Monthly Archives: April 2014

Heirs have options with investing assets

Heirs & Beneficiaries

Texas residents whose spouses predecease them and leave them an individual retirement account may be confused about the best way to protect the asset from penalties. The key to deciding what to do with the money depends on the age of the deceased and that of the surviving spouse.

There are two basic decisions to be made — to shift the money into an inherited IRA and keep it as a tax shelter or to roll the funds into a separate individual IRA.

According to a technical consultant, when deciding what to do, consider age. If the survivor is younger than 59 1/2 and the deceased spouse died before making 70 1/2, and the money is needed, it is better to remain a named beneficiary. Rolling the money into his or her own IRA and making any withdrawals will incur 10 percent penalties until the age of 59 1/2. Remaining a named beneficiary will allow the survivor to make withdrawals as needed without penalty, but the IRA must be retitled as an inherited IRA.

The decision made can impact the next generation of heirs. When the surviving spouse rolls the IRA into his or her own, beneficiaries can factor in their own life expectancies when taking distributions as they, in turn, inherit the money. Beneficiaries are able to stretch out the distributions over the period of their remaining lives if it is kept as an inherited IRA.

A Georgia consultant stresses that the surviving spouse is “not locked into that option,” and may roll the funds into a separate account at a later date.

If the survivor is younger than 70½ with no pressing need to access the money, it’s generally a good idea to go ahead and make the IRA solely his or hers. The minimum distributions won’t begin until the minimum age requirement of 70½ is met.

If the original owner of the IRA died prior to having to take the minimum distributions, spouses who are named beneficiaries won’t have to begin taking disbursements until the time the late spouse would meet that age criteria had he or she lived. April 1 is the “required beginning date” in the year after the owner reaches the 70 1/2 milestone.

Don’t wait until the death of a spouse to sort this out. An estate administration attorney can explain your options to you at a time when you are not under stress and grieving.

Source:DailyFinance.com, “When a Spouse Inherits an IRA” Rachel L. Sheedy, Apr. 22, 2014

Texas elderly now providing end-of-life directives, wills

Will Execution

Recent events in the medical community indicate that people are beginning to view passing into the afterlife with considerably less distaste than in previous years. Such trends are evident in Texas as well as across the nation.

The number of elderly individuals who have drawn up a will in the last few years has almost doubled. These trends have not had an effect on hospitalization in the past.

Documentation regarding end-of-life care may be considered a way to allow that a person’s final wishes are respected. It also indicates an increasing desire for an individual to discuss his or her passing with family and loved ones.

One case that made headlines in Texas was the widely-discussed case of a pregnant woman who was brain-dead, but had to be kept on life support due to conflicting opinions over how to interpret state law. The court finally ruled to respect the family’s wishes to disconnect her from the ventilator.

While medical personnel is encouraged to discuss end-of-life directives with their patients, there continues to be little effect on the hospitalization of the patient or possibility they will die at their homes. On the other hand, many physicians are of the opinion that it is critical to consider family dynamics and cultural factors before having this type of discussion.

An advanced directive, as well as a living will, allows you to communicate your wishes as to how you envision your future medical care. In the event you cannot effectively manage your estate planning or your final wishes in the state of Texas, you may issue a physician directive, power of attorney, or other provisions that enable you to involve professional assistance in making your wishes known. It is to your advantage to consult with an entity that can walk you through the process of clearly communicating your final wishes, so as to make sure you pass to your final resting place with peace of mind.

Source:News Medical, “Study: A record number of elderly people are completing living wills to guide end-of-life medical treatments” No author given, Apr. 03, 2014

Protecting your family farm for the next generation

Will Execution

Texas farmers and ranchers often pass down their land and occupation to their children. This is their legacy. However, protecting the family legacy to ensure that you are making the most of it takes planning.

An economic development consultant says, “When it comes to planning versus no plan, it’s an easy decision.” He also points out that you have two choices: either you decide what happens to your children’s legacy or the court decides.

Divvying up farm or ranch property for your children is usually more complicated than just drafting a will. Sometimes there is one child who is more interested in working a farm and continuing the legacy than another child. You may want to gift some of the farm or assets to them while you are still alive. At some point, one generation may want to retire from maintaining the farm and start the next generation on another path.

One way of dividing up a farm or ranch business to pass it along to heirs while you are still living is to set up the family business as a legal entity like an LLC. This way, you can divide it up by shares. Whoever owns over 50 percent (51 percent or more) of the shares is in control of the entity, so if you want to remain the controller, limit the shares you portion out. Your shares can then be willed to whomever you want to take over after your death.

The economic development consultant also recommends good communication between family members and getting advice from outside trusted parties. You want to be as fair as possible to your heirs if you intend to keep harmony in the family. Discuss your estate planning and wills regularly with your legal and financial advisors to see if changes are in order. In addition, don’t neglect to determine the tax implications before embarking on any legacy estate planning decisions.

