Will Your Estate Go to Your Family? 4 Ways to Avoid Probate in Texas

When it comes to safeguarding your legacy and ensuring your assets are distributed according to your wishes, understanding the probate process—whether it’s probate with a will or without—is crucial. In Texas, probate can be a lengthy and complex legal procedure that your family may have to endure after your passing. However, with strategic planning, it is possible to bypass this process altogether, allowing your estate to transition smoothly to your loved ones without the need for court intervention.

Are you considering estate planning options to avoid probate and to protect your estate but unsure where to start? A knowledgeable probate attorney can offer invaluable assistance. At The Law Office of Whitney L. Thompson, our team of Houston probate lawyers may be able to help tailor an estate plan that fits your unique situation, giving you peace of mind that your assets will be secured for your family’s future. Don’t let the intricacies of probate law leave your loved ones in a lurch. Contact us today at (281) 214-0173 to take the next steps forward with confidence and a sense of security that your estate is passed on without unnecessary delay or expense.

Texas Probate: The Process

Probate is the legal process by which the court receives a decedent’s Will and Testament. This process allows the court to open an estate and appoint an administrator or executor. At the hearing, the court will determine whether or not the estate is subject to court scrutiny. After the hearing, the court will instruct the executor/administrator to collaborate with the lawyer in order to determine the assets and liabilities of the estate and distribute them to the beneficiaries. 

The probate process usually begins with the submission of the original will.  The court will then seek to validate the will. After the will is deemed valid, the probate court will name someone to manage the estate and supervise the probate proceedings. This role is referred to as the “independent executor”.

Most of the time, the executor is named in the original Will. Once an administrator is appointed, they must notify all creditors by providing evidence of the decedent’s death. The administrator will pay all valid claims, and then distribute any remaining property to the beneficiaries, according to the will.

In order to understand the probate process better, it is important to speak with an experienced probate attorney. A skilled estate planning lawyer may be able to help you go through the process smoothly and ensure that the estate is distributed according to the Will. Contact the Law Office of Whitney L. Thompson today to speak with an experienced probate lawyer.

Want to keep your estate out of court? In Texas, you have a few different options.

Joint Ownership of Property

One of the benefits of owning property jointly is that when one of the owners passes away, the other doesn’t have to worry about that piece of property going to someone else after probate. The catch is that you have to have “rights of survivorship,” or else the property could be subject to a court decision.

Texas has two forms of joint ownership that include these rights—joint tenancy and survivorship community property.

Joint tenancy is useful for couples (no marriage necessary) who want to own property together. Real estate, automobiles, bank accounts, and other property can be owned in a joint tenancy. To avoid probate in Texas with a joint tenancy, couples must sign a joint tenancy agreement.

Survivorship community property operates in much the same way, though it is exclusively for married couples.

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Bank Account Payable on Death Designation

Texas also allows bank account holders to designate someone to receive their money after they die. Known as a payable-on-death designation, this way of avoiding probate allows account holders to control their money while knowing that it won’t go through probate if they pass away.

Real Estate Transfer on Death Deed

Also known as beneficiary deeds, transfer-on-death deeds for real estate give home and business owners the option to transfer their real estate to someone else following their death. Property owners can revoke the deed or sell the property whenever they want as this deed does not take effect until they are deceased.

Living Trust

Living trusts are a great way to avoid probate in Texas. Nearly any sort of property can be protected by a trust, so it’s a great way for property owners to transfer houses, cars, bank accounts, and other valuable assets to their beneficiaries without getting the court involved. All you have to do is create the trust, name a successor trustee, and give yourself ownership of the property within the trust. After all that is done, the property will follow the rules of the trust, so be sure to speak to an experienced attorney before creating a living trust. Upon your death, the property will transfer to the successor trustee who can then distribute the property to your beneficiaries without going through probate.

What Happens if You Don’t Probate a Will in Texas?

Failing to probate a will in Texas can result in significant legal issues. If a will is not probated within four years of the individual’s death, the estate may be treated as though no will ever existed. In such cases, Texas intestacy laws determine how assets are distributed, which may not align with the deceased’s intended wishes. This could result in heirs receiving different portions than intended, potentially leading to disputes.

