Estate planning is a critical component of business ownership. It ensures that a person’s interests are protected in the event of their death or incapacitation.
A person’s “estate” consists of belongings and money, including real property and bank accounts. An estate must go through probate to ensure debts and taxes are paid, and assets are transferred to beneficiaries.
Wills
Like any other individuals, Texas business owners need to have a will and other estate planning documents in place. Having these documents in place ensures that the business you worked so hard to build will continue after your death and also helps you avoid costly litigation.
If you die without a will, Estate Law Texas determines how your property will be distributed. The court starts with your spouse and children and if there are none, continues down a list of more distant relatives, including siblings, grandparents, aunts and uncles, cousins, and nieces and nephews.
The state honors handwritten, non-witnessed wills, but they are more challenging to prove in court and can create problems when dealing with your estate. Working with an attorney to draft your will and other estate planning documents is a good idea. This makes the process much easier for everyone involved. In addition to the will, you should also have a power of attorney and healthcare directive in place.
Trusts
Trillions of dollars each year pass down through inheritance to heirs and beneficiaries. It is essential that you plan for this and that your family can easily access your property. Your estate plan should include a will, a living trust, and power of attorney documents that allow an entrusted person to undertake your business transactions and financial affairs and make health care decisions for you in the event of incapacity.
Creating trust is an excellent way to avoid the lengthy and expensive probate process. It also allows a trustee to manage your assets and save on taxes. A Texas trust lawyer can help you draft a trust agreement meeting your needs. It is essential to work with a business lawyer that is experienced in this area. The exact attorney can assist with other legal aspects of starting a new business, such as Texas real estate contracts and Texas commercial leases.
Intestacy
When a person dies without a will, their estate is distributed according to Texas intestacy law. This complicated process tries to make things fair for family members. However, it can create problems. For example, when pop music artist Prince died intestate, his heirs were unable to receive their inheritance for more than two years because of disputes over the value and division of his assets.
During this time, creditors can demand payment and may even seize property. This can be a significant headache for family members.
An executor is responsible for settling the estate and transferring it to beneficiaries. They must also pay any debts and file taxes. To serve as an executor in Texas, a person must be 18 or older, of sound mind, and have no criminal record. Additionally, they must post an executor bond. The bond amount is tied to the value of the estate. An individual not living in Texas can still be an executor but must appoint someone to receive legal paperwork.
Probate
The executor of a deceased person’s estate has a fiduciary duty to carry out their duties properly. When the heirs of an estate feel that an executor isn’t fulfilling their fiduciary duties, they can request that the court remove them from the position.
It is not uncommon for decedents to leave debts such as mortgages and medical bills. Those creditors must be notified as part of the probate process and allowed to file claims against the estate. This is generally done through a notice published in the local newspaper.
Texas is known for its simple, efficient probate processes. An experienced Texas attorney can help you understand your responsibilities as an executor or assist you if you are the beneficiary of an estate that needs to go through probate. An attorney can also ensure that your tax concerns are addressed correctly. This may include coordination between estate income tax rules and the personal income taxes of beneficiaries and heirs.
