Five Things to Do to Prepare for Death

Well, that doesn't sound very palatable, does it? That's probably because it isn't. No one enjoys preparing for death, but in getting your affairs together, you can save a lot of heartache and trouble for those you leave behind. And considering the emotional state they will probably be in, the less they have to deal with, the better. Here are ten things you can do to lessen their load when you do pass away.

1. Make sure your Will is up to date (or that you have a Will, period). Having an out of date Will or no Will at all (see my June 9, 2005 and June 8, 2005 posts) only increases the odds that the work for your executor will increase significantly. Is your Will clear on who receives your property at your death? What if someone predeceases you and you have made a gift to them? Is there a contingency distribution for that gift? Are all the named executors, trustees, and guardians still living and willing to serve? Has there been any changes in the tax or probate laws of your state that you can use to your advantage? Your Will should be reviewed at least every three years as a matter of course, but also if there are significant changes in your financial situation, marital status, or if there have been changes in your family as a result of a birth or death.

2. Make sure you have all your beneficiary designations up to date. Life insurance, Individual Retirement Plans, 401(k)'s, annuities, and other similiar "non-probate" assets do not pass under the Will, but instead according to the beneficiary designation for the plan or policy. Make sure that you have properly named the correct beneficiary, or that you do not need to make any changes to coincide with any changes that may have recently been made to your Will. One common mistake is that on your non-probate assets you name minor children as beneficiaries without considering the effect. If you die with minor children and you name them as beneficiaries under a plan or policy, a guardianship of the estate will have to be created for your child and administered through the probate courts. This is a costly process, and completely unnecessary. You should have a trust or trusts for your minor children created in your Will that will receive those proceeds at your death and thus eliminates the need for a guardianship.

3. Prepare a listing of all your assets and where they can be found. A common problem in estates is that the executor cannot locate all the assets easily, or worse, can never locate all the assets because there is not enough information to assist in that cause. This isn't The Da Vinci Code. Don't leave little hints and clues and expect your beneficiaries to automatically track those assets down. Write or type everything out and place it in a notebook, noting each of your assets, when and where you acquired it, and where the physical asset is located (or if it is cash or a security, the financial institution where it is held, along with account numbers). Also place in the notebook or file copies of recent account statements, tax returns, title information for vehicles, deeds for real property, names of attorneys and accountants, and copies of insurance policies. If there is a safety deposit box where you keep valuables or important papers, make sure the location is noted and where the key can be found. If you don't have an extra signer on the safety deposit box, understand that your heirs will have to get a court order to get the box drilled if you have your Last Will located there. The extra signer, like a child or sibling, might save some problems down the road.

4. Determine what you would like done with your body at your death. Morbid, yes. Necessary? Absolutely. I've seen family members fight about whether mom should be cremated or buried. If cremated, where are the ashes spread? Are any family members going to get to retain some of the ashes? If you are buried, where will it be? Do you already own a cemetery plot? Do you want to donate your body to science, or maybe just some body parts? These are all important issues, and without being too obvious, need to be addressed before you die. Let your family know your thoughts, and put them down in writing as well, so that there are no questions afterwards.

5. Write a "love letter" to your family and friends. One of the best things you can do for your family members and friends to help provide closure following your death is to draft a handwritten letter to each of those persons, letting them know how much you loved them and how much you treasured your time together. Seal each one in a separate envelope and place these in the file with your other important papers. This letter will be truly special to the recipient and will provide a great final memory of you.

Preparing for your inevitable death is not easy. But the things you do today will have a lasting effect long after you are gone.

Guardianships for Minor Children in Texas

Imagine a husband and wife with two young children, ages 5 and 3. The parents are going off on a trip to Spain, leaving the kids to stay with the husband's parents. En route to Spain, the plane crashes, and both parents are killed. The parents each had a Will, but the Wills were created before the children were born, so there is no provision for a guardian for the children. Dad had two brothers and a sister, and Mom had two sisters. All five are equally qualified, and all want to act as guardians. Before you say this would never happen, it has, and it will again. Every year hundreds of children are left parentless and in need of having a guardian appointed for them.

So in this case, who will the court appoint, and what are their duties after appointment?

In Texas, the Texas Guardianship Code governs the appointment of a guardian where there is either no Will or there is a Will, but no designation of a guardian (or a named guardian has declined to serve). The list begins with any surviving grandparent, followed by a sibling of the decedent, following by any other qualified relative or interested person. There is no preference for one sibling over another (that is, the mother's siblings are no more preferred than the father's siblings). The guiding direction for the court is that any appointment MUST be in the child's best interests.

