John Paul Kelly - plusassociates

My Philosophy
On Estate Planning

Many people have the mistaken impression that estate planning revolves around tax planning. While taxes are an important consideration in any planning, the primary focus of estate planning should be to direct the disposition of one's property to the people desired and in the form most beneficial.

After learning about the choices available to accomplish one's goals, a person must decide on the form of legacy to leave. Both before and after exploring the technical aspects involved, a person who is serious about estate planning must revisit the legacy he or she wishes to leave.

On The Estate Planning Lawyer

The estate planning lawyer's job is to stay centered on this goal, while incorporating tax planning where appropriate. This involves, first and foremost, the attorney/client relationship being solid enough so that the client feels comfortable sharing sensitive, personal information.

John Paul Kelly, P.C.

I take the time and interest to develop these relationships with my clients, and am pleased when I become an important advisor clients rely on at critical and challenging junctures in their lives. I make every effort to communicate with my clients in a clear and understanding manner, so they can make informed decisions.

To be sure, I help my clients undertake sophisticated tax planning where appropriate.

- Trusts, family partnerships and other limited liability entities can be configured into an estate plan to accomplish business succession, asset preservation and tax goals.
- Life insurance, if properly structured, can provide estate liquidity without being considered a part of the estate tax base.
- Retirement plans can be adjusted to allow for as much post-death income tax deferral as possible.
- Charitable giving can be incorporated in the most tax-favored manner, so as to give to charity while reaping maximum tax benefits.

But all of these technical features are merely tools to implement my clients’ dispository goals. It is my goal to assist my clients in the management of their assets during this lifetime and to advise how they can best perpetuate their legacy.

Areas of Practice
John Paul Kelly, P.C., offers a broad array of expertise in estate planning, probate and related taxation. I am committed to providing a high level of service to my clients. This part of my practice focuses on family wealth transfers and minimizing gift and estate taxes through the use of the following:

- wills (including testamentary trusts for minors or for tax and asset protection planning)
- trusts (revocable and irrevocable)
- family limited partnerships
- retirement asset planning
- charitable giving
- marital property agreements
- business continuity planning, and
- life insurance planning

My practice also encompasses family business planning, entity selection, and entity design, including the following:

- incorporations
- general and limited partnerships, and
- limited liability companies, and
- planning and drafting buy-sell and related stock purchase agreements

John Paul Kelly, P.C. regularly prepares and files Federal gift and estate tax returns, and advises executors, trustees and beneficiaries on estate administration and trust matters.

Estate Planning
The subject of estate planning is much more encompassing than simply writing a Will. First, it requires an understanding of "probate"
property (which a Will controls), to be distinguished from "non-probate" property.”

Non-probate property is property that is governed by some form of written agreement or contract as to its disposition at death. Common
examples of this include 401(k), profit-sharing, IRAs and other forms of retirement benefits, as well as life insurance and annuities.

All of these assets are controlled by a beneficiary designation, pursuant to the terms of an agreement. Other non-probate arrangements include
"living" trusts and "survivorship" or "pay-on-death" accounts. In order to know the current disposition of a person's assets, he or she needs to
review all of these arrangements.

The estate planning lawyer should comprehensively review the current planning and determine whether or not it is coordinated. Many times the
beneficiary or account forms controlling the disposition of non-probate property were completed before a marriage (or before a divorce) or before
the birth of a child, so that the directives are obsolete and need serious updating.

It is therefore important to provide a complete balance sheet in order to undertake an estate planning exercise. A list of life insurance coverage
is also necessary. Another aspect for married couples is to determine what assets are community property versus separate property. This is
critical, since a person's Will covers his or her separate [probate] property and one-half of the community [probate] property. In some cases,
premarital or post-nuptial agreements are used as a part of estate planning, so as to clarify what each set of heirs may expect to inherit and
to mitigate potential conflicts over property.