Without probate, the legal ownership of assets remains uncertain. Beneficiaries may face difficulties accessing bank accounts, transferring property, or managing other assets. Additionally, unresolved debts and taxes can accumulate, placing financial burdens on both the estate and its beneficiaries.

The probate process also plays a crucial role in settling creditors’ claims. If probate is avoided, creditors may pursue repayment from the estate or even the beneficiaries directly, leading to further complications. Probate ensures that these claims are handled properly, providing a structured way to settle debts.

However, there are ways to avoid probate while still ensuring your estate is managed efficiently. Using trusts, joint ownership, or designating beneficiaries for certain assets are common strategies that allow for direct transfers, bypassing the probate process. These steps can help your loved ones avoid legal complications and ensure that your wishes are fulfilled without the delays and challenges of probate.

Want to Avoid Probate in Texas? Get in Touch with Us Today.

It’s never too early to start estate planning. Contact us today so that we can create an estate plan that fits your needs and that helps you avoid probate in Texas.

Option	Description
Joint Ownership of Property	Property jointly owned with rights of survivorship.
Bank Account Payable on Death Designation	Designate a beneficiary for bank accounts.
Real Estate Transfer on Death Deed	Transfer real estate to someone upon death.
Living Trust	Create a trust to transfer assets to beneficiaries.

from The Law Office of Whitney L. Thompson, PLLC https://www.wthompsonlaw.com/will-your-estate-go-to-your-family-4-ways-to-avoid-probate-in-texas/

Considerations for Including a Family LLC in an Estate Plan

There is a structural difference between a partnership and a corporation when it comes to limited liability companies (LLCs). It is well known that this hybrid entity is beneficial for financial management, but an LLC can also be used as a powerful estate planning tool for similar reasons. Through estate planning, a Family LLC allows for asset transfers to children, grandchildren, and other family members at discounted rates, minimizing the burden of gift or estate taxes. In addition to protecting assets during your lifetime and keeping them within the family, an LLC can reduce the taxes you and your family owe.

If you’re considering including a Family LLC in your estate plan, The Law Office of Whitney L. Thompson, PLLC can help you handle this process with ease. Our experienced Houston estate planning attorney can guide you through the benefits, structure, and implementation of a Family LLC to protect your assets and ensure a seamless transition for future generations. Contact us today at (281) 214-0173 to discuss your options and secure your family’s financial future.

Why Do I Need a Family LLC?

All fifty states recognize a Family LLC as a legal entity, although each state has regulations governing its formation, running, and taxation. LLC owners (members) receive protection from personal liability in the event of lawsuits, debt, or other claims. This protection shelters personal property like a home, bank account, investments, and even vehicles. An LLC is subject to fewer state formalities and regulations than a corporation, so members can manage in nearly whatever manner they prefer.

A financial threshold defines the need for an LLC to help lower estate taxes if the estate is more than $12.06 million in 2022. If your estate is below this threshold, your estate planning attorney can help craft an estate plan that focuses on trusts to limit the probate process and estate taxes. While there is no legal reason you cannot create an LLC with fewer means, a trust will not require Family LLC’s initial and annual fees and more intensive reporting procedures.

Establishing an LLC in conjunction with your children permits you to:

• Maintain control over your assets while alive
• Effectively reduce estate taxes due to your children upon inheritance
• Distribute inheritance to your children with less gift tax during your lifetime

Family LLC vs. Trust

A Family LLC (limited liability company) and a trust are both tools used in estate planning, each serving unique purposes with distinct benefits. A Family LLC is a business structure often used to manage and control family-owned assets. It can help limit liability and provide flexibility in managing investments or real estate. Family members can be members or managers of the LLC, and it allows for strategic asset protection and tax benefits.

On the other hand, a trust is a legal arrangement where a trustee holds and manages assets on behalf of beneficiaries. Trusts are commonly used to bypass probate, maintain privacy, and safeguard assets from creditors. Trusts can be tailored to specific needs, such as providing for minors, ensuring long-term care for a loved one, or managing charitable donations. Unlike a Family LLC, a trust is not a business entity and does not involve business operations.