"Best interests" is not defined by the Guardianship Code, and so the Court will typically look at all the circumstances, such as the living conditions of any proposed guardian, previous relationships between the proposed guardian and the minor children (how often did Uncle Bill visit with the children? were the visits positive ones?), home stability, other children of the proposed Guardian, and other related matters.

Each proposed Guardian has the ability to present any evidence showing their qualifications as Guardian. The Court, along with a court appointed guardian ad litem (an attorney appointed by the Court to represent the minor children's interests) will review all the information and evidence. While in the nature of a trial, the procedures are very informal and the presentation of the evidence is more in the nature of a question and answer period with the Judge of the Court.

The Court will look to the guardian ad litem for a recommendation, but the Court is not bound by that recommendation. After all evidence is presented, the Court will appoint a Guardian based on what the Judge believes best for the children. An important thing to remember is that if a minor child is above the age of twelve (12), the Court can solicit the child's opinion about which proposed Guardian the child would think would be best. Again, the Court is not bound by the recommendation, but will give it due weight. If the child is above the age of fourteen (14), the Court will given even greater weight to that child's opinion.

The problem, of course, is that the children may wind up with people that the parents would never have considered as guardians for the children for one reason or another. But because they never put their wishes down in writing, the children may ultimately suffer the consequences. In naming a guardian for your children, consider all the possibilities and make sure that you name at least one successor to your first choice, just in case the first choice declines or is unable to serve. If you name a married couple as guardians, give consideration to what would happen if that couple got a divorce. Who would the children live with in that instance? You can provide for that possibility in your Will.

Don't pick someone as guardian just because they are good with money. You can always name that person to act as trustee of the funds your child would receive. Instead, when thinking of a guardian, consider who would look out for the emotional and physical well-being of your child and let that guide your decision. Don't allow a court to make that decision for you.

Why Dying Without a Will is More Costly in Texas

In my June 8, 2005 post, I mentioned how property owned by a Texas resident passes when he dies without a Will and warned that without a Will, you are allowing the State to determine who receives your assets at your death.

The dangers of dying intestate are not limited to the distribution of your assets. It is more expensive and troublesome to administer an estate where there was no Will than one where even the simplest of Wills was created. The reason has to do with the dual hearings that must be had to appoint an administrator for the estate and the possibility of a "dependent" administration.

Where there is no Will, Texas law dictates who the heirs will be. But in order for that law to be binding on banks, brokerage houses, and real estate title companies, an heirship proceeding must be held by the local probate court (or where there isn't a probate court, the county court at law). This proceeding is for the purpose of a judge legally declaring the proper heirs so that all the parties know their rights to the estate assets.

Why is this more expensive than the normal probate of a Will? Well, in all Texas heirship determinations, the probate court is required by law to appoint an attorney ad litem to represent the interests of all unknown heirs at law. Thus, not only are the heirs paying for the attorney that is representing the estate, they are also paying for the attorney ad litem, whose costs can run anywhere from $400 to $700, depending on how much work the ad litem has to do to track down all the possible heirs. An ad litem is not required where the Decedent had a valid Will.

In addition, the estate attorney has to publish a notice in a local newspaper to give proper notice to all the potential heirs of the Decedent. Depending on the local paper, this cost can be anywhere from $100 to $200. Again, this publication is not required where there was a valid Will.

The biggest problem with not having a Will is that it subjects the estate to what is known as a "dependent" administration, rather than an "independent" administration. Texas is one of the few states that has independent administration of estates, where the executor named in the Will can operate freely of court supervision, which saves time and legal expenses. The executor does not need approval to sell property, pay expenses, or distribute assets. The executor also does not need to post a bond (assuming the Will waives that requirement). In a dependent administration, however, the probate court supervises every activity of the administrator, and the administrator must file requests with the court for approval to do anything related to the estate assets. Further, the administrator is required to file an accounting with the court showing how every penny of the estate is spent. While in theory this seems like a good idea, it is extremely expensive and time-consuming and can drag out the administration process out for months. The administrator will also be required to post a bond equal to or exceeding the value of all the estate assets.

While all the distributees of the estate can agree on an independent administration, and even the waiving of a bond, if there are any minor distributees, almost all probate courts in Texas will decline to appoint an independent administrator because the goal is to protect the interests of any minors.

