How Recent Texas Updates Affect Your Estate Plan

In Texas, our legislature meets every two years. Many times, these legislative sessions result in changes to our state estate planning laws. Sometimes these changes are minor. Sometimes, as in 2014, 2017 and 2019 specifically, these changes are MAJOR, with new codes, rewrites of existing codes, and the like. Here are some of the most notable:

The SECURE Act. This is actually a federal law change, but it is very important. In December 2019, the U.S. Congress passed major retirement benefits reform with the Setting Every Community Up for Retirement Enhancement (SECURE) Act. This Act eliminates lifetime payouts for designated beneficiaries and replaces it with a 10-year mandatory payout. Certain lifetime payouts are still available for a new class of beneficiaries. What to do? Review your beneficiary designations with your financial advisor and attorney to ensure they still accomplish your goals.

Texas Transfer on Death Deeds. Beginning in 2015, the Revocable Transfer on Death Deed (“TODD”) allows an owner of Texas real estate to designate a beneficiary to receive that property upon the owner’s death without probate. This is an especially helpful planning tool when a home might be the only “probate” asset in an estate. What to do? Consider a TODD as a means of transferring title to your home to a surviving spouse.

Mandatory Acceptance of Powers of Attorney. In 2017, Texas enacted new laws that require banks, title companies, and other financial institutions to accept certified powers of attorney unless a ground for refusal exists. What to do? Review and update your financial power of attorney documents.

Revised Statutory Financial Power of Attorney. In 2017, Texas enacted a new financial power of attorney form. This new form includes many required changes, as well as optional “hot” powers. What to do? Review and update your financial power of attorney documents.

New Mandatory Medical Power of Attorney. In 2017, Texas amended its statutory medical power of attorney form. This form is mandatory and must be used beginning January 1, 2018. What to do? Review and update your medical power of attorney documents.

Planning for Digital Assets. In 2017, Texas enacted new laws that, with revised planning, will allow these designated decisionmakers to gain access to online and “digital” assets. What to do? Consider updates to Will and/or Trust documents to include digital access.

Authority to Designate Substitute Administrator. Beginning in 2019, a new law in Texas allows you to give your executor the power to name a backup if the executor cannot serve for any reason. What to do? Update Will documents to reflect current law.

Use of “Trust Protectors”. In 2015, Texas authorized the use of a “trust protector”. The law allows you to amend your trust and include the designation of a trust protector – himself not a trustee – to make sure the terms and intent of the trust is carried out. Most people now include trust protector provisions to (1) provide flexibility over the long term; (2) to keep administrative costs down; and (3) to look after their intent once they are gone. What to do? Evaluate your trust and family situation with your advisor and make necessary amendments to your trust.

The Bottom Line. Times change and good estate plans change with them. After actually creating a plan, keeping your plan updated is the most important step you can take in your estate planning, which I always define as “leaving your loved ones more than a mess.”

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