charitable institution. Without having it written down, there's no way to direct those things there.

Alex Hunt: 10:19

So another question that we often get is for folks that are doing their last will and testament and they're deciding who will get bequests, who will get their physical items, their financial accounts, but they also want to exclude somebody.

Bri Holcombe: 10:53

Is that something that specifically needs to be outlined, or you just don't list them? What does that look like? So if we're going to disinherit someone, we can disinherit them. We just simply put a line in there that says I have this child and I disinherit them and all of their descendants, or I just specifically disinherit this child. You know, it's very common to do and it's something that we can certainly take care of. One thing to note is that even if you did a holographic will which I'm sure we'll kind of dive into you're able to disinherit somebody. But I just I would avoid the here's why. Here's all the things that they did to make me mad. I don't care that you're disinheriting your child, I don't care that you're disinheriting a sibling. That's not my place to determine whether or not that's an OK decision and, quite frankly, none of the attorneys really care. We just want to make sure that you understand what that means and that when you sign the will, you have capacity to enter into it.

Alex Hunt: 11:48

And, more importantly, the probate court doesn't necessarily need to know why you're doing it either. They just need to see that you're doing it. But there is a need Like say, you've got three kids and unfortunately maybe you've lost contact. There's not a relationship with one of them. You should specifically disinherit that person in the last will and testament, correct?

Bri Holcombe: 12:12

If that's what you want to do, correct.

Alex Hunt: 12:14

And in testacy rules, it's just Texas law. If you don't have anything, it's going to those children. It's going to those kids. Okay, it's just Texas law. If you don't have anything, it's going to those children. In this estate planning process, like you know, sometimes I'll have a client that'll come in and want to have a financial advisor, or maybe there's. Maybe they have a sizable estate and they have tax questions about what's going to happen with however they're giving out things in their will Is it? Is it good to have other people involved? Does it complicate the process and who should be involved?

Bri Holcombe: 13:05

Good question. So the one thing to know is that if we're not creating a trust, which is a legal process that you pour your assets into while you're living it's called a living trust that's not something that your will is going to actually take care of, because those are considered non-probate assets. Those items go specifically to the beneficiaries that you have designated. You've got retirement accounts, iras, life insurance policies. Those items go to who you have instructed that financial institution to go to. Your will doesn't carry and doesn't touch any of that. In the event that you forgot a beneficiary, then your WillX is a catch-all and it grabs those assets and distributes them in accordance with your will. But those things go to whomever you've instructed. I always advise my clients go back and look, make sure that those items are going to who you want them to go to.

Bri Holcombe: 13:56

You can oftentimes have a first beneficiary and then a secondary beneficiary if the first is no longer there. I know, specifically with Fidelity, you can check a box that says per stirpes, which is essentially a fancy Latin term for the distribution of property in accordance to birth. So it's important to review everything. If you've got a financial advisor, certainly pull them in and ask them those questions like tax consequences. In Texas we don't have an inheritance tax. That's not something that Texas law has, but the IRS does have taxes and estate taxes. You've got to have an estate worth well over I believe it's $12.9 billion or million something that most middle-class families are not going to achieve, so that's not something we have to worry about. Okay.

Alex Hunt: 14:45

We have a lot of business owners as clients. What should they be thinking about? That's maybe different than somebody who works for a company and isn't a business.

Bri Holcombe: 14:55

So the first thing is how's your business structured? You know, sometimes people create companies off legal Zoom and there may not be an operating agreement, there may not be a succession plan in place. That is something that's going to be incredibly important for an individual to have. In the event that you did not establish a succession plan for your business, one, I would recommend that you do it now. But if you were to pass and that was not in place, probate is the process at which your business is going to be distributed. It very well may be dissolved, because if you have, for example, a professional company you're a lawyer, you're a doctor and you didn't have these things in place, a non-lawyer and a non-doctor can't come in and fill your shoes. So you know, having that wind up plan in place, having the succession plan, is going to be key.