In a future post, I will discuss the special problems associated with minors receiving property in Texas through inheritance or under a Will without it passing in trust, and why guardianships are as big a problem as dependent administrations. The moral, of course, of all of this is that just because you do not have a lot of assets does not mean you do not need a Will. The simplest of Wills can help avoid the delays and costs associated with intestacy and provide for a smooth transition of your estate to your loved ones.

How Property Passes When You Die Without a Will in Texas

In Texas, if a person (the "Decedent") dies without a valid will, all probate property passes under the laws of “intestate” succession as set forth in Texas Probate Code Section 38. One common myth is that the property all passes to the State of Texas. That is completely untrue, as shown below. However, the consequences of dying without a Will are that you cannot dictate who will receive your property, who will act as the executor of your estate or who might be the guardian of your children. In effect, you have ceded those decisions to the State of Texas.

Dying without a Will also complicates how your estate will be administered and results in increased costs to the surviving heirs, and these consequences will be discussed in a later post. For now, it is important to understand how property is passed when you do not have a Will.

There are several scenarios that will determine who receives what, and it is governed by whether you are are married, have children (and whether you have children from a previous marriage), and whether your property is community or separate. Community property is basically all property acquired during the marriage (except property acquired with the separate property of a spouse). Separate property is property acquired by gift, under a Will, or through an inheritance.

The following are the different scenarios and the results under each scenario:

I. SURVIVED BY SPOUSE AND CHILD OR CHILDREN:

A. All surviving descendants of Decedent ARE also descendants of Surviving Spouse

1. Separate Real Property

a. 1/3 passes to Spouse for her life (with a remainder interest to children)
b. 2/3 is equally divided among children

2. Separate Personal Property

a. 1/3 to Spouse
b. 2/3 equally divided among children

3. Community Property

All to spouse

B. All Surviving descendants of Decedent ARE NOT also descendants of Surviving Spouse

1. Separate Real Property

a. 1/3 to Spouse for life (remainder to children)
b. 2/3 equally divided among children

2. Separate Personal Property

a. 1/3 to Spouse
b. 2/3 equally divided among children

3. Community Property

a. Decedent’s 1/2 Community Property is equally divided among his children
b. Surviving Spouse retains her 1/2 community prop. interest

II. SURVIVED BY SPOUSE, NO DESCENDANTS, AND BOTH PARENTS:

1. Separate Real Property

a. 1/2 to Surviving Spouse
b. 1/4 to father
c. 1/4 to mother

2. Separate Personal Property

All to spouse

3. Community Property

All to spouse

SURVIVED BY SPOUSE, NO DESCENDANTS, AND ONE PARENT:

1. Separate Real Property

a. 1/2 to Surviving Spouse
b. 1/4 to surviving parent
c. 1/4 to brothers and sisters of Decedent, if any, or to the children of a sibling, if a sibling is deceased

2. Separate Personal Property

All to spouse

3. Community Property

All to spouse

SURVIVED BY SPOUSE, NO DESCENDANTS, AND NO PARENTS:

1. Separate Real Property

a. 1/2 to Surviving Spouse
b. 1/2 to decedent’s brothers and sisters

2. Separate Personal Property

All to spouse

3. Community Property

All to spouse

SURVIVED BY NO SPOUSE, BUT WITH SURVIVING CHILD OR CHILDREN:

All property is equally divided among the children. Children of deceased children take their parents share.


SURVIVED BY NO SPOUSE AND NO CHILDREN:

1. Both of Decedent’s parents alive

a. 1/2 to Father
b. 1/2 to Mother

2. Only one of Decedent’s parents alive

a. 1/2 to surviving parent
b. 1/2 equally divided among Decedent’s brothers and sisters living, or if a sibling is not living, to his or her children then living

3. Neither parent of Decedent survives

All property is equally divided among Decedent’s brothers and sisters, or the children of a deceased sibling


As can be seen, complications can certainly arise on the death of a Texas resident who does not have a Will. The complications are compounded in second or third marriage situations where there are children from a previous marriage, and the surviving spouse suddenly finds herself sharing property with either her husband's children or his parents and siblings. To eliminate these possibilities, and to ensure your property passes to the persons you want, make sure you have a Will and that it is up to date.

What does "Probate" mean?

I can't tell you the number of people who have worried about having their Will go through "probate," making it seem as if it is a process worse than the actual death itself. In Texas, however, the administration of an estate is a relatively painless process, assuming you have everything in order.

