Estate Planning FAQ

Your estate is all of the money and property you own. This includes, but is not limited to:

• Your home and any other real estate you own
• Investments
• Retirement accounts
• Life insurance policies
• Your share of any joint accounts
• Trust property over which you have control
• Interests you have in any business

Without an estate plan, the Texas court system will decide how to manage your affairs. If you become disabled, the court appoints a guardian of the estate, who manages your finances, and a guardian of the “person,” who makes your medical decisions. The court may or may not appoint a family member to be a guardian. This process is costly, time-consuming, and open to the public.

If you pass away without an estate plan, your estate is distributed according to Texas intestacy laws. The court will determine who becomes the guardian of any minor children or children with disabilities upon your death or disability. This process is long, expensive, and frustrating, but you can avoid it all by speaking with Alison Packard at Packard Law Firm and creating an estate plan.

Estate planning is not just for the “retired.” While many people do not consider estate planning until they are older, it is wise to begin the process early in the event of an accident or medical condition that results in unexpected death or disability.

Determining what estate planning documents you should have depends partly on your family circumstance and financial situation. While it is rare for someone to have all of these documents, a comprehensive traditional estate plan may include the following:

• Will: A will is a legal document that identifies a person’s wishes regarding the distribution of his or her assets after death. It can also include instructions regarding the disposition of one’s body after death, a designation of guardians to care for minor or incapacitated children, and provisions for contingent trusts if necessary.
• Living will: In Texas, a “living will,” “health care directive,” or “advance directive” is formally known as a “Directive to Physicians and Family or Surrogates.” This legal directive instructs a doctor to either use or not use life support to extend the natural process of dying if the individual who signed the directive is in a “terminal” phase of an illness or has an “irreversible condition” as defined by Texas law.
• Living trust: A revocable living trust (also called an “inter vivos trust”) is an instrument that provides lifetime and after-death property management, usually without the necessity of court involvement. A living trust is established by a “settlor” (the person who places the assets in the trust), who then names a “trustee” to manage the property. The trust instrument identifies successor trustees and provides instructions about the management and distribution of property during one’s lifetime and upon death or incapacity.
• Pour-over will: If you have a living trust-based estate plan, you also need a pour-over will. A pour-over will allows the executor to transfer any assets owned by the decedent into the decedent’s trust so that they are distributed according to its terms.
• Declaration of guardian for minor children: If you have minor children and have strong feelings about who should be their guardian after you pass away, it’s typically best to use a separate guardian designation to name a guardian for your children upon your death or disability. Most people use a declaration of guardian if there is an individual they wish to explicitly deny any possibility of becoming a guardian for their minor children.
• Declaration of guardian in advance of need: A declaration of guardian in advance of need is for adults who wish to express who they want as their guardian if, at any point, they become incapacitated and require a guardian.
• Power of attorney: A power of attorney is a legal document appointing a person or organization to act for another person according to the specific instructions of the document. The appointed “agent” has designated powers, including authorization to manage real and personal property, gift money, employ professional services, and make business and financial decisions. A separate medical power of attorney appoints an individual to make healthcare decisions. In Texas, medical power of attorney is effective only upon a medical determination of incapacity, whereas a general durable power of attorney can be effective immediately or upon incapacity, according to the wishes of the person making the appointment.
• HIPAA release: The 1996 Health Insurance Portability and Accountability Act, or HIPAA, prohibits the release of medical information to anyone without written authorization. Some medical providers refuse to release information on these grounds, even with medical power of attorney. It’s generally safe to sign a simple HIPAA authorization form that allows the release of medical information to whomever you appoint.

A power of attorney is a legal document appointing a person or organization to act for another person according to the specific instructions of the document. The appointed “agent” has designated powers, including authorization to manage real and personal property, gift money, employ professional services, and make business and financial decisions. A separate medical power of attorney appoints an individual to make healthcare decisions. In Texas, medical power of attorney is effective only upon a medical determination of incapacity, whereas a general durable power of attorney can be effective immediately or upon incapacity, according to the wishes of the person making the appointment.

In Texas, any legally competent adult can sign a power of attorney. An adult with mild disabilities may be able to sign his or her own power of attorney, but an adult with severe disabilities may not sign one; Instead, he or she would need guardianship. Even if you have no disabilities, it is still important to establish a power of attorney in the event that you become incapacitated unexpectedly. If a patient is 18 years or older, medical providers will not share any information about the patient with anyone, including parents, if there is no power of attorney.

Any legally competent adult may be appointed as an agent or attorney, in fact. Most people appoint a close family member such as a spouse, sibling, or adult child, but any person such as a close friend or colleague who you trust works well. You can designate more than one agent to serve separately or simultaneously. It is generally best to appoint one agent to serve at a time, as simultaneous agents must both be able to sign when needed and must always agree on a decision regarding the principal or individual who signed the power of attorney.

The 1996 Health Insurance Portability and Accountability Act, or HIPAA, prohibits releasing medical information to anyone without written authorization. Some medical providers refuse to release information on these grounds, even with a medical power of attorney. While some medical providers have their own HIPAA release form they want you to sign, it’s generally safe to sign a simple HIPAA authorization form that allows the release of medical information to whomever you appoint. Ms. Packard will include a HIPAA release form in her clients’ estate planning package without additional charge.

In Texas, a “living will,” “health care directive,” or “advance directive” is formally known as a “directive to physicians and family or surrogates.” This legal directive instructs a doctor to either use or not use life support to extend the natural process of dying if the individual who signed the directive is in a “terminal” phase of an illness or has an “irreversible condition” as defined by Texas law.