Choosing between a Family LLC and a trust depends on individual goals. If the primary aim is to manage family business assets and limit liability, a Family LLC may be more suitable. However, if the goal is to avoid probate and control how assets are distributed after death, a trust could be the better choice. Both options can complement each other in a comprehensive estate plan, depending on the family’s needs and objectives.

If you’re unsure whether a Family LLC or a trust is the right fit for your estate planning needs, the Houston estate planning attorneys at The Law Office of Whitney L. Thompson, PLLC can provide the guidance you need. We can help you understand the benefits of each option and tailor a plan that aligns with your goals to protect your assets and provide peace of mind for your family’s future. Contact us today to discuss your unique situation and start building a plan that works for you.

How is a Family LLC Structured?

A Family LLC is managed by the parents. The children or grandchildren hold shares in the LLC’s assets without management or voting rights. The parents can distribute, buy, sell, or trade the LLC’s assets but other members have restrictions regarding the sale of LLC shares, company withdrawal, or membership transfer. While gifting shares to younger members comes under the gift tax, significant benefits permit you to gift more while lowering the tax value of your estate.

Upon establishing a family LLC following your state’s legal process, you can transfer assets into the LLC. The management will decide how best to translate the market value of these assets into LLC units of value in much the same manner as stock in a corporation. You are now ready to transfer ownership of LLC units to your children or grandchildren as you desire. 

The value of units transferred to non-managing members becomes discounted because the LLC units become less marketable without management rights which is where tax benefits come into play. The manager of the LLC can often reduce the value of transferred units by as much as forty percent of their market value. In essence, non-managing members may receive an inheritance advance at a lower tax burden than otherwise due to their personal income taxes. Additionally, the overall value of your estate is reduced, lowering estate tax when you die.

What is Transferred to a Family LLC?

You can transfer almost any asset into a family LLC, but typically they include:

• Property – Titles to land and structures built on that land are transferable; however, check with any mortgage holder before such a transfer if you need their approval.
• Cash – It is permissible to transfer money from personal bank accounts into the LLC and distribute it among members.
• Personal possessions – You may transfer ownership of stocks, precious metals, automobiles, boats, jewelry, artwork, or other significant collections or belongings into the family LLC.

Upon the death of an LLC owner, some states require the dissolution of the LLC if there is no specific succession plan. A transfer to another individual upon death as defined in the operating agreement creates a joint tenancy membership, avoiding the LLC’s dissolution. This transfer builds a revocable trust to hold the LLC membership or a probate process if the LLC goes through court to determine a succession plan.

Assets Transferable to a Family LLC	Description
Property	Titles to land and structures built on that land are transferable, subject to approval from mortgage holders if necessary.
Cash	Money from personal bank accounts can be transferred into the LLC and distributed among members.
Personal Possessions	Ownership of stocks, precious metals, automobiles, boats, jewelry, artwork, or other significant collections or belongings can be transferred into the family LLC.

Does an LLC Go Through Probate?

A limited liability company (LLC) is a business structure that provides its members with limited liability protection and pass-through taxation, meaning the company itself is not taxed, but profits and losses are reported on the members’ personal tax returns. When it comes to probate, which is the legal process of distributing a deceased person’s assets, an LLC as an entity typically does not go through probate because it is considered a separate legal entity.

However, ownership interest in the LLC may be subject to probate under certain circumstances. If an LLC owner or member dies without an estate plan that includes provisions for their LLC interest, or if there is no operating agreement detailing the transfer of ownership upon death, that interest may go through probate.

To avoid probate of an LLC interest, LLC members can employ several strategies. These include creating a comprehensive estate plan, having a well-drafted LLC operating agreement that includes succession provisions, and establishing buy-sell agreements. These strategies can facilitate the smooth transfer of ownership interests to designated beneficiaries or remaining members, thereby bypassing the probate process.