Trusts are another important estate planning tool. In fact, trusts have been used for centuries to control property over a term of years or for
lifetimes or generations. The idea of a trust is to provide specified benefits for one person for some time (or for his or her lifetime), and
thereafter pass the remaining property to others. This is very useful in blended families, where for example the first spouse to die wishes
to provide for the surviving spouse for life, but have the property ultimately end up in the hands of his or her own children. Trusts can also
be useful for estate tax avoidance, and trusts are commonly used to protect a beneficiary from wasting the assets too soon. A less common
application of trusts is what is referred to as a "beneficiary-controlled trust." In this type of trust, an adult child could be given his or her inheritance
as trustee of his or her own trust. This trust could extend for the child's lifetime, protecting the inheritance from possible creditors or divorce of
the child. The beneficiary-controlled trust has become a widening trend in estate planning in the last two decades. Indeed, trusts can be used
creatively to express one's legacy, viewing the role of the trustor as the steward of the inheritance.

As important as any of the decisions made during the estate planning process is who to appoint in the various fiduciary roles in one's Will. A
trustee's job is one marked by the highest duties in law, since that person is handling other people's property. A trustee does not need to be an
expert financier, but more than anything, trustworthy. The trustee job involves investing the trust corpus (or hiring a suitable investment manager),
and properly distributing it per the terms of the instrument. An executor's job is similar in some ways, but is more short-lived. The additional duties
of the executor have to do with settling all debts of the decedent, in particular settling with the Internal Revenue Service. A guardian for a minor
child could also be appointed by Will.

Other fiduciary roles lie outside the Will itself. These are agents appointed under powers of attorney, both financial in nature and medical in nature.
The importance of these instruments cannot be over-estimated, since the alternative is a long, expensive court-controlled guardianship proceeding.
Related to these is the Directive to Physicians and Family or Surrogates, also known as the "living Will." This is a document used to express one's
desire to die naturally and avoids uncertainty in end-of-life decisions.

I seek to customize yet simplify the process of estate planning. I enjoy spending the necessary time with each client to understand that client's goals,
and we explain in understandable terms how to accomplish those goals.

To start, you can reach my assistant at (972) 392-3942 to schedule an initial appointment. I ask you to bring a completed checklist (available in
married or single versions) to the first meeting, along with relevant documents, such as current trusts or Wills. Generally, by the conclusion of that
meeting, I will have given you specific recommendations to accomplish your estate planning goals and are able to provide a fee quote based on
the anticipated planning.

Married checklist
Single checklist

Probate
The process of probate is chiefly designed to insure that any and all creditors of the decedent are paid before the assets are distributed to the heirs of the decedent. In other words, an heir is entitled to his or her inheritance, subject to the payment of the decedent's debts.

For many years, the state of Texas has allowed a testator to appoint an executor to serve independently of the court in administering his or he estate, by specific language used in the Will. An independent administration involves the executor's payment of all valid debts of the decedent and distribution of the probate estate, pursuant to the terms of the Will. The following discussion assumes that the decedent's Last Will has indeed appointed an independent executor, that the Will was properly "self-proved," and that no out-of-state real property was owned by the decedent.

The first step is to locate the original copy of the decedent's Last Will, which must be produced and filed in the proper court. Typically, probate is initiated in the county of the decedent's permanent residence. The type of court (whether a statutory probate court or a county court at law) depends on the particular county.The person who is named an independent executor hires the attorney to handle the probate and assist with the estate administration. The attorney prepares a court pleading to which the original Will is attached and filed with the county clerk's office. The deadline for doing this is four years from the death, but it is preferably done within a month or two of the death, so that the independent executor can gain access to funds and other assets, to pay creditors (including the Internal Revenue Service) and maintain the assets until the estate is closed.

