The 2013 Federal Estate Tax Exclusion

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Many clients have asked me how the fiscal cliff deal affected the 2013 federal estate tax exclusion amount.  At the end of 2012 attorneys were scrambling to assist their clients to transfer assets in anticipation of a drop in the federal estate tax exclusion from $5,000,000 to $1,000,000.  Most people in the estate planning business (including me) were predicting that Congress would negotiate a deal that would put the 2013 federal estate tax exclusion amount somewhere in between $5,000,000 and $1,000,000.

Surprisingly, Congress left the federal estate tax exclusion amount at $5,000,000 permanently.  The amount is indexed for inflation each year which means that the basic 2013 federal estate tax exclusion amount for people who die this year is $5,250,000.

The federal gift and generation-skipping transfer tax exemption is the same as the estate tax exclusion amount.  The top federal estate tax rate is now 40%, up from 35% in 2012, for the largest estates.  Transfers from one spouse to the other are still tax-free under the unlimited marital deduction.

Another result of the new law is that portability became permanent.  Prior to portability, a husband and wife had to make use of a trust or multiple trusts in order to take advantage of both spouses’ estate-tax exemptions.  Portability effectively makes the federal estate tax exclusion amount “portable” between a husband and wife. When one spouse dies, the surviving spouse typically can get the deceased spouse’s unused exemption amount without having to set up trusts or other tax-saving maneuvers.

If you need an estate attorney who is familiar with the 2013 Federal Estate Tax Exclusion contact Paul A. Romano.

Lack of Testamentary Capacity

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Testamentary capacity or lack of testamentary capacity is the legal term of art used to describe a person’s legal and mental ability to make or alter a valid will. Adults are presumed to have the ability to make a will.

Litigation about lack of testamentary capacity typically revolves around charges that the testator or grantor, by virtue of senility, dementia, insanity, or other unsoundness of mind, lacked the mental capacity to make a will. In essence, the doctrine requires those who would challenge a validly executed will to demonstrate that the testator did not know the consequence of his conduct when he executed the will.

Lack of mental capacity can also be a reason to overturn a trust, deed, beneficiary designation form or other document that passes property from one person to another.

For a free initial consultation with Paul Romano, a Houston area attorney experienced in matters dealing with lack of testamentary capacity, please call us at 281 242-0995 or contact our Houston area law office.

 

Removal of an Executor or Administrator in Texas

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If an executor or administrator of an estate acts improperly, he or she may be subject to removal by the court on its own motion, or on the complaint of any interested person. The following list encompasses some of the more common reasons for removal of an executor or administrator of an estate.

(If you need to speak to a Houston estate litigation lawyer today, please contact us.)

  • failure to return within 90 days after qualification, unless such time is extended by order of the court, an inventory of the property of the estate and list of claims that have come to his or her knowledge;
  • failure to timely post bond (if required);
  • being absent from the state of Texas for a period of 3 consecutive months without permission of the court;
  • cannot be served with notices or other processes by reason of the fact that his or her whereabouts are unknown, or by reason of the fact that he or she is eluding service;
  • has misapplied, embezzled, or removed from the state of Texas, or is about to misapply, embezzle, or remove from the state, all or any part of the estate property committed to the personal representative’s care;
  • failure to return an account which is required by law to be made;
  • failure to obey a proper order of the court having jurisdiction with respect to the performance of his or her duties;
  • proven to be guilty of gross misconduct, or mismanagement in the performance of his or her duties;
  • he or she becomes an incapacitated person, or is sentenced to the penitentiary, or for any other cause becomes incapable of properly performing the duties of his or her trust;
  • as executor or administrator, he or she fails to make a final settlement within three years after the grant of letters, unless the time be extended by the court upon a showing of sufficient cause supported by oath; and
  • failure to give timely notice of the probate of a will to certain beneficiaries under the will.

For a free initial consultation with experienced Houston estate litigation attorney Paul Romano, please call us at 281 242-0995 or contact our Houston area law office.

 

How to Contest a Will in Texas

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Read my blog post: How to Contest a Will without Paying any Money Up Front

Who can Contest a Will in Texas?

Any “interested” person may contest the probate of a will. Interested Person is defined in Texas to include:

(If you need to speak to a Houston will contest attorney today, please contact us.)

  1. heirs;
  2. devisees;
  3. spouses; or
  4. any other person or entity having a property right in or claim against the estate.

