Weldon Russell ’98 is a partner with the firm of West, Webb, Allbritton & Gentry, PC, in College Station. Prior to joining the West Webb firm, Russell worked in the estate planning division of a national law firm in Houston. Weldon’s law practice covers all sizes and aspects of estate planning, including preparing wills and trusts; estate and gift tax planning for families, family businesses and entities; charitable planning matters; asset protection planning; and representing individual and corporate fiduciaries in estate and trust administration.
Russell is a frequent speaker on estate planning topics and has written numerous articles presented at legal education courses. He is board certified in estate planning and probate by the Texas Board of Legal Specialization and was named a 2016 Texas Super Lawyer in Texas Monthly magazine. Russell earned his bachelor’s degree in finance and accounting from Texas A&M University and remains a proud Aggie. He earned his J.D. from Baylor Law in 2001 and a LL.M. in tax from the Dedman School of Law at Southern Methodist University in 2003.
Who needs estate planning?
Everybody needs some form of estate planning, regardless of the size of their estate. For instance, almost everyone needs a will. A person’s will appoints an executor to finalize their financial affairs and oversee who receives what property after their lifetime.
If you don’t have a will, property passes depending upon your surviving family and the type of property. For example, separate property assets (property acquired before marriage) pass differently than community property assets (property acquired during marriage) owned by spouses. Additionally, real property (immovable property like land) passes differently than personal property (possessions of any kind that are movable).
Furthermore, the procedure necessary to pass property to your heirs on death without a will, termed an “heirship,” typically requires more time and money. Similarly, everyone needs incapacity documents like a power of attorney and medical power of attorney, which allows an agent to make financial and medical decisions, respectively, if you are unable to.
Are there special considerations for those living in Texas?
Yes. The state you live in makes a big difference because laws differ. For instance, Texas is a community property state, which means that most property acquired during marriage belongs to both spouses. This impacts what property each spouse owns, which can have big implications in second marriages and other scenarios.
Another example is the use of living trusts. This type of trust is established during a person’s lifetime and passes property upon death to beneficiaries outside of the probate process. This may be the most common estate plan in many states, and there are countless financial articles and internet sources that advise using living trusts. However, most Texas residents do not need this as part of their estate plan because the state has “independent estate administration.” This means the court has less involvement and supervision of the probate process, which in turn means probate is faster and less costly. Accordingly, in Texas, we use living trusts in more limited circumstances, such as when the client owns out-of-state property or when we anticipate a contested probate situation.
Will all property I own pass under my will?
Probably not. Most people have “non-probate” and “probate” assets. Probate assets pass under your will, whereas non-probate assets pass by contractual arrangement. For example, retirement accounts and life insurance have beneficiary designations which typically pass proceeds to one or more beneficiaries, and both supersede what is outlined in your will.
Likewise, many bank accounts are styled as “joint with right of survivorship” or “payable on death.” These accounts will pass respectively to the account or designated payable-on-death beneficiary. As with retirement accounts, it’s important to make sure these non-probate assets are coordinated with your estate plan to ensure your assets are allocated as you wish.
Almost every will should also include a contingent trust for assets passing to minors to ensure they will be held and managed by a responsible party until the beneficiary reaches a specific age. The beneficiary designations on life insurance and retirement accounts should likewise direct these non-probate assets to the contingent trust. If these beneficiary designations are not coordinated with the will, a costly guardianship proceeding will ensue because assets pass directly to the minor otherwise.
What are the best ways to benefit Texas A&M with my estate plan?
There are many estate planning tools to benefit Texas A&M. During your lifetime, you can make a gift of cash and receive an income tax deduction. Appreciated assets (such as stock or real estate) are also excellent assets to gift because you would otherwise have to recognize income and pay capital gains taxes on the sale of these assets.
Another simple way to benefit Texas A&M after your lifetime is to leave a gift in your will or living trust, called a “bequest,” to the Texas A&M Foundation. Naming the Foundation as beneficiary of your retirement account (or a portion of it) is another after-lifetime gift with major tax savings implications. Individual beneficiaries pay income tax as funds are withdrawn from the account, but charitable organizations like the Foundation do not and therefore get more benefit. Leaving gifts to charities after lifetime can also reduce estate taxes in large estates. Finally, designating the Foundation as beneficiary of a life insurance policy is another great after lifetime gift option to support Texas A&M.
Lastly, a charitable remainder trust (CRT) is another excellent tool to pass property to benefit Texas A&M during or after lifetime. The CRT is an irrevocable trust in which the donor gifts an appreciated asset (such as stock or real estate) which provides an immediate income tax deduction. The CRT (unlike the donor) can then sell the appreciated asset without recognizing capital gain, and the sale proceeds then fund payments to the donor or a family member over a set period of time. Once the term ends, the remaining assets in the trust pass to the Foundation to support the Texas A&M area of your choosing.
CRTs can also be setup as an after-lifetime gift that would provide beneficiaries an inheritance stream instead of a lump-stream inheritance. This is sometimes referred to as a “give it twice trust” because you can support your beneficiaries first and the remaining balance supports Texas A&M second.
Disclaimer: This article is intended to share general legal information on topics relating to estate planning. It does not provide legal advice. Those visiting and/or reading this article have not entered into an attorney-client relationship. This article should not be used or referenced as a source for legal advice. Visitors/readers should seek legal advice from an attorney in their respective jurisdiction.