Wealth Preservation, Estate Planning & Probate
This probate group is led by Steven J. Clausen, who is a senior member of the firm. The attorneys at HCWD, PLLC who practice in the Wealth Preservation and Estate Planning Group focus their practice on many facets of wealth preservation planning, estate planning, legacy planning, probate and trust administration, asset protection planning, trust and estate litigation, charitable gift planning and related areas of tax, trust and fiduciary law. The Wealth Preservation, Estate Planning Practice and probate Group performs important estate, wealth preservation, and tax planning for clients of various economic means and family situations. HCWD, PLLC attorneys have represented a broad range of family businesses and individual clients ranging from those with assets valued at over one billion dollars to those with holdings of several hundreds of thousands of dollars.
ASSET PROTECTION AND ESTATE PLANNING
The attorneys at HCWD, PLLC advise individual and business clients in The Woodlands, Houston, San Antonio and Austin, Texas, as well as surrounding areas, about strategies for preserving wealth and transferring it to their families or their beneficiaries. Our clients have diverse backgrounds, professions, family circumstances and asset holdings. They include owners of closely-held businesses, senior executives of publicly-held corporations, individuals with substantial inherited wealth, professionals such as doctors, lawyers and educators and extended families with complex asset holdings and family offices. Our wealth transfer, tax and estate planning for these diverse clients must be customized to individual circumstances and objectives. HCWD, PLLC delivers its skilled services based on the needs of our clients.
Our many years of experience have exposed us to a wide variety of situations and have taught us to be good listeners and to respond timely to our client’s concerns. Our clients typically want more than strategies to minimize taxes. They seek our judgment about the protection of wealth from creditors, failed marriages and possible fiscal irresponsibility of beneficiaries. They want our views about the impact of wealth on younger family members and our suggestions about educating younger generations on wealth management and philanthropy.
Our wealth preservation and estate planning work generally leads to the preparation of wills, trust agreements, powers of attorney, and medical directives and in appropriate cases, limited partnership, limited liability company documents and buy-sell agreements. Our planning documents are drafted for the unique circumstances of every client and reflect emerging legal, estate planning and tax issues, and, most importantly, are customized to fit the particular circumstances of each client. If you need assistance, Please contact Mr. Clausen.
ESTATE AND TRUST ADMINISTRATION, PROBATE LITIGATION AND RELATED SERVICES
HCWD, PLLC represents executors, administrators and trustees in their probate of wills and administration of estates and trusts. Our clients include family members who have no prior experience with fiduciary roles as well as large and sophisticated banks and trust companies.
Our work for these fiduciaries includes probating wills, assistance with the collection and valuation of assets, compliance with probate, estate and trust laws, preparation or review of income and estate tax returns, special legal issues that arise during the course of estate or trust administration, and proceedings at the end of estate or trust administration to discharge the fiduciaries from liability.
The attorneys at HCWD, PLLC regularly represent clients in disputes involving estate and trust matters. We have appeared before the courts of Harris, Montgomery and Travis counties in Texas, as well as other counties around The Woodlands, Houston, San Antonio and Austin, Texas, and from time to time before other courts throughout the state. Estate and trust disputes can take a variety of forms. A few of the more common forms of contested case that we handle are:
- Will and trust contests.
- Will and trust construction cases.
- Trust modification cases.
- Breach of fiduciary duty cases.
- Amount of an executor, aministrator or trusts.
Many of our clients are charitably minded. They seek our advice about alternative strategies for their philanthropic giving and the tax consequences associated with it.
We regularly prepare charitable remainder trusts and charitable lead trusts. We help clients to establish private charitable foundations and to secure IRS recognition of their tax-exempt status, as well as advising about legal and tax issues that arise during the ongoing administration of such foundations. If you need assistance with charitable planning, Please contact Mr. Clausen.