Source:Agri-View, “Legacy planning addresses family issues, even health care” No author given, Mar. 31, 2014

Disabled vet charity under fire in Texas

Estate Administration

A crime victim advocate and former prosecutor has requested that the Harris County District Attorney’s office look into a disabled veteran charity’s financial records after some veterans alleged shabby treatment by the organization and broken promises.

A blind veteran who died last year was living in a home that he had gotten with assistance from the charity and his own contribution of $50,000. The charity tried to take the home back after his death from cardiac arrest by using a buy-out option stating that if the vet died within 10 years of taking possession of the home, the charity could buy it back for the $50,000 veteran contribution cost.

However, the veteran’s family filed suit against the agency, saying that the buy-out option was invalid. The vet’s father held his son’s power of attorney but was not present when his son signed the papers. Due to his blindness, the former Army specialist was unable to read the provisions of the contract. The father also alleges that the reported $250,000 value of the home was inflated from the $170,00 listed on the contract. The agency had also promised to make the home accessible for the blind, yet failed to do so.

The family hired an investigator to review the charity’s financial records, but the administrators of the charity refused to allow him access. After being contacted by the Harris County District Attorney’s office, the charity administrators agreed to comply with Texas law that states the public may have access to their financial documents.

After the death of a loved one, relatives are saddened and often stunned and not thinking clearly. An estate attorney can review all documents pertaining to the estate of the deceased to insure that everything is in order and take the necessary steps to remedy any improprieties.

Source: Houston Chronicle, “Questions raised about Houston charity that builds homes for veterans” Cindy Horswell, Apr. 08, 2014

Texas buyer wants deposit back in real estate dispute

Real Estate Disputes

Real estate transactions have been tricky in many southern states since the economic slump of 2008. Texas has not been the only state to fall prey to real estate property disputes.

A real estate company previously affiliated with Prudential has filed a suit against Regions Banks of Alabama and a resident of Texas in the Orleans Parish District Civil Court. At issue is a $50,000 deposit and a buyer who changed her mind.

A Texas woman agreed to purchase a property on Prytania Street, New Orleans, for $1.6 million. She then signed an “Agreement and Counter Offer” transaction.

The suit claims the broker and listing agent came to an arrangement with the buyer and the $50,000 deposit was delivered by the buyer’s agent. The property closed on the predetermined date, but the broker was later informed that the buyer would not go through with the sale.

Since then both the bank and the buyer have requested the funds be released, but the real estate company considers the funds to be in dispute. The representative for the real estate company has requested that the court hold on to the funds, less the costs of filing, and has asked to be dismissed from the case.

The bank feels that the buyer reneged on her obligation to purchase the property, as per the real estate agreement and counter offer. They claimed the buyer agreed to make the purchase and was aware of the closing date. The bank states that the contract allows them 10 percent of the purchase price, or $160,000, and the right to retain the disputed funds.

Real estate transactions are complex in Texas, as in other states. There is a great deal at stake for the buyer and the seller, as well as the for lending institution. In the mountain of paperwork to be filed, sometimes a purchase dispute arises. It is advisable for all involved in real estate transactions to have the guidance and expertise of a seasoned individual or entity, that is well-versed in real estate law. It is in your best interest and will help protect your rights and your understanding of what you are signing.

Source:Louisiana Record, “Real estate company asks to be released from responsibility of $50K deposit dispute” Lizzy Fitzsousa, Apr. 02, 2014

Avoid ‘do it yourself’ estate planning in Texas

Estate Planning

El Paso readers, like most, like to save money by doing things themselves. But there are a few things that it might be worth spending money for a professional to handle instead of trying to do it yourself. Estate planning is one of those things.

Drafting estate planning documents is important, and there are too many mistakes that can be made if you are not well-versed in this type of law. Having a professional who knows the difference between wills and living trusts, guardianships and conservatorships, and other complicated estate planning issues can ensure that your will or trusts meet your needs and final wishes. Also, different states may have different laws that could affect how you plan asset distribution.

If you move to a new state, you should have your estate planning documents reviewed to ensure they meet the new state laws and, thus, will still be upheld. Some things that you may want to pay attention to when it comes to different state laws are: asset protection, state taxes on property and assets, and whether your state is a community property state like Texas or an equitable distribution state. These things could have an impact on how you draw up your wills and trusts. Existing documents may need revisions.

You should also know the difference between a will and a living trust, so you can decide which would be best for you. While either a will or a living trust can be used for assigning or transferring property or assets, if you need to assign a guardian to minor children or dependents, you will need to do this through a will. If you are concerned about your assets and want to have them managed while you are still alive, in the event you become disabled for instance, you can use a living trust.

Source:Forbes, “Moving To A New State: How To Put Down Financial Roots” Deborah L. Jacobs, Mar. 19, 2014