The Texas Probate Code requires that this pleading and the Will stay on file for at least ten days before a hearing may be held to admit the Will to probate. This is fairly archaic waiting period, based on the theory that all potential contestants may read the pleading which is posted at the county courthouse. (By statute, a Will may continue to be contested after being admitted to probate for two years thereafter.) After the necessary ten day period has elapsed, a hearing is conducted by the attorney, with a witness to the facts of death (commonly the independent executor will serve as the witness). Then, the independent executor signs his or her Oath of office, at which point the county clerk's office will issue Letters Testamentary. The purpose of Letters Testamentary is to authorize the independent executor to secure access to all assets of the decedent.

The next step is for the independent executor to have a notice published in a county newspaper indicating to all potential
creditors of the decedent that he or she has been appointed as the official party to notify concerning debts of the decedent. Unless the estate involves controversies among the beneficiaries or creditors, then the only other court involvement is the required filing of a probate inventory, describing all assets that pass through the Will, as well as a value for each such asset as of the date of death.

The filing of the probate inventory, and indeed an understanding of a Will itself, requires an understanding of "probate" property (which a Will controls), to be distinguished from "non-probate" property. Non-probate property is property that is governed by some form of written agreement or contract as to its disposition at death. Common examples of this include 401(k), profit-sharing, IRAs and other forms of retirement benefits, as well as life insurance and annuities. All of these assets are controlled by a beneficiary designation, pursuant to the terms of an agreement.Other non probate arrangements include "living" trusts and "survivorship" or "pay-on-death" accounts. Assets that are held in any of these arrangements are not reportable to the probate court, because they are not probate property. (Caveat: It is not unusual for beneficiary designations to point toward trusts under a Will, in which event the asset controlled by the beneficiary designation will be distributable to such trusts, but still will not be a probate asset reportable to the court. By contrast, if an asset controlled by a beneficiary designation is payable to the decedent's "estate" or "executor," then that makes it a probate asset.)

The above discussion summarizes the typical probate process in Texas where an independent executor is appointed and no controversies erupt. That, however, does not conclude the administration of a Texas estate, which is more open-ended, depending on the complexity of the estate in question. The first order of business for the independent executor is to take control of all probateassets and make sure that all such assets remain secure, including the monitoring of investments during the pendency of the estate administration. The next step is to assess and pay all valid debts as applicable.

One of the most important debts to pay is taxes. This includes all remaining Federal income taxes of the decedent, as well as any Federal estate and Texas inheritance taxes. The independent executor should engage a tax accountant well-versed in the area of trusts and estates taxation, as well as the attorney, both of whom can offer advice and counsel in connection with these obligations. This is critical since the Internal Revenue Code assigns personal liability to an executor to the extent of any underpayment of taxes, even if the executor has distributed the estate to the beneficiaries and cannot obtain reimbursement from them for some reason.

Because of the personal liability for taxes and potential exposure from unpaid creditors, the independent executor should consult with the attorney as to relevant statutes of limitations to determine when it is recommended to close the estate. While the estate is open, it is a separate taxpayer, responsible for reporting and paying its own income taxes. The independent executor must also work with the attorney and tax accountant in connection with funding the bequests under the Will, taking into consideration post-death income taxation. Finally, the independent executor may wish to obtain a release from any future liability from the beneficiaries upon closing the estate.Given the competing interests of the Internal Revenue Service, other creditors and various beneficiaries, the job of an executor is a serious responsibility, which should be undertaken with care and with the input of professional advice

Federal Income Tax and Small Business Planning
My background in accounting and law allows this firm to engage in tax consultation and business planning, encompassing virtually all areas of federal and state taxation.

My business practice focuses on counseling and planning in the areas of corporate, partnership, trust, real estate, and tax-exempt organizations, personal and executive tax planning, and planning incident to the division of property occasioned by marital dissolution.

I concentrate on the tax implications of structuring both simple and complex transactions and integrating those plans with related financial accounting guidelines and securities laws.

I work closely with all types of businesses from formation to dissolution. My transactional practice integrates my estate planning and accounting background, providing a unique ability to represent closely-held businesses and their owners in virtually every area affected by the tax laws.