Tag Archive for: wills

Wills v Trusts

Wills v. Trusts: What’s the Difference?

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Wills v Trusts
What is a Will?

Often, the first 10 minutes of an estate planning consultation involve explaining the differences between a Last Will and Testament (or, simply a “Will”) and a trust. Each may have a critical role to play in a client’s estate plan. A Will is a testamentary instrument, which is a lawyerly way of describing a document that does not become effective until an individual’s death. In other words, a Will is merely a stack of paper with words and a few signatures until the individual executing it (called the “testator”) has passed away. Texas law provides stringent requirements for the proper execution of a legal, valid Will.[1] After the testator’s death, his or her Will must be “admitted to probate” by a court of appropriate jurisdiction. This requires someone (usually the executor) going before a judge and proving up all the various requirements of the Will. Only then can a personal representative take control of the deceased testator’s property, wind up his or her affairs, and distribute the estate in accordance with the Will’s provisions.

What is a Trust?

By contrast, a trust describes a relationship between three parties: (i) the settlor, (ii) trustee, and (iii) the beneficiaries. Thus, a trust is an abstract intangible thing, so it is not a document at all. Also, unlike a Will, a trust may become effective during the grantor’s life, or at death, and there is no requirement that a trust be proved up, authorized, or otherwise sanctioned by a court. To establish a trust, a settlor simply entrusts property to a trustee, who accepts a legal obligation to manage, administer, and distribute that property for the benefit of the beneficiaries. Each of these parties may be a single individual or a group of people. Even though the trust itself is amorphous, the terms, conditions, standards of distributions and other guidelines for this trust relationship are often memorialized in a written document called a “trust instrument.” A trust instrument may be a stand-alone document, or it may constitute a section in a testator’s Will. Either way, a single trust instrument will often govern many different trusts.

Trusts can take an endless variety of forms and serve myriad purposes. Many trusts are created to achieve special tax, asset protection, or wealth transfer goals. But when clients are weighing their options between a Will and a trust for estate planning purposes, they are generally thinking of a “revocable living trust.” This is commonly structured to have an individual or couple simultaneously serve as the settlor, trustee, and initial beneficiary. Revocable living trusts are similar to Wills in that they dictate what will happen with a person’s property when he or she dies. Thus, they remain a standard tool of estate planning attorneys.[2] 

Deciding whether a Will or a (revocable living) trust best matches a given situation will depend on the particular client’s needs, goals, outlook and other circumstances. Often, a Will is all that is needed in Texas to plan a person’s estate. In some circumstances, however, a revocable living trust will better address the situation. Understanding the fundamental distinctions between a Will and a trust is an important starting point to both a client’s decision about the overall structure of his or her estate plan, as well as the client’s ability to maintain that estate planning structure in the years to come.

Spencer Turner

Spencer Turner is an associate attorney at Farrow-Gillespie Heath Witter LLP. Since obtaining his license to practice law in 2016, Mr. Turner has focused his legal efforts primarily in the trust and estates arena. He has been featured as a speaker on various aspects of the probate process at several seminars hosted by the National Business Institute. Spencer is a graduate of from Baylor University School of Law.

[1] See Ch. 251 of the Texas Estates Code.

[2] Mr. Turner and Christian S. Kelso, Esq., a partner at Farrow-Gillespie Heath Witter LLP, recently co-authored an article for the State Bar of Texas’ Continuing Legal Education program. The article is entitled The Alchemy of Revocable Trusts: Creating the Perfect Solution for Each Client’s Problem, and may be found among the written materials for the “Handling Your First (or Next) Trust 2021” webcast.

Beware Fill in the Banks Will Chris Wilmoth

Beware Fill-in-the-Blank Wills!

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Beware Fill in the Banks Will Chris Wilmoth

In 2015, the Texas Legislature passed a law requiring the Supreme Court of Texas to make available to the public simple forms for preparing wills. In the six years since, however, the Supreme Court has not published these model wills online. If and when these free model wills are published, it will become easier and more affordable for Texans to prepare a will by simply filling in the blanks.

Of course, fill-in-the-blank form wills are much older than the internet and can be found in form books available at your local bookstore. When blanks in a draft or form will are completed in handwriting, the question sometimes arises whether the handwriting was inserted before or after the will was signed.

In 1837, in the absence of evidence as to when blanks were filled in, the Supreme Court of Missouri presumed that the blanks were filled in before the will was signed.[1] Other state courts have followed this presumption, including South Carolina (1921), Illinois (1929), Wisconsin (1939) and Montana (1960).[2] A legal treatise published in 1954 described this presumption as “well settled.” However, no reported Texas case has adopted or rejected this presumption.

