Unlike children of parents who received disability benefits through the Supplemental Security Income (SSI) program, children of Social Security Disability Insurance (SSDI) benefits’ recipients may be able to receive survivors’ benefits. Although the U.S. Social Security Administration administers both programs, the SSDI program allows some surviving family members to receive survivors’ benefits.

According to federal law, the Social Security Administration may pay SSDI benefits to dependent family members of SSDI recipients. Generally, survivors’ benefits are available to children and surviving spouses caring for a recipient’s children if the recipient worked for at least 1.5 years before death. Furthermore, in addition to dependency benefits for survivors of SSDI recipients, widows and widowers, unmarried children and dependent parents of recipients may qualify for survivors’ benefits based on the deceased recipient’s work history. The federal SSDI survivorship benefit rules vary by degree of kinship, age and marital status. For instance, surviving dependent parents of SSDI recipients may receive survivors’ benefits if they are at least 62 years old and are qualified dependents. Qualified dependent-parents must prove they relied on a recipient’s support for at least 50 percent of their daily living expenses.

The amount of benefits that qualified survivors may receive will depend on a recipient’s lifetime earnings. Generally, the more a recipient earned, the larger the survivorship payment. The Social Security Administration also provides one-time payouts of $255 in some cases to survivors of SSDI recipients.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.

The Internal Revenue Service (IRS) does not require you to declare your gifts or inheritances that you received during the tax year on your Federal income tax returns unless you fall within a few exceptions. In most cases, as the recipient of a gift or inheritance, you do not have to pay income taxes on those gifts. Instead, the donor of the gift pays income taxes if his gift exceeds the annual threshold. For the 2011 tax year, the annual gift limit is $13,000 per recipient. Thus, a donor does not have to pay income taxes if his gift per recipient is up to $13,000. However, if you receive a foreign gift, you may have to report it on IRS Form 3520, Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts. It is important to understand your responsibilities as a U.S. resident receiving a foreign gift.

Note that the federal tax law is not an income tax paying requirement; it is a reporting requirement. This means that your legal obligation as a U.S. resident is to report it in some cases (depending on the dollar amount and type of gift donor). Under the Internal Revenue Code, the IRS does not require you to pay federal income taxes on your foreign gifts. It is also important to understand the IRS’ definition of a “foreign gift.” A foreign gift is a gift of property or money received from a foreign individual or entity by a U.S. resident.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.

In 2010, Texas made news headlines for making its first posthumous exoneration of an inmate wrongfully imprisoned. In 1985, Tim Cole was convicted of raping a fellow classmate at Texas Tech University while he was attending as an Army veteran.

Cole maintained his innocence for the next 14 years. In 1999, he died in prison from asthma complications at the young age of 39. In 2008, a DNA test cleared Cole of the 1985 rape. Two years later, Texas Governor Rick Perry posthumously officially pardoned Tim Cole of the rape. Because of the controversy surrounding this case, Texas passed the Timothy Cole Act which allows victims to receive large monetary lawsuits for their wrongful imprisonments. The state paid his surviving family members over $1 million. To stake his claim, Timothy Cole’s estranged father appeared out of the woodworks for his portion of the inheritance. As far as we know, Kennard Cole, Tim Cole’s father, never had any personal relationship with his son. In fact, his name is not on his son’s birth certificate. A Texas judge ordered the Tim Cole’s surviving parents to split his wrongful imprisonment settlement between them, even though his father was never involved in the inmate’s life. Tim Cole’s mother has stated that she plans to sue him for years of unpaid child support based on this unfair decision. Hopefully, the state will prohibit his father from inheriting his late son’s legacy.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.

A power of attorney is a legal document that creates a special kind of relationship between you and someone else, called a principal-agent relationship. Through your power of attorney you grant someone—your agent—specific legal authorities to act on your behalf. This person’s role can be as limited or as broad as you decide, but you should always carefully consider the issue of payment before you choose to appoint an agent, also known as an attorney-in-fact. There is no legal requirement that you pay an agent, but your agent should be someone you can rely on and providing payment may make it easier for a potential agent to accept the position.

Salary: When you’re appointing an agent the question of pay often hinges on the extent of the agent’s actions and his or her relation to you. If, for example, you appoint an attorney to manage your finances if you get sick, payment is typically required or the attorney will not accept the position. On the other hand, if you appoint your spouse as your power of attorney for health care decisions, a salary is typically not required. Either way, you should make it clear in your power of attorney document what, if any, payment the agent will receive.

Expenses: In general, agents have the right to be compensated for any out-of-pocket expenses they incur as they perform their duties. However, an agent has specific duties when it comes to handling a principal’s finances, and you should check with an attorney before giving yourself any payments.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.