Alex Hunt: 15:42

Yeah, and that's something that a lot of attorneys deal with. We have clients that are doctors. There's something in Texas called corporate practice of medicine. There's the same doctrine in the law, like you mentioned, you can't have a non-doctor take over a medical practice. But there certainly are assets there that you want to be going to your family and the last thing that you want to do if you're a doctor, if you're a lawyer, if you're a business owner there's a lot of businesses where the owner is in a complex area and their spouse might not be familiar with it, might not be able to dissolve the. You won't have a plan in place. So that way you're not creating a crisis, a disaster, and you're making sure that the assets that are in that business can easily be resolved, so that way your family can get the benefit of it. Are there any other considerations that business owners should think of?

Bri Holcombe: 16:50

I think it's really important for business owners to take account of their ownership interest in the company that they have and remember, when you pass, debts and liabilities have to be paid. Now, if you were a sole proprietor, you had an LLC and you're just a single member. The debts that you accumulated aren't just wiped away necessarily. When you pass and you go through the probate process, an inventory is prepared of everything in your estate. We look at the debts that you have. There's a priority order of how debts are paid, from secured claims to unsecured claims and so you want to make sure that you know all your assets aren't just going to pay those things, that your family has something in place. Life insurance is a great place to look. So pulling in a financial advisor and saying, hey, how much is it going to cost to cover these liabilities that I have so that my family can have something on the other side when they get out of it?

Alex Hunt: 17:41

And a lot of people, including us, want to keep as much of this property out of the probate court as possible. Tell me a little bit more about probate versus non-probate assets. What should people be thinking of to try to stay out of court as much as possible?

Bri Holcombe: 17:59

So I mean it really comes down to what's in your specific estate. Everybody is different. Everybody has different makeup of assets and makeup of liabilities. I would say the first thing if you wanted to avoid probate, one option is to have a living trust. That is, a document that you fund all of your property with during your marriage. I'm sorry, not a document, a process, a legal process. So you put your home in the name of the trust, you put your retirement accounts in the name of the trust, your life insurance policies. That way, in the event of your passing, you know those things. You don't have to go through the probate process. You don't have to open everything up. When you pass, your trustee steps in and they just take care of managing the trust.

Bri Holcombe: 18:41

For middle class families though sometimes that's not always practical of having that and keeping up with it over time there are different tools that we can use to avoid probate. If you have all non-probate assets, you've just got retirement accounts and life insurance policy, bank accounts and then maybe just a home. A transfer on death deed is a great option. It basically says I give my ownership interest in this person. When I pass, we file that document with the property records with a county clerk and it's on file. It's there and when you pass, your person just has to take the death certificate and the title transfers over.

Alex Hunt: 19:18

Okay, so we talked a little bit about living trusts. Tell us about testamentary trust. We talked about this in a previous episode, where it was really more geared towards younger families, but this certainly might have implications for older individuals as well. What's a testamentary trust and who needs it?

Bri Holcombe: 19:39

So a testamentary trust is a trust that's created in your will. It only takes effect if certain conditions are met, meaning someone is under a certain age or maybe they've reached incapacity and they're not able to you know inherit property because it would mess up some sort of government benefits or assistance that they're on. Who needs a contingent trust or a testamentary trust is, you know, really just depends on your family makeup. If you're giving, you know, let's say you're a married couple and you're giving everything to your spouse and then to your children, well, what happens if one of your children predeceases you and they've got grandkids, or you've got grandkids, you want to make sure that those grandkids are not inheriting and then spending all their money on Roblox or Legos or whatever the new fad is. So in our estate plan we do put that testamentary trust in there, just because because of what, if, what, if it does make it down the line, we want to make sure that we're thinking of everything and taking care of your family for the long run.

Alex Hunt: 20:39

Okay, and especially some of our older clients or more established clients might have specific items that they want to bequest to certain individuals, and so I know that we have a system in place for that. Tell me about how that works in our state planning process.

Bri Holcombe: 20:54

Yeah, so one of the documents we include is what's called a personal property memorandum. In our will we say we can reference this personal property memorandum. Personal property is things like your clothes, your jewelry, your china, that you may have, those items you may want to give specifically to one individual, and you can do that over time, which is great. But we don't want to have to have you come back and redo your will every time you give a piece of jewelry away. You know, in my family my Meemaw's china, her Christmas china, is a big deal. So she can put on this personal property memorandum. I give four place settings to my granddaughter, I give four place settings to my daughter and it covers you so that those things are carried out. Your wishes are there, it's handwritten, you don't have to have a notary or witnesses and you can add to it over time and you can take away as property comes and goes.