It is crucial for LLC members to seek legal advice from a Houston estate planning attorney to establish the necessary documentation, ensuring that their interests are transferred according to their wishes without the need for probate. Contact The Law Office of Whitney L. Thompson, PLLC today to schedule a consultation.

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Advantages of Having a Family LLC in Estate Planning

You may have to pay a significant amount of estate tax upon your death if your estate is valued above the federal estate tax exemption. In 2021, this value is $11.7 million. However, by using a family LLC to transfer your business to your heirs, you may be able to avoid paying the said tax. 

The family LLC can help an owner lower their estate value below the threshold for owning federal estate taxes. One way that a family LLC can make this happen is by having the IRS help out by allowing discounts. Normally, people would want their assets to be valued at their maximum value. However, in the case of having an LLC, having less can mean better things. These discounts are meant to recognize that investors are usually not interested in family-owned businesses. With these discounts, it is possible for the owner of the estate to reach the threshold slower compared to when they move their assets at their actual values. This means that a family LLC will allow you to transfer more assets before your estate tax threshold is reached.

Family LLCs can also protect your family legacy, so you can ensure that the family business continues to be family-owned. A family LLC can also be used to limit who is allowed to transfer interests outside of family members.

Asset Protection with Your Family LLC

The key benefit of a business LLC is that the owner is not liable for the company’s debts. The Family LLC also provides the heirs’ protection from creditors in the event of a parent’s default, bankruptcy, or other family obligations. It is not permissible for creditors to go after these assets.

A Family LLC can be a powerful tool to manage your assets and pass them to your heirs. You can maintain control over your estate as an LLC manager while providing significant tax benefits to you and your children. Creating a Family LLC for estate planning purposes is complex and requires legal guidance from an experienced estate planning attorney and a financial advisor before formalizing your LLC plan. Contact The Law Office of Whitney L. Thompson, PLLC at our Houston office at (281) 214-0173 or our Bay City office at (979) 318-5079 today to schedule an appointment and discuss how we can assist you with your legal matters.

from The Law Office of Whitney L. Thompson, PLLC https://www.wthompsonlaw.com/considerations-for-including-a-family-llc-in-an-estate-plan/

Special Needs Guardianship: A Short Guide for Parents

When a child becomes an adult at age 18, they gain the right to make decisions about their life, their finances, and their health. In some cases, however, obtaining a special needs guardianship as their parent or caregiver is necessary for their well-being. Such a guardianship can control some or all of the legal decision making power for the adult ward.

As a family law attorney whose office handles guardianship and estate planning, I wanted to discuss this topic to help others understand how it works. If you think you may need to become a legal guardian for an adult with disabilities in the future or need to make that decision now, here are some considerations to think about. It is important to speak with an experienced Houston guardianship attorney to understand your guardianship duties before making any decisions for your child’s future. For personalized guidance tailored to your specific situation, contact The Law Office of Whitney L. Thompson today at (281) 214-0173 to schedule a consultation.

Does My Child Need a Special Needs Guardianship?

The first thing to decide is whether the person in question needs a guardian. It’s important to understand that a diagnosis of mental illness or cognitive disability does not automatically mean that someone needs another person to make decisions for them. There are two types of guardianship: guardianship of the person and guardianship of the estate. Guardianship of the person is when someone needs help making decisions about their living situation, healthcare, and other personal matters. Guardianship of the estate pertains to financial and legal matters, such as paying bills or hiring an attorney.

Most courts consider special needs guardianship a last resort and attempt to find alternatives that grant the individual some power to make their own decisions about their life. A limited guardianship granted by the courts only allows a guardian to make certain decisions.