First of all, "probate" is derived from the Latin word probatum, meaning "to prove." Thus, to probate a Will (at least in Texas) simply means to prove that the Will is valid. Once the Will is admitted as a valid Will, then the executor named in the Will is approved by the Court. The executor files his or her oath and begins the process of administering the estate.

Texas has an administration process that is probably the simplest in the nation. It is known as "independent administration", and it means that other than proving the Will is valid, the appointment of an executor, and the filing with the probate court of an inventory of the assets that actually pass under the Will, there is no court involvement in the administration of the estate. The executor handles all matters independent of court supervision, and needs no approval from the Court to sell property, distribute assets, pay expenses, or do anything else that might arise in the regular administration of an estate. This saves time and money, since there is no necessity to go to the Court (incurring legal expenses) for approval of anything the executor needs to get done.

This does not mean that the executor has free rein over the estate. The executor must still adhere to the laws of the State of Texas and the terms of the Will. Failure to exercise due care in the administration of the estate could result in liability for the executor, but assuming the executor is receiving sound legal advice and does not try to personally benefit from his entrusted role as the caretaker for the estate, there should not be any problems with the administration.

In future posts I will discuss the administration process in more detail, but readers should know that the length of time to administer an estate can vary. An estate is like a snowflake; no two are alike. Problems between beneficiaries, title or tax issues on real property, missing assets--all these can lead to an increased time to administer the estate. An estate without any problems, which is very clean as far as title and tax issues go, and with no issues between beneficiaries can typically be finalized between one to four months after the Will is admitted and the executor appointed. Of course, there are no guarantees and what you may view as simple, the executor may find rather complicated.

In any instance, "probate" is nothing to be feared, at least in Texas. So if you're going to die, at least have the good sense to do it here.

Texas Medical Power of Attorney

In a previous post, I discussed the Texas Directive to Physicians. The Medical Power of Attorney is a document closely related to the Directive, in that it provides for medical decisions to be made by another in the event you are unable to do so yourself.

The Medical Power of Attorney is a document signed by a competent adult (the person creating the power is known as the "principal") designating a person that the principal trusts to make health care decisions on the principal's behalf should the principal be unable to make such decisions. The individual chosen to act on the principal's behalf is referred to as an "agent."
The following questions and answers are related to the Medical Power.

When does the Medical Power of Attorney go into effect and how long is it effective?

It is effective immediately after it is executed and delivered to the agent. It is effective indefinitely unless it contains a specific termination date, it is revoked, or the principal becomes competent.

When does the agent have the right to make health care decisions on the principal's behalf?

An agent may make health care decisions on the principal's behalf only if the principal's attending physician certifies in writing that the principal is incompetent. The physician must file the certification in the principal's medical record.

Can the agent make a health care decision if the principal objects?

No. Treatment may not be given to or withheld from the principal if the principal objects. This is true whether or not the principal is incompetent.

What health care decision making power does the Medical Power of Attorney grant to an agent?

Under a Medical Power of Attorney, an agent is given wide latitude when consenting to treatment on the principal's behalf. However, an agent cannot consent to:

• Commitment to a mental institution;
• Convulsive treatment;
• Psychosurgery;
• Abortion; and
• Neglect of comfort care.
  
• In the Medical Power of Attorney document itself, the principal may limit the agent's decision-making authority beyond the restrictions above.
  

How is the Medical Power of Attorney revoked?

A Medical Power of Attorney may be revoked by notifying either the agent or the principal's health care provider orally or in writing, of the principal's intent to revoke. This revocation will occur regardless of the principal's capacity to make health care decisions. Further, if the principal executes a later Medical Power of Attorney, then all prior ones are revoked. If the principal designates his/her spouse to be the agent, then a later divorce revokes the Medical Power of Attorney.

What assurance is there that the principal understands the consequences of signing a Medical Power of Attorney?

The Medical Power of Attorney is not legally effective unless the principal signs a disclosure statement that he/she has read and understood the contents of the Medical Power of Attorney before signing the Medical Power of Attorney itself.


Do you need a Medical Power of Attorney?

There is a chance in your lifetime that you may be seriously injured, ill, or otherwise unable to make decisions regarding health care. If this should happen, it would be helpful to have someone who knows your values and in whom you have trust to make such decisions for you.

Who should be selected as an agent?

