Ag law specialist: Don't wait to plan your estate
By Jennifer M. Latzke
The average age of an American farmer is now around 65 years old, said Tiffany Dowell, agricultural law specialist with Texas A&M AgriLife Extension Service. “Meanwhile, 55 percent of Americans have no will,” she said. “And yet 100 percent of Americans will die. It’s an issue for everyone in this room.”
Dowell was speaking at the 2013 Texas Commodity Symposium, Dec. 4, in Amarillo, Texas. The symposium was in conjunction with the annual Amarillo Farm Show and brought farmers and ranchers together to hear from agribusiness professionals.
Dowell was on hand to discuss estate planning and she provided a few examples of what happens in the state of Texas if you were to die without a will.
“In Texas or other states, state statutes lay out the plan to distribute your assets at your death,” she said. These intestacy statutes mean the state must appoint an executioner and spend months determining any and all heirs, which then results in a longer and more expensive probate period and an increase in disputes among heirs.
“For example, say a husband dies without a will,” Dowell explained. “If he is married without any kids, the community and separate personal property goes to his wife and half of the separate real property goes to his wife and half to his parents. Separate real property is what he brought into the marriage or was bought after the marriage.” In this example, the widow and the parents would divide, say, the family ranch, she explained.
“But then, say that widow remarries and she dies without a will,” she continued. “Then, half of that separate real property she inherited from her first husband goes to his parents and half to her second husband.” In this case, the second husband then has a claim to the family ranch she inherited from her first husband, and many families would object to this, Dowell said.
It gets even more complicated when minor or adult children, step-children, or second spouses are involved. This is how families wind up losing farms and ranches they worked generations to create, Dowell said.
She advised producers to start off with an inventory checklist when preparing to write a will. This will include:
Estate planning documents;
IRAs and other retirement accounts;
Life insurance policies and information;
Bank account and safety deposit box information;
Credit and debit card information and payment schedules;
Deeds, titles, registrations, lease royalties, water rights, surveys, etc.;
Health insurance information;
Birth and death certificates, marriage licenses, adoption certificates;
Lists of personal property;
Burial plot locations and funeral arrangements; and
Names of attorneys, CPAs and bankers with information regarding your estate.
As for writing a will, in Texas it can be handwritten as long as it is completely done in your own handwriting, Dowell said. Otherwise, it can be typed and signed by two witnesses who don’t inherit in the will, she added.
Dowell said when writing a will, you’ll want to include:
A residuary clause that disposes of property not expressly disposed of by other provisions in the will;
Plans for the care of any minor children;
Appointment of an executor;
An independent administrative clause that allows the executor to act without court supervision and without probate in small matters and saves your estate money; and
A self-proving affidavit, which means no witnesses have to testify in court that you signed before them, again saving the estate money.
Dowell also discussed living wills, medical powers of attorney, powers of attorney and trusts and when they might be useful.
A medical power of attorney, for example, allows you to appoint an agent to make decisions for you in case of incapacitation, Dowell explained. Most people only think this is needed at an older age, but if you have kids in college, she said, it’s a good idea to have them sign a medical power of attorney so that you as parents can make medical decisions for them.
“If you have an 18-year-old child going off to college, say in College Station, and he is in an accident, unless you have this medical power of attorney you cannot make medical decisions for them,” she explained.
In the end, the goal of estate planning is to not haunt your surviving family members if you are incapacitated or after your death, Dowell said.
“There are five ways to not haunt your family, and first is to go see an attorney,” she said. “Then, be sure that you have a will that disposes of all of your property and includes that residual clause. Without that, if you forgot an asset it has to go through the intestacy process.
“Be sure to include a self-proving affidavit and create trusts if they are needed,” she added. “And finally, discuss your estate planning with your family. This is especially true if you have one child who works on the farm and another who lives off the farm. This can avoid a lot of bickering in the end.”
Dowell writes a blog on estate planning issues, which can be found at www.agrilife.org/texasaglaw.
Jennifer M. Latzke can be reached at 620-227-1807 or email@example.com.