Grounds to Contest a Will in Texas:

Contesting a will in Texas is generally accomplished under one of the following theories:

  1. Revocation by Physical Act: The testator may have revoked the will by some physical act such as tearing the will in half;
  2. Revocation by Subsequent Instrument: The testator may have revoked the will by executing another document that qualifies as a will or simply by signing a document that states he or she is revoking the will;
  3. Lack of Testamentary Capacity: If the testator did not have sufficient “testamentary capacity” at the time the will was executed, the will is void;
  4. Lack of Due Execution: There are certain statutory formalities that must be met when executing a will (e.g., the will may not have been properly witnessed or signed);
  5. Undue Influence: The will may be challenged if the testator executed the will as a result of undue influence (e.g., one child pressures the testator to sign a will leaving everything to them and nothing to the testator’s other children);
  6. Fraud: This includes the forging of the testator’s or witnesses’ signatures. It also includes the substitution of pages after the signing of the will.
  7. Mistake: This includes situations where the testator did not know he or she was signing a will. Mistake also may occur where the testator makes choices regarding who to leave his or her property to based on mistaken beliefs.

Filing a Will Contest in Texas

Generally, once an application has been filed to probate a will, the contesting party files what is called a “will contest” challenging the validity of a will by alleging various grounds for which the will should not be admitted to probate.

When to File a Will Contest in Texas

In addition to filing a contest prior to a will having been admitted to probate (but after it has been filed), a contestant may file a will contest within two years after the will has been admitted to probate.

The Cost of Filing a Will Contest in Texas

Our firm handles the contest of wills on both an hourly and contingency fee basis. If you choose to have us represent you in a will contest on an hourly basis then we charge $250 per hour. If your will contest is handled on a contingency fee basis then you agree to share a percentage of any recovery with our firm; however, you do not pay unless we collect. Each case is different so call us to get an estimate on what it might cost to represent you in your particular situation.

For a free initial consultation with experienced Houston will contest attorney Paul Romano, please call us at 281 242-0995 or contact our Houston area law office.

What is a Trust?

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A relationship created at the direction of an individual, in which one or more persons hold the individual’s property subject to certain duties to use and protect it for the benefit of others.

(If you need to speak to a Houston trust lawyer today, please contact us.)

Individuals may control the distribution of their property during their lives or after their deaths through the use of a trust. There are many types of trusts and many purposes for their creation. A trust may be created for the financial benefit of the person creating the trust, a surviving spouse or minor children, or a charitable purpose. Though a variety of trusts are permitted by law, trust arrangements that are attempts to evade creditors or lawful responsibilities will be declared void by the courts.

The person who creates the trust is the settlor. The person who holds the property for another’s benefit is the trustee. The person who is benefited by the trust is the beneficiary. The property that comprises the trust is the trust res, corpus, or principal.

A fiduciary relationship exists in the law of trusts whenever the settlor relies on the trustee and places special confidence in her. The trustee must act in good faith with strict honesty and due regard to protect and serve the interests of the beneficiaries. The trustee also has a fiduciary relationship with the beneficiaries of the trust.

A trustee takes legal title to the trust res, which means that the trustee’s interest in the property appears to be one of complete ownership and possession, but the trustee does not have the right to receive any benefits from the property. The right to benefit from the property, known as equitable title, belongs to the beneficiary.

The terms of the trust are the duties and powers of the trustee and the rights of the beneficiary conferred by the settlor when he created the trust.

For a free initial consultation with experienced Houston trust attorney Paul Romano, please call us at 281 242-0995 or contact our Houston area law office.

Can you Contest a Trust in Texas?

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As an experienced trust litigation attorney will tell you, the creation of a trust must follow the requirements of Texas law; therefore, the validity of a trust may be the subject of trust litigation.

(If you need to speak to a Houston trust litigation lawyer today, please contact us.)

Just as a will can be challenged and contested, so too can a trust be challenged on such issues as fraud, duress, undue influence, coercion, or lack of mental capacity. Each such challenge has specific legal standards and is best explained by an experienced trust litigation attorney such as Paul Romano.

For a free initial consultation with experienced Houston trust litigation attorney Paul Romano, please call us at 281 242-0995 or contact our Houston area law office.

 

What does an executor do?

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An executor is the person appointed to administer the estate of a person who has died leaving a will which nominates that person. Unless there is a valid objection, the judge will appoint the person named in the will to be executor.

(If you need to speak to a Sugar Land probate lawyer today, please contact us.)