There are many published cases from Texas courts addressing “interlineations” in wills – that is, handwritten (or even typewritten) insertions to the text of a will (as opposed to merely filling in blanks). When such a will is challenged, courts require testimony that the insertions were made before or at the time the will was signed because insertions made after signing are considered void. Even in uncontested cases, probate courts typically admit wills with interlineations “as originally written,” leaving questions about insertions to be resolved by agreement or subsequent litigation.

People making a will should not count on a Texas probate court accepting handwritten insertions, even if they are merely filling in the blanks. This could lead to ineffective provisions in the will or, worse, the complete failure of the document to be admitted to probate, resulting in an intestacy.

Attorneys experienced in the drafting and execution of wills take steps to avoid the issue entirely. With word processing programs, it is easy to make corrections and minimize handwritten insertions during signing ceremonies held at the attorney’s office.

If the will is being signed in someone’s home and blanks need to be filled or corrections need to be made, it is best to initial and date those insertions and refer to them in the self-proving affidavit. Even then, the witnesses might be called upon to testify in court that the handwriting was part of the will when it was signed.

If the Supreme Court someday makes form wills available to the public online, or if you use a form from a book, your will stands a better chance of being admitted to probate at less cost and inconvenience if it contains no handwriting except for the signatures of the testator and the witnesses. The experienced estate planning attorneys at FGHW are prepared to help you minimize these risks.

[1] Graham v. O’Fallon, 4 Mo. 601 (1837).

[2] Guerin v. Hunt, 110 S.E. 71 (S.C. 1921); Martin v. Martin, 165 N.E. 644 (Ill. 1929); In re Home’s Will, 284 N.W. 766 (Wisc. 1939); In re French’s Estate, 351 P.2d 548 (Mont. 1960).

Chris Wilmoth

Hon. Chris Wilmoth is a seasoned probate, guardianship, and trust litigator. He also conducts mediations and accepts appointments as a special judge. Mr. Wilmoth served as Judge of Dallas County Probate Court No. 2 from 2011 through 2014. He has been named one of the best lawyers in Dallas by D Magazine each year since 2018.

Executing Texas Estate Plans in the Era of COVID-19

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These are unprecedented times, even for estate planning attorneys. The advent of COVID-19 has “persuaded” many clients to either consider establishing an estate plan for the first time or to re-assess their current estate plans. As a result, estate planning attorneys across Texas are working hard during this period of great uncertainty to develop and protect their clients’ legacies.

Yet a finely crafted estate plan is useless if it is not properly signed and executed. Texas law has strict parameters for the signing of certain estate planning documents. For example, a valid will in Texas must be in writing, signed by the individual making the will (the testator), and attested by two or more witnesses. The witnesses must be within the physical presence of the testator when witnessing the execution of the will. A notary public signs the will as well (though this is technically not a requirement under Texas law). Between the testator, witnesses, notary, and estate planning attorney, a total of five or more people typically attend a will-signing ceremony. In the era of COVID-19, that’s a social faux pas. Government regulations may forbid a gathering of such size, and in the author’s experience, clients are presently uncomfortable with exposure to more than one non-family member at a time. Therein lies the chief problem facing estate planners: how to safely convene with clients to sign and execute their essential documents?

Governor Greg Abbot’s Emergency Order

In recent weeks, Texas Governor Greg Abbot has attempted to provide estate planners with a method for electronically notarizing wills, powers of attorney, and other estate planning documents. Typically, a notary public must also be in the physical presence of a client while he or she is executing a will. Governor Abbot’s emergency order enables a notary to instead observe a will-signing ceremony over Zoom or similar “electronic means.” The notary would then need to receive a faxed or scanned copy of the will (or other estate planning document) and affix his or her signature and stamp to the same. The notarization process is complete upon the notary’s return of the will and other estate planning documents to the client by scan or fax. This temporary fix aims to alleviate the need for large gatherings and can help clients execute their estate plans without undue delay.

Concerns with Electronic Notarization

But as with any temporary amendment to the law, Governor Abbot’s relaxation of notarial standards remains fraught with questions and legal concerns. For one, the required witnesses must still physically attend a will-signing. That fact alone may still dissuade clients from pursuing execution of their estate plan during the pandemic. Questions also remain about the extent of Governor Abbot’s authority to authorize such a suspension of Texas law. Probate litigators may later capitalize on the legal uncertainty surrounding wills notarized by electronic means and initiate a contest in probate court[1]. All this to say, estate planners must proceed with caution when utilizing electronic notarization for estate plans. Certain clients and potentially contentious dispositions of property in an estate plan may not warrant this unproven method of execution.