Houston guardianship lawyer

Types of Guardianship and Conservatorship

In guardianships and conservatorships, various types are designed to address the specific requirements of individuals, particularly those with special needs. The following are some key types:

• Guardian of the Person: This guardian assumes the responsibility of overseeing the well-being of an individual with special needs. Their duties encompass ensuring that the person receives appropriate care, supervision, and accommodation. Their role includes making decisions related to medical care, vocational planning, and education. However, this guardian is not required to live with the individual, provide daily supervision, or use personal funds for the individual’s care.
• Conservatorship or Guardian of the Estate: This role is necessary for individuals with special needs who cannot manage their finances and have income beyond benefit checks. The conservator assumes responsibility for managing the financial resources on behalf of the individual and is required to submit an annual accounting report detailing the status of their assets to the court.
• Limited Guardianship: This type of guardianship is specifically limited to particular decision-making areas, such as medical treatment, allowing the individual to make other life decisions independently. It is applied in a manner that is least restrictive for individuals with special needs.
• Temporary Guardian or Conservator: Often appointed during urgent situations when immediate decisions are required, temporary guardianship typically lasts up to 90 days. It is common for states to require a permanent guardianship request to be filed alongside a temporary appointment.
• Successor Guardian: This person, designated in legal documents by the parents of a child with special needs, is appointed to assume guardianship in the event of the parents’ death or inability to provide care. A special needs lawyer may recommend considering a co-guardianship arrangement with the successor guardian while the parents are still alive.

Selecting a guardian involves evaluating the individual’s best interests and welfare. For more comprehensive information and guidance, it is recommended to consult with a Houston guardianship attorney who can provide tailored advice based on the unique circumstances of the individual requiring guardianship or conservatorship. Contact The Law Office of Whitney L. Thompson for compassionate and knowledgeable assistance.

Applying For Special Needs Guardianship

Acquiring guardianship for a child with special needs is critical to safeguard their best interests and ensure proper care. However, the process of obtaining guardianship can vary in complexity depending on your specific circumstances. If you are considering seeking guardianship, it is important to understand the necessary steps involved in initiating the process. 

The first step is to have your child’s doctor fill out a Physician’s Certificate of Medical Examination, which outlines areas in which your child requires supervision, such as dressing, feeding, financial decision-making, and driving. You may also be required to demonstrate that you have explored less formal support options, such as joint-decision-making agreements or becoming a representative payee. 

After filing the guardianship petition in court, an attorney ad litem will be assigned by the judge to represent your child’s interests during the guardianship process. The attorney ad litem will assess whether guardianship is necessary or if other supports and services could work for your child. They will speak with your child to discuss guardianship law, your reasons for seeking guardianship, and your child’s wishes. The attorney ad litem may also review medical reports and speak with your child’s school, caregivers, and other family members. 

After completing their investigation, the attorney ad litem will submit a report to the court with their opinion on whether your child requires a guardian. If the judge grants guardianship, they will consider your child’s preferences when choosing a guardian. The court will provide the guardian with a letter of guardianship, which can be used to communicate with schools, banks, health insurance providers, doctors, and other necessary entities.

Alternatives to Special Needs Guardianship

Guardianship of an adult with cognitive disabilities or mental illness is not always the best option. Fortunately, you can choose one of the many alternatives to special needs guardianship that exist and even combine them in whatever way best serves the interest of the person being cared for. Alternatives to guardianship include:

• Creating a special needs trust
• Appointing a durable power of attorney
• Appointing a financial representative
• Hiring assisted living services

To figure out the option that is best for your situation, it’s critical to consult with a professional such as an attorney.

Power of Attorney Vs. Guardianship for Disabled Adults

When considering legal arrangements for disabled adults, understanding the distinction between Power of Attorney (POA) and guardianship is crucial. Both serve important roles in managing the affairs of individuals who may need assistance, but they operate in distinctly different ways with unique implications.

A Power of Attorney allows an individual, known as the “principal,” to appoint an “agent” or “attorney-in-fact” to make decisions on their behalf. This legal document is versatile, allowing the principal to specify what decisions the agent can make based on their personal needs and circumstances. The principal retains the ability to make decisions as long as they are capable, making POA a preferred choice for those who anticipate future incapacity but are currently able to participate in decision-making.

Guardianship, however, involves a court appointing a guardian to take responsibility for the personal and financial decisions of another person, referred to as the “ward.” This approach is generally pursued when the individual is unable to make safe or sound decisions due to mental or physical disabilities. Unlike POA, guardianship involves ongoing court involvement to oversee the guardian’s actions, providing an added layer of oversight and ensuring that decisions made on the ward’s behalf are in their best interests.