The principal should be knowledgeable about your wishes, values, and religious beliefs, and in whom you have trust and confidence. In the event your agent does not know of your wishes, that agent should be willing to make health care decisions based upon your best interests.

Can there be more than one agent?

Yes. Although you are not required to designate an alternate agent, you may do so. The alternate agent(s) may make the same health care decisions as the designated agent if the designated agent is unable or unwilling to act.

Who can be an agent?

Anyone may act as an agent other than the following:

(1) the principal's health care provider;
(2) an employee of the health care provider unless the person is a relative of the principal;
(3) the principal's residential care provider; or
(4) an employee of the principal's residential care provider unless the person is the principal's relative.

How can you obtain a Medical Power of Attorney?

You may contact your local hospital, long term care facility, physician, attorney, or state health organization such as the Texas Conference of Catholic Health Facilities, Texas Medical Association, Texas Hospital Association, Texas Health Care Association, or the Texas Association of Homes for the Aging or you can go to this link:

http://www.texasprobate.com/forms/medpoa.htm

Texas Directive to Physicians

If anything good came out of the recent death of Terry Schiavo, it is that there is a new level of awareness for advance Directives for medical treatment. Because Terry Schiavo lacked a written Directive, unnecessary and costly legal wrangling prolonged an unfortunate situation, and has prompted many people to consider having such Directives prepared as part of their own estate plan.

There are two medical Directives that let you specify in advance what medical treatment you would want to receive if an illness or disability prevented you from making your own decisions. A Directive to Physicians (also know as a “living will”) identifies the medical treatment you wish to receive when you are facing death. A durable Medical Power of Attorney appoints a person to make medical decisions for you in the event you are unable to do so yourself.

The Directive to Physicians identifies the medical procedures you do or do not want to receive during your final illness. This document can provide your doctor with instructions on whether you want to receive life-sustaining treatment if you have a terminal condition or are in a persistent vegetative state, and the level of care you wish to receive. For example, you can decline artificial nutrition or hydration, or you can request that only pain-reducing medication be provided to you. A “terminal condition” is defined in the Texas Health and Safety Code as an incurable condition caused by injury, disease or illness that will result in death within six months, even if life-sustaining treatment was provided.

If you sign the Directive, you should inform your physician and ask that it be made part of your medical record. If you become physically or mentally unable to do so, another person may inform your physician.

Executing the Directive

The Directive must be witnessed by two competent adults. Texas law does not require that the Directive be notarized.

At least one witness cannot be a person who:

(1) is related to you by blood or marriage;
(2) has a claim on your estate;
(3) has been designated by you to make a health care treatment decision on your behalf;
your attending physician;
(4) is employed by your attending physician;
(5) is an employee of a health care facility in which you reside, if the employee is involved in providing direct patient care to you or is an officer, director, partner, or business office employee of the health care facility or of any parent organization of the health care facility.

Effect of Directive

The Directive becomes effective - meaning that life-sustaining treatment can be withdrawn - only when you become a "qualified patient." A qualified patient means a patient with a terminal or irreversible condition that has been diagnosed and certified in writing by the attending physician.

You should be aware that no one may force you to sign the Directive. No one may deny you insurance or health care services because you have chosen not to sign it. If you do sign the Directive, it will not affect your insurance or any other rights you may have to accept or reject medical treatment. If your attending physician chooses not to follow the Directive, your physician must make a reasonable effort to transfer responsibility for your care to another physician.

You may designate another person to make treatment decisions for you if you become incompetent, or are otherwise mentally or physically incapable of communication. However, you do not have to do so in order for the Directive to be a legal document. If you do, that designated person may also execute an out-of-hospital do-not-resuscitate order

Enforceability of a Directive Executed in Another Jurisdiction

A Directive or similar instrument validly executed in another state shall be given the same effect as a Directive validly executed under the law of Texas. This does not authorize the administration, withholding, or withdrawal of health care otherwise prohibited by the law of this state.

Revocation

The Directive is valid until it is revoked. You may revoke the Directive at any time, even in the final stages of a terminal illness. If you revoke the Directive, be sure your physician is told of your decision. The physician or the physician designee shall record in the patient's medical record the time and date when the physician received notice of the revocation and shall enter the word "VOID" on each page of the copy of the Directive in the patient's medical record. If you change your mind after executing a Directive, your expressed desire to receive life-sustaining treatment will at all times supersede the effect of a Directive.

Here is a link to website containing a Texas Directive to Physicians form:

http://www.peopleslawyer.net/willform.html