Another important consideration with life insurance beneficiary designations concerns spouses are not required to carry life insurance policies as part of their divorce settlement agreements but fail to substitute beneficiaries. For example, imagine Husband and Wife divorce in 2010. Following the divorce, Husband forgets to name a different beneficiary in his life insurance policy. Under Texas law, if Husband forgets to change his life insurance beneficiary designation, his former wife probably doesn’t have a right to his benefits upon his death. Instead, his life insurance benefits would go to an alternate beneficiary. If Husband did not name an alternate, the insurance carrier typically pays the benefits to his estate. If he dies without a will, then his benefits are payable to his intestate heirs according to the state laws of intestate succession. If he dies with a will, his benefits are payable to his surviving heirs named in his will. It is important to make changes to your estate planning documents, your life insurance policies and your retirement policies to avoid these issues following divorce.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.

Another important consideration with life insurance beneficiary designations concerns spouses who are not required to carry life insurance policies as part of their divorce settlement agreements but fail to substitute beneficiaries. For example, imagine husband and wife divorce in 2010. Following the divorce, husband forgets to name a different beneficiary in his life insurance policy. Under Texas law, if Husband forgets to change his life insurance beneficiary designation, his former wife probably doesn’t have a right to his benefits upon his death. Instead, his life insurance benefits would go to an alternate beneficiary. If Husband did not name an alternate, the insurance carrier typically pays the benefits to his estate. If he dies without a will, then his benefits are payable to his intestate heirs according to the state laws of intestate succession. If he dies with a will, his benefits are payable to his surviving heirs named in his will. It is important to make changes to your estate planning documents, your life insurance policies and your retirement policies to avoid these issues following divorce.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.

You should speak with a property or an estate planning attorney to help you understand your legal rights and to make sure your written agreement complies with the state’s statutory requirements.

It is generally insufficient to create a deed that states your intent to hold property with your spouse with a right of survivorship. Instead, your attorney will most likely draft a separate agreement stating such and file it in the appropriate county clerk or recorder’s office. You should also be aware that although a written agreement signed by you and your spouse may allow the surviving spouse to have an unfettered ownership interest to community property at one spouse’s death, the agreement will not control who receives your property after the surviving owner dies. Instead, you must create a will to control the future disposition of your community property. If you fail to draft a will, the state’s rules of intestate succession establish the rights that heirs have to your property.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.

Marital property ownership rights are important for estate planning purposes. In most community property states, communal owners each own half of their property and as such, they may freely dispose of their rights as they wish while they are alive or at death. At one spouse’s death, a community property owner may not have an automatic right of survivorship to the remaining property. However, in Texas, the Texas Legislature recognized the need for flexibility for planning purposes between spouses.

The Texas Legislature amended the Texas Constitution and the Texas Probate Code. The Texas Probate Code allows spouses to enter into agreements whereby a surviving spouse has a legal right to automatically own her deceased spouse’s community property upon his death. Spouses can enter into written agreements between them giving one spouse a survivorship interest to community property. To conform with the Texas Probate Code, a written agreement must bear the signatures of both parties and must identify the subject community property. The language within the agreement must specifically incorporate specific survivorship language giving a surviving owner a right to unlimited ownership of that community property at one owner’s death.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.

Typically, unless you are going through or have gone through a divorce, you probably haven’t given much thought to the term “community property” or “equitable property.” If you are thinking about estate planning, you should understand what “community property” and “equitable property” really mean. Most states follow the common law regime of equitable property during divorce and for estate planning purposes. However, like a handful of other states, Texas is a minority community property jurisdiction.

Courts in community property jurisdictions consider that all property acquired during marriage as joint property of both spouses. Unlike equitable distribution jurisdictions, community property jurisdictions view spouses as equal owners of community property, regardless of how they hold title to their property.

In equitable distribution states, courts divide marital property and debts equitably, not necessarily equally. Spouses in community property jurisdictions own property acquired during marriage equally. Similarly, they are jointly responsible for their marital debts. However, in equitable distribution states, there is no presumption of equal ownership in divorce, and judges can divide marital assets and debts using an equitable methodology. In many cases, fault may play a big role in how courts ultimately divide marital property and debts in the absence of a property settlement agreement.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.

According to the Texas Probate Code, adopted children have inheritance rights when their parents die intestate. An intestate parent is one who dies without a valid will. An adopted child has the same intestacy rights of inheritance as a natural or biological child. The Texas Probate Code sets forth the rules of succession to determine which heirs are entitled to receive an inheritance when a Texas resident dies without a valid will. Pursuant to the Texas Probate Code, an adopted child has a right to inherit from both sets of parents – biological and adoptive. However, a biological or natural parent does not have a legal intestacy right to inherit from the child she chose to give up to adoption.

The Texas Probate Code’s protection of adopted children is especially important as more and more children seek out their natural birth parents’ identities. Since Texas law allows adult adoptions, the Legislature addressed this by denying intestacy rights to adoptive adult parents and their adult children. In other words, an adopted adult does not have an intestate right to inherit from her adoptive parent. Conversely, an adoptive parent does not have an intestate right to inherit from his adopted adult child.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.