- Estate Planning
- Asset Protection Planning
- Beneficiary Controlled Trusts
- Charitable Remainder & Lead Trusts
- Creditors' Claims
- Dynasty Trusts
- Family Limited Partnerships
- Generational Wealth Planning and Counseling
- Grantor Retained Annuity Trust
- Incentive and Educational Trusts
- Income, Gift, and Estate Tax Minimization Strategies
- Installment Sales to Grantor Trusts
- Integration of Employee Benefits, IRAs, and Life Insurance
- Philanthropic Advice
- Post Mortem Tax Planning
- Powers of Attorney
- Premarital Agreements
- Private Annuities
- Private Foundations
- Qualified Personal Residence Trusts
- Qualified Subchapter S Trusts
- Revocable Trusts
- Self-Cancelling Installment Notes
- Spousal Access Trusts
- Structuring Charitable Gifts & Scholarships
- Valuation Planning
- Removal of Executor or Trustee
- Removal of Executors and Trustees
- Representation of Beneficiaries of Trusts and Estates
- Representation of Executors, Administrators, and Trustees
- Service as Executor, Administrator, or Trustee
- Will and Trust Interpretation Suits
- Will and Trust Interpretation
- Will Contests
The GST is an additional transfer tax that applies when a transfer “skips” a generation. An example of when this might occur is when parents leave part of their estate to grandchildren. In the past, wealthy grandparents made use of trusts that left income and principal to their children for their lives. On the death of their children, the trust could leave income and principal to the grandchildren. On the death of the grandchildren, the principal could then be distributed to great grandchildren, avoiding Estate Taxes at the prior “skips” in generations. This allowed for the accumulation of wealth and appreciation of assets. Congress then added the GST to impose a transfer tax for individuals bypassing their children’s generation. The GST is in addition to the Estate Tax. Under current law, the GST Exemption is the same as the Federal Estate and Gift Tax Exemption. For example: if a $1,000,000 bequest was subject to both federal estate tax and the GST tax, the grandchildren would receive only $360,000
You can reduce your estate by establishing a Charitable Remainder Trust. By doing so, you can reduce your estate while donating to a charity of your choice. The Charitable Remainder Trust is useful for appreciated assets (stocks, real estate, etc.). The asset is transferred to an irrevocable trust, removing it from your estate and providing you with a charitable income tax deduction. The trust then sells the asset at fair market value, but is not required to pay capital gains tax. You retain a lifetime income stream from the trust that is higher than you would otherwise receive since the principal is not reduced by capital gains tax. At your death, your favorite charity receives the assets.
You can reduce your estate by transferring a family-owned business, real estate, stock, etc., to your children by establishing a Family Limited Partnership (FLP). The benefit of a FLP is that you and your spouse, either directly or through an entity such as a limited liability company, can maintain control over your assets as the general partners. Each of your children can be given limited partnership shares, which can be given annually to make use of the $14,000.00 annual gift exemption. The FLP allows both spouses or their entity that is the general partner to retain control no matter how much of the assets are transferred to the children. In fact, as limited partners, the children cannot sell or transfer their shares without the parents’ approval. The share of the limited partnership are discounted since there is no market value for them. Family limited partnerships are often used to keep family businesses, ranches, farms and vacation homes from being divided or sold. The foregoing discussion is a generalized discussion and careful planning is necessary to avoid estate tax inclusion that may be caused by the Tax Court decision in the Powell Case.
You can establish a Qualified Personal Residence Trust to transfer your home out of your estate. This works by transferring your home into a trust for an established time period for the benefit of your children. You can continue to live in your home. When the period has expired, the home is transferred to your children and is not included in your estate. If you pass away before expiration of the period established in the trust, your home is included in your estate. At the time of transfer, the value of your home will be discounted for gift tax purposes since your children will not receive the home until a future period. The discounted value of the home will be used to determine the gift, allowing you to maximize your lifetime exemption.
The irrevocable life insurance trust is a trust that is created for the purpose of becoming the owner of your life insurance policy. However, you must live at least three years after the transfer of an existing policy. At death, the life insurance proceeds will not be in your estate. You can name the irrevocable life insurance trust as the beneficiary of the policy. When you pass away, the life insurance proceeds will be paid according to the provisions of the irrevocable life insurance trust (i.e. to your spouse, children, etc.)
You can give up to $15,000 annually to anyone you want tax-free. So, if you and your spouse each give $15,000 to three children and two grandchildren, you can give away $150,000 annually. This is a great way to reduce the size of your estate. Other ways to reduce your estate include use of the Irrevocable Life Insurance Trust, the Qualified Personal Residence Trust, the Grantor Retained Annuity Trust, an Intentionally Defective Grantor Trust, the Family Limited Partnership, and the Charitable Remainder Trust.
The Estate Tax is a Federal Transfer Tax. Congress allows each of us to pass a certain amount of assets tax-free during our lifetime or at death. This is known as the Federal Estate and Gift Tax Exemption. Currently, each individual can pass up to $11,180,000 in 2018 and $11,580,000 in 2020, indexed for inflation ($5,000,000 on January 1, 2026) tax-free in the form of lifetime gifts or at death. Any amount transferred in excess of this amount is subject to either a Gift or Estate Tax.
Having a revocable trust does not necessarily mean that you will not have to pay Estate Taxes. A revocable trust is a tool that can allow married couples, by effectively planning their estates, to prevent wasting one of their lifetime exemptions to reduce or eliminate Estate Taxes. Each spouse can leave an unlimited amount tax-free to a surviving spouse who is a U.S. Citizen. This is called the marital deduction. Use of the marital deduction defers Estate Taxes until the second spouse dies.
Yes. A Will directs how a deceased person’s assets are to be distributed. When a revocable trust is created, it must be funded. Funding occurs when assets are transferred into the trust at the time of creation. What could happen is that future assets acquired by an individual or couple are left out of the trust. Having a “pour over Will” directs that any assets held in your name be transferred at your death to your living trust. These assets will have to pass through probate, but distribution will be according to the terms of the trust. A Will also permits a deceased person to nominate a guardian to care for and provide for minor children.