The executor must insure that the person’s desires expressed in the will are carried out. Practical responsibilities include gathering up and protecting the assets of the estate, obtaining information in regard to all beneficiaries named in the will and any other potential heirs, collecting and arranging for payment of debts of the estate, approving or disapproving creditor’s claims, making sure estate taxes are calculated, forms filed, and tax payments made, and in all ways assist the attorney for the estate (which the executor can select).

For a free initial consultation with experienced Sugar Land probate attorney Paul Romano, please call us at 281 242-0995 or contact our Sugar Land law office.

Who has a fiduciary duty and what is a breach of fiduciary duty?

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The executors and administrators of estates and trustees of trusts have a fiduciary duty to each beneficiary to be fair, impartial, and fully compliant in sharing the financial details of how the estate is to be settled or how the trust is being managed. Each beneficiary, on the other hand, has the right to fully understand how, and in what manner, the assets of the estate or trust are distributed and may demand an accounting when necessary. The importance of having an experienced estate litigation lawyer to advise you in these matters is essential.

(If you need to speak to a Houston estate litigation lawyer today, please contact us.)

In many instances, the executor, administer or trustee is also a beneficiary. Under those circumstances, it is especially important to be sure that person acts impartially and does not use his role to benefit himself over other beneficiaries.

When executors, administrators and trustees misbehave or act negligently, they can be removed.

For a free initial consultation with experienced Houston estate litigation attorney Paul Romano, please call us at 281 242-0995 or contact our Houston area law office.

 

 

Removal of a Trustee in Texas

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A Trustee has a Fiduciary Duty to the Beneficiaries

Trust litigation generally involves the manner in which the trust is being administered. It is important to understand that a trustee has a fiduciary duty to the beneficiaries of the trust.

(If you need to speak to a Houston trust litigation lawyer today, please contact us.)

What Rights do Beneficaries of a Trust have?

The primary right the beneficiary of a trust has is the right to a full and transparent accounting of all trust assets and all trust activity. The beneficiary may demand such from the trustee, but trust litigation may be necessitated if the trustee either refuses to provide an accounting or provides less than a full accounting.

When can a Trustee be Removed?

A trustee can be removed if:

  1. the trustee violates the terms of the trust agreement resulting in a material financial loss to the trust;
  2. the trustee becomes incapacitated or insolvent;
  3. the trustee fails to make an accounting that is required by law or by the terms of the trust; or
  4. for other reasons the court deems appropriate.

If you are either a trustee dealing with inquiries from the beneficiaries of a trust or a beneficiary trying to understand your options, a consultation with an experienced trust litigation lawyer is the best way to understand and protect your rights. For a free initial consultation, please call us at 281-242-0995 or contact our Houston area law office.

What is Undue Influence?

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Undue influence is a judicially created defense to transactions that have been imposed upon weak and vulnerable persons that allows the transactions to be set aside.  A claim of undue influence is often made when someone is trying to invalidate a will, a trust, a deed or any other legal document which passes property from one person to another.

(If you need to speak to a Houston will contest attorney today, please contact us.)

Virtually any act of persuasion that over-comes the free will and judgment of another, including exhortations, importunings, insinuations, flattery, trickery, and deception, may amount to undue influence. Undue influence differs from duress, which consists of the intentional use of force, or threat of force, to coerce another into a grossly unfair transaction. Blackmail and extortion are classic examples of duress.

Three elements must be shown to establish undue influence. First, it must be demonstrated that influence existed and was exerted. Second, there must be evidence that the influence subverted or overpowered the mind of the person at the time he signed the document.  Third, it must be shown that the person signing the contested document would not have executed that document but for the influence.

Such conditions as mental, psychological, or physical disability or dependency may be used to show susceptibility.  Defendants who aggressively initiate a transaction, insulate a relationship from outside supervision, or discourage a weaker party from seeking independent advice may be attempting to exercise undue influence. Courts are wary, for example, of testators who make abrupt changes in their last will and testament after being diagnosed with a terminal illness or being declared incompetent, especially if the changes are made at the behest of a beneficiary who stands to benefit from the new or revised testamentary disposition.

When undue influence is found to have altered a transaction, however, courts will make every effort to return the parties to the same position they would have occupied had the overreaching not occurred.

For a free initial consultation with experienced Houston will contest attorney Paul Romano, please call us at 281 242-0995 or contact our Houston area law office