Choosing between POA and guardianship depends on the specific needs and capacity of the individual concerned. While guardianship offers comprehensive oversight for those who need it, a Power of Attorney provides a flexible and less intrusive alternative, allowing individuals to maintain greater control over their life decisions. This decision should be guided by thoughtful consideration of the individual’s current competencies and future needs, often in consultation with legal counsel. Contact The Law Office of Whitney L. Thompson today to speak with an experienced Houston guardianship attorney and make an informed decision.

How to Get a Special Needs Guardianship through the Courts

Obtaining a guardianship through the courts begins with a petition. The petition includes information about the person such as a description of their disability, their relationship to the proposed guardian, and the reasons that the courts should grant the guardianship.

The next step of the process is a hearing before a judge. During the hearing, the petitioner must prove that a guardianship is necessary, that no other alternatives are sufficient, that the petitioner is capable of carrying out the duties of a guardian, and that no one else has a better claim to become the person’s guardian (for instance, a parent or another close relative).

How Does Guardianship Work for an Adult With Special Needs?

Texas’ guardianship process is administered by the probate court. This degree of oversight is used to protect incapacitated or vulnerable adults (and minors in some cases) from abuse, neglect, and other difficulties that could arise if they have to make difficult decisions about their lives and finances.

When you apply for guardianship, you are asking the court to:

1. Remove some legal rights of the incapacitated or the ward;
2. Give jurisdiction over exercising those legal rights of the ward to another adult, the guardian.

Texas law defines legal incapacitation as a person who is unable to work because of a serious medical or mental condition and if they are unable to provide for their basic needs (i.e. Shelter, food, and clothing) and oversee their own physical and financial well-being. The primary duty of a guardian is to take care of the ward’s needs in this regard (depending on the type of guardianship).

Although guardianships may be necessary in cases where the person cannot manage their own affairs because of a disability or illness, they are clearly different from incapacity. Paraplegia or any other form of disability does not automatically make a person legally incapacitated.

A person can be incapacitated if they are unable to take care of their financial and physical needs. If a person is only partially incapacitated (e.g. when they can care for themselves but are unable to manage their estate and finances), guardianship rights may be limited.

When you seek guardianship, it is essential to first understand the abilities and needs of your child and how they are seen by law.

Working With a Skilled Houston Guardianship Attorney at The Law Office of Whitney L. Thompson

Due to the often-intricate nature of this process, obtaining a special needs guardianship can be challenging. It is recommended to consult with an attorney to make a plan for how to approach guardianship. At The Law Office of Whitney L. Thompson in Houston, we understand the significance of this responsibility and are committed to providing clear legal guidance through every step of the guardianship process. If you have any questions about special needs guardianship or its alternatives, don’t hesitate to contact us at (281) 214-0173 and schedule a consultation.

Key Steps in the Process of Applying for Special Needs Guardianship	Course of Action
Physician’s Certificate of Medical Examination	Have your child’s doctor complete this certificate outlining areas where your child requires supervision.
Explore Less Formal Support Options	Demonstrate that you’ve considered alternatives like joint-decision making agreements or representative payee.
File Guardianship Petition in Court	Initiate the process by filing the guardianship petition with the court.
Attorney Ad Litem’s Assessment	An attorney ad litem is assigned to assess your child’s needs and whether guardianship is necessary.
Attorney Ad Litem’s Investigation	The attorney ad litem investigates by speaking with your child, reviewing reports, and consulting caregivers.
Attorney Ad Litem’s Report to the Court	Submit a report to the court with the attorney ad litem’s opinion on the need for guardianship.
Judge Grants Guardianship	If approved, the judge may consider your child’s preferences when choosing a guardian.
Receive Letter of Guardianship	The guardian receives a letter of guardianship, enabling communication with relevant entities.

from The Law Office of Whitney L. Thompson, PLLC https://www.wthompsonlaw.com/special-needs-guardianship-a-short-guide-for-parents/