Glenda Clausell has a variety of legal experience, from working in small- to mid-size law firms focused on general business litigation to the corporate legal department of Shell Oil Company. She frequently makes educational presentations on estate planning and probate matters and is often quoted saying, “There is a misconception that estate planning is only for the wealthy.” Her goal is to prove that estate planning is not about how much money you have, but about what happens to your assets. Ms. Clausell is a graduate of Texas A&M University (B.A., History), the University of St. Thomas (M.L.A.) and an honors graduate (cum laude) of Thurgood Marshall School of Law at Texas Southern University (J.D.).
What is estate planning?
"I hear a lot of people say, 'I have a will.' And I tell them that is great, but that is not your estate plan. A will is only one small piece of your estate plan. Estate planning involves wills, trusts, incapacity planning (powers of attorney), probate and tax considerations. Other times I hear people say they are too young or don’t have any money, so they don’t need an estate plan yet. That’s not true either—anything that you own while you are alive, and especially after you pass away, is part of your estate. After you pass away, your estate plan will come into play. No matter how big or small, your estate plan determines what assets will be distributed and who they will go to."
Why should somebody have an estate plan?
"I like to answer that by telling people what is at stake by choosing not to have an estate plan. Unless you want the government to decide how to disburse your assets, you should always have an estate plan. Without one, the courts will choose a guardian or trustee for minor children or grandchildren as well as a personal representative to handle your estate during probate. Your grieving loved ones will be subject to paying additional legal fees and court costs than would otherwise be necessary. Lastly, the government will use your estate tax dollars rather than, perhaps, your favorite charity. So, unless you believe that the courts could do any of these things better than you, please create an estate plan."
What is the difference between a will and a trust?
"There are two types of common trusts: testamentary and lifetime trusts. A testamentary trust becomes active after somebody passes away. They are embedded in a will or another trust to protect assets or save taxes. A lifetime trust, also known as a revocable trust, is most often used for gifting and life insurance policies, but can also be used in other creative ways like providing income to family members. In a lot of ways, it works like a will, but assets do not go through probate, a court procedure by which a will is proved to be valid or invalid. Something important to consider is that a trust can be expensive and time consuming. You don’t necessarily need a trust, but you must always have a will.
A will is a legal instrument that states how a person’s property is to be distributed at their death. It only takes effect after a person’s death and when admitted to probate. For this reason, the person making the will can change their will as often as they would like during their lifetime."
What about the cost of creating a trust versus the cost of probate from a will?
"Generally, probate is very inexpensive. A trust, on the other hand, must be managed. The trustee can be you, or it can be run by a fiduciary or financial institution. But they take fees. So, it really depends on your situation and financial status. The best thing to do would be to talk to an adviser about your end goals so they can help you determine what will work best for you."
How do you create a will?
"A will requires few formalities, and with legal guidance from a qualified attorney, it can be properly crafted to ensure that the wishes of the person making the will are respected. Make sure to work with your estate attorney to dispose of all your property and name who you want to have which possessions of yours. Be very detailed (serial numbers, VINs, etc.). Once you have the will drafted out, you need to ensure it is valid. It must be signed by the person making the will, and they must be at least 18 years old. There must also be two attesting witnesses, and each of them must sign in the presence of the person making the will."
When should you update your will or beneficiary designations?
"If you get married, or if you get divorced, update your beneficiary designations. Unfortunately, I’ve seen cases where couples who were married and had each other listed as beneficiaries forget to change their designations after a divorce. When one person dies, guess who gets the money? The ex-spouse. The death does not void the beneficiary designation. Now with a will, if there is a divorce, it’s as though that ex-spouse died before you, meaning that they would not receive the inheritance. But keep in mind that the beneficiary on your financial documents like your 401K take authority over what you state in your will."
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.