In some cases, yes. A revocable trust is not subject to court supervision. As a result, a trustee may be able to take advantage of the trust to a greater extent than if the court is supervising the actions of the trustee. In addition, a living trust is generally more expensive than a standard Will, although the difference in cost is nominal when compared to the alternatives of probate and Estate Taxes. A revocable trust may not be extremely helpful if one is a young, single individual without kids and little or no assets. However, one must keep in mind that assets accumulate over time and circumstances change for people. A revocable trust may also still be important in directing how a deceased person is to be cared for in the event of incapacity or disability. Finally, certain individuals may find their dealings with third parties, such as banks and title companies, in connection with real estate may be difficult when title to property is owned in a trust.
A revocable trust, also known as a revocable inter-vivos trust or a living trust, is a legal document that allows you to direct how you want your assets to be distributed when you die while allowing you to maintain control of those assets during your lifetime. When a revocable trust is combined with a comprehensive estate plan, some of the benefits it can provide are the care of disabled and handicapped children (special needs trust), the prevention of taxation of life insurance proceeds (irrevocable life insurance trust), the private administration of a deceased person’s estate after death, the nomination of a successor by the deceased person to manage estate assets in the event the deceased person becomes incapacitated, the benefit of directing how estate assets are to be distributed at death and to whom, the benefit of allowing married couples to take full advantage of their lifetime exemptions to reduce or eliminate Estate Taxes, the option to pass property with limitations established by the deceased person, the option to establish educational funds for children, the option to distribute property to children in trust for the benefit of grandchildren, for the purpose of avoiding the Estate and Gift Tax at the death of the children, to the extent authorized under the generation skipping transfer tax rules, and the benefit of avoiding probate. An estate planning attorney can help you plan and select the appropriate options tailored to your estate planning needs.
Yes. Certain property will not have to pass through probate before it is distributed. Such property includes jointly held property (joint bank accounts, real estate held as joint tenants, etc.), life insurance proceeds (as long as they are not payable to the estate or a deceased person), IRA’s, 401k’s, retirement accounts, and assets held in a living trust.
Probate is a process that oversees the administration of a deceased person’s estate. Its purpose is to assure that the deceased person’s debts are paid, the beneficiaries described in the Will ascertained, the income and estate taxes are paid, and the assets of the estate are distributed according to the deceased person’s Will. In Texas, most probate proceedings are completed with independent administration. Independent administration is significantly different than dependent administration, which is the process used under the probate laws of many other states. In Texas, certain executors and administrators may serve independently of the court’s supervision, which streamlines the probate process and allows it to move much more quickly and efficiently than in dependent administration.
Independent probate administration has several advantages. The executor is not dependent upon the court for approval of all of his or her actions, the executor is not required to post a bond if bond is waived in the Will. This can avoid a significant amount of time and expense.
An executor can be independent if the decedent left a will that specifically states that the executor should be independent, or if all of the heirs or beneficiaries can agree to it.
No. In fact, having a Will assures that your estate will pass through probate. Probate is necessary to ensure that a Will is valid so your assets can pass to loved ones named in the Will. A Will cannot pass title to your property until it is admitted to probate.
No. Although a Will can dispose of most of your assets, assets such as life insurance proceeds, retirement benefits, joint bank accounts, payable on death accounts, realty held as joint tenants with rights of survivorship, assets held in a living trust, and your spouse’s one-half community property interest in any assets cannot be disposed of by your Will.
In Texas, for a Will to be valid, the person must have legal capacity, testamentary capacity, and testamentary intent. A person has legal capacity if he or she is at least 18 years of age, has been lawfully married, or is a member of the United States armed forces. Testamentary capacity refers to being of “sound mind.” A person has testamentary capacity if her or she has the mental capacity to understand that he or she is making a Will, the effect of a Will, the nature and extent of his or her property, who the natural objects of his or her bounty (relatives) are, the fact that assets are disposed of through a Will, and has the ability to plan for an orderly disposition of his or her property. A person has testamentary intent if, at the moment the Will is signed, he or she has the intention to make a disposition of property that will take effect at death.
Additionally, certain formalities must be met in the actual documentation process of creating a Will. The State of Texas recognizes two types of Wills: (1) an attested will, and (2) a holographic will. Each of these documents has its own separate requirements. For an attested will to be valid, it must be in writing, signed by the testator or another person at the direction of the testator while in the testator’s presence, and witnessed by at least two witnesses over the age of fourteen. For a holographic will to be valid, it must be written completely in the testator’s own handwriting, and signed by the testator. It does not have to be signed by any witness.
In Texas, a person may also add a self-proving affidavit to the will. A self-proving affidavit substitutes for in-court testimony of witnesses regarding the validity of the will.