Alex Hunt: 21:43

Okay, well, very good. And then it's something that, especially when folks are approaching the end of life, but it's really applicable at any point, because you never know and you want to have plans in place our funeral expenses and uh, planning and, um, the probably the most morbidly titled document that we deal with the agent to for disposition of remains, um, helps give an idea to your loved ones, um, of how you'd like your body disposed of, what you would like your funeral to look like. Ones of how you'd like your body disposed of, what you would like your funeral to look like, how much money you want to spend. Tell us a little bit more about that, yeah.

Bri Holcombe: 22:21

So it's a great document because if you don't know what you want to do, you can appoint someone who's going to do it for you.

Bri Holcombe: 22:26

You appoint the person who's going to be in charge of your body and making sure that, once you've passed, your wishes are carried out, if you have any. I always think it's a good idea and, again, it's very morbid to go ahead and think about the cost and the expense of having a funeral, having a celebration of life being buried, being cremated. Visiting one of the many you know funeral homes around the Houston area is going to be great, because you can not only take care of those expenses now and pay for them and have that set, have things ready to go when the time comes and you take that burden off your family. You take the burden off of them to spend more money than you would want them to. So I always encourage my clients to go and visit with one of those funeral homes to get their wishes laid out, get things taken care of, pay for it now so you don't pay for it later and lock yourself in.

Alex Hunt: 23:38

If it's $20,000 for a full funeral and a spot in a cemetery and all that stuff, you can only imagine what it's going to be like, and we know of somebody that did that process decades ago and it was a fraction of the cost of what it would be now, I think, like $600 for a plot.

Bri Holcombe: 23:49

Now they're going probably for like $13,000.

Alex Hunt: 23:52

Yeah, so definitely not something we think of in terms of like an investment, but it is an investment in our family's future. Another end of life issue is not necessarily if you pass, but if there is some sort of incapacity. We want to make sure that at least I know that I do, that the person that is making decisions for me is who I want, and I specifically want to make sure, maybe, that there's certain people that I don't want to be making those decisions for me, and so that's where the declaration of a guardian in the event that the need arises is a form that will walk our clients through. Tell us a little bit about that form, why it's important, what we need to know.

Bri Holcombe: 24:39

So a guardianship is a legal lawsuit that basically takes an individual's rights away. They're not able to make decisions for themselves and they become in danger and we need to strip them of that power. It's not necessary in all circumstances. The court, before they appoint a guardian over someone and take rights away from an individual, is going to say are there least restrictive means in place? Is there a financial power of attorney? Is it doing its job? In most circumstances that's going to be effective. Represent your person and represent your property. So it's twofold. You know you may not be able to make financial decisions for yourself or you're not able to make appropriate care decisions for yourself.

Bri Holcombe: 25:21

This document says we're going to take that power away and we're going or, I'm sorry, not this specific document, but a guardianship takes that power away and appoint someone to be in charge.

Bri Holcombe: 25:31

When we have that happen, you know, oftentimes people have their opinions on who they'd want to be in charge of them and who they wouldn't want to be in charge. When we have that happen, you know, oftentimes people have their opinions on who they'd want to be in charge of them and who they wouldn't want to be in charge of them this document says, if that has to happen if I have to get there. These are the people that I'd want to be in charge of my person and my property, and here are the people that I don't want. That way, if you're in and you find yourself in a contested guardianship hearing two doctors have certified, you know that you're incapacitated, you can't make decisions and you've become a danger that if that person that you said no, I don't want them to be my guardian comes in, wave and say and pick me to the court, of course going to say when this person was competent, they they said not you.

Alex Hunt: 26:11

And they're going to take that serious.

Bri Holcombe: 26:12

They are.

Alex Hunt: 26:13

And they're not going to let that person make any decisions for you. And the court's preference, the court's requirement, unless there's a reason otherwise, is they're going to select the person that you did say that you want to be the guardian, so it's putting you in the driver's seat, whereas you would just be at an extraordinarily difficult time in your life, whether you might come back from that incapacity or not. You're really putting that decision in someone else, a situation where you can't make decisions they have to petition the court for guardianship.

Bri Holcombe: 26:45

They have to take your rights away and be appointed the person to be your guardian, and it easily can be ten thousand dollars, it can be so expensive, or you could spend a couple hundred bucks. Now have those documents done and your family members can just step in and you don't have to pursue that option and we've gone over.

Alex Hunt: 27:17

One of the worst things that you can do is to do nothing, because then you're putting your life at the in the hands of a judge who knows maybe an hour's worth of your story and it's making major decisions for you, um, and putting decisions.

Alex Hunt: 27:33

If you pass into your family's lap and they're going to have to deal with it, the best thing you can do is to get a comprehensive estate plan that deals with all of these different scenarios. It puts in place who your guardian is going to be in the event the need arises. If you have children, it's going to say who you want to be the guardians of those children. If you have a sizable state, it's going to make sure that that is disposed of with your wishes. The middle option, because a lot of people see this process and they say I don't have the time, I don't have the money and it's more inexpensive than you think. And our consult for estate planning is free. It's less expensive than you think. But a lot of folks say I just don't have the capacity to do that right now.

Alex Hunt: 28:26

A holographic will is maybe a stop gap, depending on your situation, to put something in place. It's better than nothing, and a holographic will is simply a handwritten document that says what you want to happen with your estate. You can write down who you want to be the guardian of your kids and the key is can't be a video, can't be typed, it has to be handwritten. Write it out on a legal pad and sign it, and we certainly big surprise a lawyer saying that it's best to go to a lawyer and to get this document done the right way. But in the absence of that, it certainly pays to just write out something so that your family and the courts will know what your wishes are. Yep, what else would you suggest? If somebody is doing a holographic will or maybe doesn't have time for this, what would you suggest that they do, or what should they know?

Bri Holcombe: 29:29

Well, the first thing I would say is making time for something that's going to save your family time and money in the future is something that you want to make a priority, and it really doesn't take much time to get an estate plan done. You know you're not waiting on us to get these documents out and moving into you. Where I find most clients want to drag their feet is once they see them and they know they have to sign that. It scares them, but we can take as much time as you need, so you're never going to be waiting on the attorneys at Hunt Law Firm to get things done and get things moving.

Bri Holcombe: 30:01

I would say too, it's just important to have something written out. Even if you want to take your napkin to a lawyer and let them look at it and tell you that it's good or it's not good, that's better than nothing. And two, you want to make sure that someone knows where that napkin is. Someone knows where your wishes are in that legal pad or whatever you chose to create and craft your holographic will. So that's what I'd say for anyone who's kind of on the fence is that make this a priority.

Alex Hunt: 30:30

Yeah, and making sure that the loved ones that are either going to care for you or they're going to benefit under your will know where it is Incredibly important. I remember a few years ago I was reading an article about a court case with Aretha Franklin, the singer who passed away a few years ago, and her family literally found some holographic handwritten wills inside of the couch at her home, and the court ruled didn't matter where it was, didn't matter how it was written. It expressed her wishes and they upheld it. So doing something is better than nothing, but doing it the right way is easier and less expensive than I think a lot of people realize.

Bri Holcombe: 31:16

And it saves you money in the future and it saves your family the heartache and the trouble of navigating the court process on their own and fighting over things.

Alex Hunt: 31:24

And I've found in clients some measure of peace to know that they've put a plan in place. It's one less thing to have to think about, especially if they're later on in life, they're approaching end of life. It's one thing that they can control in life which is unpredictable. Well, bree, is there anything else that you think folks need to know, want to know?

Bri Holcombe: 31:49

I don't think so, but if you have questions, feel free to reach out.

Alex Hunt: 31:52

Yeah, absolutely. If anybody has questions, feel free to go to our website, message us. Look at past episodes that we've done on estate planning or a variety of other topics. So thanks for joining me, brie.

Bri Holcombe: 32:04

Thank you.