The Pax Financial Blog

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What is the Best Way to Avoid Estate Planning Errors in Texas

Financial Planning, financial advisor San Antonio, Retire in Texas Dec 19th, 2022 by: Darryl Lyons

While creating an estate plan is a great way to ensure a smooth process after your death, creating a plan that avoids the most common mistakes and snags is crucial. There are many important decisions when planning to protect your loved ones, but having one riddled with errors that could present legal issues will cause a ton of stress in the end.

Be aware of common estate planning mistakes in order to avoid them. So whether you are just starting your first estate plan or updating an existing plan, familiarize yourself with common pitfalls and mistakes so your plan can be flawless while still safeguarding your legacy. 

TEXAS ESTATE PLANNING DOESN'T HAVE TO BE DIFFICULT. CONTACT OUR PAX TEAM OF TEXAS FINANCIAL ADVISORS TO HELP

 

Texas estate planning document

 

DON’T FORGET TO WRITE YOUR WILL

Whether you know it or not, you have an estate plan. If you did not write one yourself, the state of Texas has kindly written one for you, and you might not like it. For example, Texas law does not automatically give all of your property to your spouse when you die.

If you are married without children, any real estate you bought before your marriage will end up being co-owned by your parents. Children from outside of your marriage will automatically inherit the majority of your assets as opposed to your spouse. Failing to set up a will could lead to a confusing situation that could end up being costly for the loved ones you leave behind.

The state of Texas will also determine your "heirs at law" if there is no immediate surviving family, and they likely won't know your personal relationships with anyone. Money from your estate will be spent locating your nearest relatives, who may not even know you exist. This all can be done, regardless of your relationships with your family, or lack of one. 



DON’T FAIL TO UPDATE YOUR PLAN

Retirement planning and financial planning are not the most exciting things to do, and estate planning is no exception either. Because of this, many people never look at their plans again once they complete them. This is quite the fallacy in logic. People move, get married, have children, and just experience life in general. Their wealth likely will fluctuate. These are all factors that could have a serious influence over your estate plan, and failing to update your plan semi-regularly could lead to potential problems for you and your loved ones down the line. 

Keeping track of personal changes is important, but you must also keep track of changing laws. This is especially important when you consider passing down money and the tax exemption amount, as they have changed drastically over the past few decades. For example, the estate tax exemption was $1 million in 2003, while it is $12.06 million nearly two decades later. 

 

PLAN FOR LONG-TERM CARE

A great estate plan should include plans for long-term care. The current cost of long-term care in Texas is roughly $77,000 annually, which is certainly not cheap. However, a concrete plan can help mitigate the exorbitant costs. An experienced estate planning attorney can help you establish a solid plan to protect your assets, learn about the Medicaid benefits and process, and structure a long-term care plan suitable for your personal needs. 

Establishing dependable powers of attorney can relieve much of the pressure of estate planning. Should you become incapacitated or unable to make sound decisions regarding your health, your loved ones may have to endure complex elder laws, exacerbating the stress that naturally comes with getting one's affairs in order. Texas has several options for powers of attorney, including: 

  • Durable Power of Attorney
  • Medical Power of Attorney
  • General Power of Attorney
  • Limited Power of Attorney
  • Springing Power of Attorney
  • Business Operations Power of Attorney
  • Professional Practice Power of Attorney

 

Texas long term care insurance document



DON’T NEGLECT YOUR BENEFICIARIES

Never leave assets to a minor without also appointing a guardian who can manage the funds left behind. Not doing so will just result in significantly more money spent later on in legal fees trying to name a guardian, and even more so when you need to name a trustee to manage the estate until the minor comes of age. 

Always consult a Texas estate planning attorney if you plan on leaving a sizeable inheritance to a minor. As an advisory firm offering estate planning in San Antonio, TX, our team at PAX makes sure to help you designate the absolute best person to act as the trustee so that they may protect your assets from poor financial decisions, creditors, and other life-changing events that may have influence. 

Furthermore, don't forget to update and match your beneficiary designations in both your insurance policies and retirement plans in the event that they supersede and conflict with any wishes in your will.

As San Antonio, TX, financial advisors, the PAX team operates in your highest interests as fee-based advisors. We provide full-service, affordable financial help. Our total focus is on your needs, goals, and desires. We put your interests ahead of ours.

Certain team members at PAX may have one or more of the following credentials:

  • CFP® (CERTIFIED FINANCIAL PLANNER™)
  • Chartered Financial Consultant® (ChFC®)
  • Accredited Investment Fiduciary® (AIF®)
  • Juris Doctor (JD)
  • Master's Degree in Accounting (MSA)
  • BFA (Behavioral Financial Advisor)

 

DON’T UNDERESTIMATE THE TAX IMPLICATIONS

Taxes are always a force to reckon with, and Uncle Sam doesn't always make the process cut and dry. Regardless of whether you designate your estate to a nonprofit, family member, or some other loved one as a beneficiary, be sure to learn the different tax implications for each. 

For example, nonprofits are eligible to receive money from retirement accounts tax-free; however, beneficiaries face double taxation while they may be unaware. 


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This material is provided by PAX Financial Group, LLC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The information herein has been derived from sources believed to be accurate. Please note: Investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results.

 

Darryl Lyons

Darryl Lyons

CEO and co-founder of the PAX Financial Group, Darryl Lyons has been a licensed professional in the financial services industry since 1999. A lifelong Texan, Darryl began his career in the financial sector just one day removed from earning his bachelor’s degree in corporate financial management and accounting at St. Mary’s University. Throughout his career, he has won awards for recruiting and development from Fortune 100 companies. In January 2007, he chose to begin and develop his independent practice. He joined Andres Gutierrez and Joseph Schuetze to form the PAX Financial Group. Darryl also served as the Chairman for Brooks Development Authority. Shortly after his service, Mayor Julian Castro, named a park “The Darryl W Lyons Park” in honor of his service. He was named to the 2010 San Antonio Business Journal’s “40 Under 40 Rising Stars,” which honors people making a difference in business and in the community.

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