Trusts and Holographic Wills

However, estate planners have developed another creative approach to this executionary quandary brought on by COVID-19. Trusts can provide a workaround for the more stringent execution requirements of a will. A valid trust in Texas only requires the signature of the client seeking to establish the trust. As a result, clients may print the final version of a trust instrument and sign in the safety of their own home. No public gatherings are necessary.

A trust’s terms provide for the disposition of the client’s property upon death, much like a will. But for a trust’s terms to be effective, a client must transfer his or her assets into the trust. This can be a tedious task involving the drafting of deeds, assignments of interest, and many more documents. A client might also need to personally visit a financial institution to change accounts into the name of the trust: another no-no in the era of COVID-19.

A holographic will might serve as the catchall for assets that have yet to be transferred into a client’s trust. Unlike typewritten wills, a holographic will is entirely in a client’s handwriting. Texas law does not require witnesses or a notary to sign holographic wills. A client could then print and sign the trust while also drafting his or her own holographic will (with an attorney’s instruction) to sign as well.

These homemade, holographic wills are only intended as an interim solution. But they ensure that the assets in a deceased client’s estate will “pour over” into the trust that he or she established, thereby making the estate assets subject to the trust’s dispositive terms. In short, a properly drafted trust and holographic will can provide clients with a temporary fix to the dangers of gathering in larger groups for signing a will and other estate planning documents. Together with the electronic notarization of wills and estate planning documents, these methods give estate planners a chance to achieve their clients’ goals in the midst of the current pandemic.

Spencer Turner

Spencer Turner is an associate attorney at Farrow-Gillespie Heath Witter LLP. Since obtaining his license to practice law in 2016, Mr. Turner has focused his legal efforts primarily in the trust and estates arena. He has been featured as a speaker on various aspects of the probate process at several seminars hosted by the National Business Institute. Spencer is a graduate of from Baylor University School of Law. 

[1] Few things excite probate litigators more than a video of an elderly testator executing his or will. An astute attorney can use a recorded Zoom session to sow doubt and concern among members of the jury regarding the elderly testator’s mental capacity.

The Effects of Divorce on Wills and Estate Plans in Texas

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Here is a guide to the legal effects of divorce on Wills, Trust instruments, and financial accounts in Texas.

Wills and Divorce in Texas. When a person’s marriage is dissolved by divorce, the former spouse cannot receive any payments, benefits or inherit property from that person’s will unless it expressly states otherwise. Not only is the former spouse not allowed to take any benefits or serve in a fiduciary role with regard to the estate, but neither can a relative of the former spouse do so, unless the relative is also a relative of the testator.

Trust Instruments and Divorce in Texas. A person can create a trust through provisions in a will. However, if that person’s marriage is dissolved by divorce, Texas law will operate as if the former spouse has disclaimed his or her interest in the trust. The divorce cancels the former spouse’s right to receive any property from the trust, to act as trustee, or to be appointed in any other fiduciary capacity. However, this rule applies only to trusts created in a will, and not to trusts created during one’s lifetime.

Divorce on P.O.D. and Multiple-party accounts. If a deceased individual has established a “pay on death”, multiple-party account, or any other beneficiary designation during a marriage that ends in divorce, the beneficiary designation of the former spouse, as well as of relatives of the former spouse who are not a relative of the decedent, are no longer effective.

Exceptions to the Rule. Some exceptions to the general rules occur under the following circumstances:

  1. The Court’s divorce decree so orders.
  2. Express terms in a trust instrument grant rights regardless of divorce.
  3. An express provision of a pre-nup or post-nup relates to the division of the marriage estate.
  4. The decedent reaffirms the survivorship agreement in writing.
  5. There are express provisions in joint trust documents.
  6. The former spouse is re-designated as the P.O.D. payee or beneficiary after a divorce.

This article brushes the surface of the many estate planning issues that can occur after a divorce in Texas. Be sure to review your estate planning documents yearly and seek the counsel of an attorney when there has been a major life event, such as marriage, birth, death, changes in investment accounts, property changes, or divorce.

Elaine Price | Farrow-Gillespie & Heath LLP | Probate Proceedings

Elaine Price practices in the areas of probate, heirship, and guardianship proceedings. Ms. Price is a graduate of the Thurgood Marshall School of Law and holds a Bachelor of Arts in political science from Prarie View A&M. Elaine was formerly with the law office of Rhonda Hunter.