Estate Planning in Texas

Key Facts About Estates

• An estate represents the net worth of your assets, obtained by subtracting all liabilities, such as funeral costs, debts, taxes, and fees, from the total value.
• Estates become important after death, as your property and possessions must be distributed according to your will or state laws.
• Beneficiary refers to someone who inherits assets from an estate through a will or intestate succession.
• If a substantial portion of an estate is left to a surviving spouse or a charity, the estate tax may not apply or be reduced.

Who Manages Estates?

After a person dies, their estate is typically distributed among their surviving family members. The management of estates can involve the following roles:

1. Executor: This person is responsible for carrying out the deceased person’s wishes as outlined in their will, including distributing the estate according to the will’s instructions.
2. Administrator: If the deceased person did not leave a will, the probate court may appoint an administrator to manage the estate and distribute the assets according to state law.

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The Importance of Having a Trust

A trust designates a third party (a trustee), to hold assets (real estate, vehicles, clothing, jewelry, and other personal belongings or title assets) on behalf of the beneficiary or beneficiaries. Trusts are arranged in many different ways and can be specific about how and when an asset passes to a beneficiary.

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Benefits of Estate Planning

Minimize Taxes: Strategic estate planning allows you to direct the transfer of your assets in a tax-efficient manner by considering trusts, gifting, and charitable donations.  

Avoiding Probate: Strategic estate planning may assist in avoiding or minimizing probate, which can be time-consuming, expensive, and subject to public scrutiny.

Business Succession: For business owners, estate planning is crucial for ensuring a smooth transition of ownership and management. It allows you to establish a clear plan for transferring your business interest or selling them. 

How to Create an Estate

1. Schedule an appointment with an Estate planner.
2. Create a will.
3. Choose an executor. 
4. Identify your assets. 
5. Name beneficiaries.

Debt and Estates Planning

Debt and estate planning are closely related. According to the Consumer Financial Protection Bureau (CFPB), any unpaid debts are coved by the person’s estate in most cases. One of the main reasons someone creates an estate is to protect their assets. If a person has significant debts, creditors may have the right to claim assets to satisfy outstanding debts. When considering debt in estate planning, someone can employ strategies to shield certain assets from creditors and ensure they are protected for their benefactors. 

Trust and Estates

A person may set up a trust as part of their estate plan to transfer assets to their beneficiaries more efficiently and protect them from creditors or other risks. A trust can be used with a will or as a standalone document, depending on the person’s goals and circumstances.

A will is created to provide instructions on how someone’s estate and custody of minor children, if any, should be handled after death. Their wishes and instructions are detailed in a will, and they name a trustee or executor that they trust to fulfill their dying desires. A will also indicates whether a trust should be created upon their death.

Making a Will

A will provides instructions for what happens after your death; having a will in place is essential. 

In 2021, only 46% of adult Americans had a will. Having a will is important for several reasons:

1. Distributing assets
2. Nominating guardianship for minor children and dependents 
3. Avoiding family disputes
4. Expression of wishes
5. Minimizing taxes and expenses

Having a will ensures that individuals decide who receives their property and assets when they die, instead of state laws. 

Final Thoughts 

Estate planning is a powerful tool that can be used to manage assets according to an individual’s wishes. By appointing a trustee to manage assets on behalf of beneficiaries, an estate ensures that assets are transferred promptly and efficiently.

By taking the time to understand estates and how they can be used, individuals can make informed decisions about their estate planning needs and ensure that their wishes are carried out according to their desires.

Are you ready to plan your estate? Please schedule an appointment with one of our wealth management advisors today.

For more information about the wealth management division, visit our website, Wealth Management – Financial Planning from Texas Regional Bank. 

TRB Wealth Management, LLC is a Registered Investment Advisor with the Securities Exchange Commission. TRB Wealth Management, LLC and Texas Regional Bank are affiliated entities. Investment Advisory Services are offered by TRB Wealth Management, LLC. Neither TRB Wealth Management, LLC or Texas Regional Bank provides legal or tax advice. See your accountant or legal counsel for tax or legal advice. The information contained herein is obtained from sources deemed to be reliable.   This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. NOT FDIC INSURED, NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY. NOT A DEPOSIT OR OTHER OBLIGATION OF, OR GUARANTEED BY TEXAS REGIONAL BANK OR ANY OF ITS AFFILIATES. SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTMENT.